Cross, Gunter, Witherspoon & Galchus, P.C. E-Newsletter
FEBRUARY 2009 NEWSLETTER
In this issue:
  • 2009 EMPLOYER "TO-DO" LIST
  • CONSIDERING LAYOFFS? REMEMBER THESE PRINCIPLES TO STAY OUT OF TROUBLE
  • COBRA CHECK LIST: COMMON MISTAKES MADE BY EMPLOYERS IN ADMINISTERING COBRA
  • EIGHTH CIRCUIT HELD THAT EMPLOYERS CAN TERMINATE EMPLOYEES ON FMLA LEAVE FOR VIOLATING CALL-IN POLICY
  • WHAT IS THE RESPECT ACT?
  • NEWS AROUND THE FIRM




 
 2009 EMPLOYER "TO-DO" LIST
 David Dixon

The New Year, along with the new legislature and executive administration, brings about many extensive changes in the employment and labor law sector of which employers need to be mindful.
 
The following is a brief summary of relevant changes and anticipated legislation in employment law that will have a profound impact on businesses and requires your attention. If your company is unaware of these current legal requirements or proposed legislation, please feel free to contact any attorney with Cross, Gunter, Witherspoon & Galchus,P.C. for more guidance.

A. To-Do – Now:
  1. The Family and Medical Leave Act (FMLA)
    In January 2008, amendments to the FMLA were signed into law by President Bush. In November 2008, the Department of Labor published its final rule and regulations to implement these amendments. Those rules and regulations took effect on January 16, 2009, and include changes to an employee’s FMLA leave entitlements; changes to the medical certification process; changes to an employer’s notice requirements; and increased penalties for violating the FMLA. These changes to the FMLA require the employer to take some notably different steps in ensuring that it is FMLA compliant.

  2. The Americans with Disabilities Act (ADA)
    On January 1, 2009, the ADA Amendments Act of 2008 took effect. The ADA Amendments expand ADA protections for disabled workers by providing a broader definition of those individuals who may be regarded as having a disability and, thus, entitled to a reasonable accommodation. The amendments further broaden the definition of what constitutes discrimination under the ADA. These amendments are expected to lead to a larger pool of ADA plaintiffs and increased risks and costs associated with defending an ADA claim. Employers must be prepared to address these changes made to the ADA.

  3. The Revised I-9
    On December 17, 2008, the Department of Homeland Security issued an interim final rule which a) amends the types of documents acceptable in the I-9 identity and employment authorization verification process and b) requires all documents to be unexpired in order to be acceptable for I-9 purposes. 
         
    BREAKING NEWS…
    The United States Citizenship and Immigration Service (USCIS) has announced a 60-day delay in the implementation of new I-9 regulations on acceptable documents for employment eligibility verification and the new I-9 forms. The new regulations and form are now scheduled to go into effect on April 3, 2009. The interim final rule and an informational revised I-9 form will continue to be available for public comments at http://www.regulations.gov/.
     
  4. E-Verify Deadline
    The deadline for federal contractors and subcontractors to begin using the U.S. Citizenship and Immigrations Services’ (USCIS) E-Verify system has been suspended until February 20, 2009. Under the E-Verify system, federal contractors would be required to use the USCIS’ electronic verification system to verify their employees’ eligibility to legally work in the United States. The suspension is a result of a legal challenge of the E-Verify requirements by numerous employer associations. Depending upon the progress and outcome of this legal challenge, it is uncertain whether the requirement for federal contractors and subcontractors to begin using the E-Verify system will be further delayed.
     
    BREAKING NEWS…
    The deadline for federal contractors and subcontractors to begin using the U.S. Citizenship and Immigrations Services’ (USCIS) E-Verify system has been suspended, for the second time, from February 20, 2009, to May 21, 2009. Under the E-Verify system federal contractors would be required to use the USCIS’ electronic verification system to verify their employees’ eligibility to legally work in the United States. The suspensions are a result of a legal challenge of the E-Verify requirements by numerous employer associations. Depending upon the progress and outcome of this legal challenge, it is uncertain whether the requirement for federal contractors and subcontractors to begin using the E-Verify system will be further delayed.
B. To-Do – Legislative Action
  1. Employee Free Choice Act (EFCA)
    EFCA will essentially do away with an employee’s right to a secret ballot vote on whether or not to be represented by a union. It will allow a union to effectively organize a company by obtaining an employee majority based on mere signatures on a union organizing card. It further requires binding arbitration if the employer and union cannot agree to a first contract within 120 days and provides increased penalties for unfair labor practices. EFCA is expected to be a priority issue during the first nine months of 2009. If passed in its likely form, EFCA will have a profound impact on American businesses. Please contact your senator and representatives to voice your opposition to EFCA.

  2. Lilly Ledbetter Fair Pay Act (Fair Pay Act)
    On January 22, 2009, the Senate approved the Fair Pay Act. This Act could overturn a U.S. Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S 618 (2007), that limited the time frame for bringing pay discrimination claims. The Ledbetter ruling established that the time limit for filing a discrimination charge with the EEOC, either 180 or 300 days depending upon the state’s employment agency, starts to run when the employer makes the initial alleged discriminatory pay decision. The Fair Pay Act changes this limiting period by allowing an employee to bring a pay discrimination claim based on each subsequent pay check he or she receives thereafter. In other words, this allows the employee to bring such a claim regardless of whether the alleged discriminatory pay decision was made several years in the past. It is almost certain the President Obama will sign the bill into law.  If signed into law, the Fair Pay Act will take affect as if enacted on May 28, 2007, and apply to all claims of discrimination in compensation pending on or after that date.

    The Ledbetter Act overturns the U.S. Supreme Court case of Ledbetter v. Goodyear Tire and Rubber Co., 550 U.S. 618 (2007). A person alleging a charge of pay discrimination must bring their claim within 180 days of the unequal pay violation. In the Ledbetter case, the Court determined that the statute of limitations for filing an equal-pay lawsuit begins to run when the employer determines the pay rates. In other words, a cause of action for pay discrimination accrues when the employer chooses to pay an individual a certain amount.

    Under the Ledbetter Act, a new 180-day statute of limitations becomes effective with each paycheck. Effectively, this would make each paycheck a separate instance of employment discrimination. This allows employees who have allegedly experienced pay discrimination to bring an action virtually at any time, even if the alleged discriminatory pay decision was made years in the past.

    BREAKING NEWS…..
    On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009 (“Ledbetter Act”), which amends Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967, and modifies the operation of the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973, to clarify that a discriminatory compensation decision or other practice that is unlawful under such Acts occurs each time compensation is paid pursuant to the discriminatory compensation decision or other practice.

  3. The Paycheck Fairness Act (PFA)
    The PFA seeks to address gender-based wage discrimination by narrowing an employer’s affirmative defenses under the Equal Pay Act and allowing for compensatory and punitive damages. Under current law, one way an employer may defend a gender-based wage discrimination suit is by showing that the pay disparity between the woman and man is based on something other than gender. The PFA would limit this defense to only factors that are “job related with respect to the position in question” and “consistent with business necessity.” How those terms are to be defined is unknown. The PFA would further require employers to maintain records on how they set employee wages and report that information to the EEOC annually.

  4. Employee Misclassification Prevention Act (EMPA)
    In September 2008, legislation was introduced aimed to prevent employers from improperly classifying employees as independent contractors in order to avoid paying them overtime and benefits to which they would otherwise be entitled. EMPA would amend the Fair Labor Standards Act by prohibiting such misclassifications, providing for liquidated damages and increased penalties under certain circumstances, and requiring employers to comply with certain reporting and notice guidelines. It would require the Department of Labor to perform targeted audits of employers in industries that frequently misclassify workers. Under the current state of the law, misclassification of workers can be costly in terms of back pay, taxes, and benefits; under EMPA these costs will be even greater. This Act is expected to receive favorable approval, particularly in light of the fact that President Obama was one of the bill’s initial supporters.

 CONSIDERING LAYOFFS?  REMEMBER THESE PRINCIPLES TO STAY OUT OF TROUBLE
Bo Loftis

Unfortunately, in these troubled economic times, layoffs are inevitable. As an employer, only one thing pains you more than being forced to let some of your people go - not terminating the employee properly such that they now have a wrongful discharge claim against you. If you are considering reducing your workforce in 2009, keep these simple points in mind to ensure your cost reduction efforts do not backfire.

#1 Decide why you are laying off employees in the first place. Your managers should be able to clearly articulate a legitimate business reason for the layoff. This reason should be something that can be objectively measured, like lost profits or revenue. Otherwise, employees might think there are unlawful reasons for their job loss.

#2 Do not discriminate when deciding whose position will be eliminated. Choose who you layoff carefully. Focus on positions, not on employees. Use objective criteria that are easily measurable, such as seniority, productivity, or sales results. Otherwise, an employee could accuse you of terminating him/her based upon some protected characteristic, leading to an EEOC charge or lawsuit.

#3 If your company has written policies concerning job layoff procedures, follow these consistently. Any deviation could constitute the basis for a discrimination charge. If your company uses a seniority system to determine who gets terminated, usually a “last hired, first fired system,” then continue to follow it. Do not show favoritism. Do not deviate from the system because you are friends with, or personally like, a particular person whose position is scheduled for elimination.

#4 If a person you are terminating is age forty or over, then the person is protected by the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefits Protection Act (OWBPA), and a special set of circumstances apply. If you are going to require that the laid off workers sign a release of claims in order to get a severance package, then the release must be “knowing and voluntary.” A knowing and voluntary release for purposes of the OWBPA must meet the following prerequisites:
  1. the release must be written in a manner calculated to be understood by the employee signing the release;
  2. the release must specifically refer to claims arising under the ADEA;
  3. the release must not purport to encompass claims that may arise after the date of execution;
  4. the employer must provide consideration for the waiver or release of the ADEA claims above and beyond that to which the employee would otherwise be entitled;
  5. the employee must be advised in writing to consult with an attorney prior to executing the agreement;
  6. the employee must be given at least 21 days to consider signing the release; and
  7. the employee must be given at least 7 days following the execution of the agreement to revoke the agreement.
If the release is offered as part of an “exit incentive or other employment termination program offered to a group or class of employees,” even more is required of the employer. In this situation, an employee must given 45 days, rather than 21, in which to consider the agreement. The employer must also make a written disclosure to each individual eligible to participate in the employee termination program indicating (1) the class, unit, or group of individuals covered by such program, any eligibility factors for such program, and any time limits applicable to such program, and (2) the job titles and ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program. This information must be given to the employees at the start of the 45 day period.

#5 WARN Act. If your business has 100 or more employees, you must comply with the Worker Adjustment and Retraining Notification Act (WARN Act). The WARN Act requires companies to provide notice 60 days in advance of a plant closing or mass layoff. This notice must be provided to employees, the State dislocated worker unit, and the appropriate unit of local government. An employer must give notice if an employment site shutdown will result in an employment loss for 50 or more employees or if there is a mass layoff which will result in an employment loss for 500 employees, or for a lesser number of employees if they make up at least 33% of the employer’s active workforce. To calculate the number of affected employees, employers need not count employees who have worked less than 6 months in the last 12 months or who work an average of less than 20 hours a week.

Considering these simple precepts will help keep your liability from going up, while your costs are coming down.

COBRA CHECK LIST: COMMON MISTAKES MADE BY EMPLOYERS IN ADMINISTERING COBRA
Amber Bagley

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides continuation of health coverage that otherwise might be terminated. The COBRA law generally applies to group health plans maintained by employers with 20 or more employees in the prior year. A check list of common problems can be helpful in making sure that the benefits section of your business is correctly following through with COBRA’s mandatory requirements.
  1. COBRA NOTICES: The administrator of the employer’s group health plan is obligated to notify an individual participant of his or her COBRA rights at the time of commencement of coverage under the plan and again following a COBRA qualifying event. This notice should address the participant’s specific “rights,” including the requirements that must be satisfied in order to elect and maintain COBRA continuation coverage for the maximum period. Notably, at the commencement of the plan coverage, the plan must provide written notice of COBRA rights to each covered employee and the spouse (if applicable).

    a. The employer must notify the plan administrator of the following events within 30 days of the date of the qualifying event: death of a covered employee; termination of the employee’s employment (other than by reason of gross misconduct); reduction in hours so that the employee becomes ineligible for benefits; or the covered employee becoming entitled to Medicare benefits.

    b. In turn, the plan administrator must notify the qualified beneficiary of his or her COBRA rights within 14 days of the date that the plan administrator was notified of the qualifying event.

  2. ELECTION PERIOD: Plans must provide qualified beneficiaries with a minimum 60-day election period, and if COBRA coverage is timely elected, the qualified beneficiary has another 45 days in which to make the initial premium payment. Notably, plans are prohibited from mandating an earlier election or withholding earned benefits in order to force an earlier decision by the beneficiary. When timely elected, generally, COBRA coverage must be provided retroactive to the date that coverage would have otherwise terminated.
     
  3. COVERAGE: Qualified beneficiaries must be provided with the same coverage that is provided to similarly situated plan participants who are not receiving COBRA coverage. If the qualifying event is a covered employee’s termination or reduction in hours, the maximum continuation of coverage for the employee and the covered dependents is 18 months. While those that become disabled under Titles II and XVI can receive an 11-month extension, all other qualifying events call for the maximum election period of 36 months. There are also special rules when multiple qualifying events occur that employers should take notice of when administering COBRA.
For more information regarding COBRA administration, contact Amber Bagley with our firm.
 
EIGHTH CIRCUIT HELD THAT EMPLOYERS CAN TERMINATE EMPLOYEES ON FMLA LEAVE FOR VIOLATING CALL-IN POLICY
Jimmy Cline

The Eighth Circuit recently held that an employer did not violate an employee’s FMLA rights by terminating her while she was on FMLA leave. In Bacon v. Hennepin County Medical Center, an employee, while out on medical leave, initially complied with the employer’s call-in policy regarding absences from work by calling her employer every day that she was scheduled to work to report that she would not be coming in to work. However, the employee stopped calling in her absences after about a month. Consequently, the employer sent a letter to the employee informing her that, because she had been absent for three days without calling in her absence, she was deemed to have resigned. The employee filed a lawsuit against her employer, asserting that her employer interfered with her FMLA rights by terminating her while out on FMLA leave.

The Court examined FMLA regulation 29 C.F.R. § 825.309(a), which provides that “[a]n employer may require an employee on FMLA leave to report periodically on the employee’s status and intent to return to work.” Therefore, the Court concluded that 29 C.F.R. § 825.309(a) specifically permits an employer to enforce its call-in policy by terminating an employee who fails to comply with such a policy, even if the employee is out on FMLA leave. Accordingly, because the Court determined that the employer terminated the employee based on her noncompliance with its call-in policy, not because she exercised her right to FMLA leave, the Court held that the employer did not interfere with the employee’s FMLA rights.
 

 WHAT IS THE RESPECT ACT?
Jess Sweere

High on the list of organized labor’s legislative priorities for the new Congress is the Re-Empowerment of Skilled and Professional Employees and Construction Trades workers ("RESPECT") Act. The legislation dramatically changes the definition of “supervisor” in the National Labor Relations Act (“NLRA”), thereby reducing the number of employees classified as supervisors. Supervisors are specifically excluded from coverage under the NLRA and may not support or participate in union organizing.

Section 2 (11) of the current NLRA defines a "supervisor" as an employee with the authority to "hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or to responsibly direct them, or to adjust their grievances, or effectively to recommend such action" so long as this authority requires the use of "independent judgment." An employee only needs to exercise the authority for any one of the activities listed in the definition for a small portion of their work time to qualify as a supervisor. The RESPECT Act would remove “assign” and “responsibly direct” from the definition and require that an employee perform the remaining supervisory functions for a majority of their work time in order to qualify as a supervisor. Millions of working supervisors, therefore, would lose the classification of supervisor as a result of the Act.
 
Supervisors, as members of management, owe a duty of undivided loyalty to the employer in labor-management relations, such as during union organizing campaigns, grievances, picketing, and strikes. That duty would be compromised by the RESPECT Act. Working supervisors would be in the same bargaining unit as the workers they supervise, thereby dividing the supervisor’s loyalty between the union and the employer. Supervisors could be subject to union penalties and fines for making decisions the union opposes. Pro-union supervisors could solicit union authorization cards from their employees during organizing campaigns. Few employees are going to refuse to sign an authorization card solicited by their boss. Supervisors would be forced to consider internal union politics when making decisions, thereby impeding business productivity.

Front-line supervisors are typically management’s most effective communicators of management’s position on unionization. Using bargaining unit employees to present management’s position is illegal under the NLRA. If the RESPECT Act passes, employers will be much more limited on how they can communicate with employees. A strong push by organized labor is expected in the coming months on this legislation. Contact your U.S. Representatives and Senators to let them know your position on this bill.

NEWS AROUND THE FIRM
 
Cross, Gunter, Witherspoon & Galchus, P.C. is proud to announce two new attorneys in the firm's Fort Smith offices -  Michael K. Redd and R. Scott Zuerker.   Mike Redd, also a Certifed Public Accountant,  has provided corporate business legal advice to clients for 22 years in the Fort Smith area.  His areas of practice include corporate transactions dealing with the transfer and sale a business, banking law, bankruptcy law for creditors, probate law, estate planning, telecommunication law, and taxation law, including benefit plans.  Scott Zuerker practices in the area of civil litigation including insurance defense, Workers’ Compensation, motor carrier liability, products liability, and employment law.  Mr. Zuerker was admitted to the Arkansas Bar in 1994 and also serves as an Adjunct Professor of Law at the University of Arkansas in Fayetteville where he teaches Workers' Compensation.   
 
The Employee Free Choice Act (“EFCA”) is pending legislation that would fundamentally alter the way unions organize employees. EFCA could have drastic legal effects on your business and you need to be aware of how to deal with its ramifications.  All companies are at risk for unionization with this legislation, but there are proactive steps you can take to minimize your risk. To assist with your proactive plan, our firm has put together a program to help employers eliminate the threat of unionization that EFCA will pose to their organizations. Our preparation plan includes step by step initiatives which can be purchased in its entirety or customized to fit your company’s needs.  These steps include: identifying your employees’ sentiments, determining who are truly supervisors, looking at the need for or your use of a No Solicitation policy, conducting supervisory training and educating your employees about the impact of EFCA.  If you would like more details, contact any attorney with the firm. 

Bruce Cross conducted a series of lectures in Little Rock, Fort Smith, and Bentonville on January 14 and 15, on the Employee Free Choice Act (EFCA), how it will affect companies, large and small, and what companies can do to prepare themselves. Bruce also spoke on the same topic on January 20 in Fort Smith at the Manufacturing Executives Association.

Ben Shipley and Allen Dobson will present a seminar at the firm’s Fort Smith office on February 3 on recent changes made to FMLA and ADA. This seminar was re-scheduled from January 27 due to bad weather.

Ben Shipley will be speaking at the Arkansas Association of School Personnel Administrations Conference on February 5 in Little Rock on ADA Reasonable Accommodation and FMLA Military Leave.

Rick Roderick presented a seminar for Arkansas Tech University, Professional Development Institute on November 18. His topic was the Americans with Disabilities Act, Family and Medical Leave Act, and Workers Compensation. On December 9 Rick presented a firm seminar on the Employees Free Choice Act (EFCA) and Union Avoidance. On December 10, he made presentations on Union Avoidance Strategies at two different firm seminars in Little Rock. Rick made a presentation on Discipline, Termination, and Documentation at a Lorman Seminar in Little Rock on December 12 and on January 8 he presented a seminar for the Benton Chamber of Commerce on EFCA and Union Organizing.

Brian Vandiver will be speaking on ADA/FMLA at the Council on Education in Management meeting in Little Rock on February 26.

Jess Sweere was appointed to the Board of Directors for the Central Arkansas Human Resources Association. He made a presentation at that Association meeting on January 8 on the EFCA and union avoidance. Jess also spoke on EFCA at the Arkansas Hospitality Association meeting in Jonesboro on January 20. He spoke to the Arkansas Sheriff’s Association on January 19 on hiring liability and sexual assault investigations and made a presentation on legislative updates at the First Annual Transportation Seminar of the Primerus Defense Institute in Orlando, Florida, on January 23.



Cross, Gunter, Witherspoon & Galchus, P.C.

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