Ten Critical Labor & Employment Issues for 2009

Tuesday, January 27, 2009

Anne Caldwell, Outsourcing Solutions, http://www.azoutsource.com

1. The Employee Free Choice Act (EFCA).
The EFCA, as currently written, would significantly change U.S. labor law. The draft legislation proposes to (a) eliminate secret ballot elections and require employers to recognize and bargain with a union if a majority of employees within an appropriate unit sign cards indicating a desire for union representation; (b) eliminate the possibility of a stalemate or indefinite bargaining over a first collective bargaining agreement by giving the parties a limited period to reach agreement before an arbitrator is appointed to set the terms of an initial, two-year contract; and (c) increase the penalties that may be imposed on employers for unfair labor practices.

What to do now: To minimize their risk of unionization, employers should review their pay and benefits programs to ensure they are competitive. In addition, employers should revisit basic union-free strategies: ensure employees are treated fairly; maintain open lines of communication; revisit company solicitation, posting, and e-mail policies; and make sure employees know that the company is opposed to unions and the reasons for that opposition. In addition, the company should consider refresher training for supervisors on how to identify and address potential union activity and should consider educating all employees on the ramifications of signing a union authorization card.

2. The Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers Act (RESPECT Act).
As currently drafted, the RESPECT Act would amend the National Labor Relations Act (NLRA) to narrow the definition of "supervisor" and increase the number of employees eligible to join unions. The RESPECT Act would eliminate two of the most commonly used tests for identifying a supervisor under the NLRA — the employee has the authority to assign work to other employees and the employee responsibly directs the work of other employees. The RESPECT Act would also increase the percentage of time an individual must exercise supervisory authority to qualify as a supervisor. The proposed legislation will principally impact the status of front-line supervisors, including charge nurses.

What to do now: Employers should review front-line supervisor job duties and job descriptions and consider whether additional responsibilities and duties can be assigned so that the positions are properly classified as supervisory even under the proposed RESPECT act.

3. The ADA Amendments Act of 2008.
This proposed legislation would significantly modify the definition and interpretation of "disability" under the Americans with Disabilities Act (ADA). The Act would reverse Supreme Court precedent and move the federal ADA closer to state law counterparts in California and New York by requiring that a person's disability status be determined without considering the effects of any mitigating measures (including medication and medical devices).

What to do now: In general, the proposed legislation would significantly increase the number of employees who meet the definition of "an individual with a disability" and require employers to engage in the interactive accommodation process with them. Employers should therefore revisit their accommodations policies and protocols to ensure that requests for accommodations are being handled by managers or human resources professionals who are well versed in the requirements of the ADA.

4. Civil Rights Act of 2008.
The Civil Rights Act of 2008 proposes to amend a number of employment statutes to, among other things,
(a) eliminate the damage caps for alleged violations of Title VII of the Civil Rights Act of 1964 ("Title VII") and the ADA;
(b) allow for compensatory and punitive damages under the Fair Labor Standards Act (FLSA);
(c) require ADEA disparate impact claims to be analyzed under the same framework as Title VII claims;
(d) expand the definition of prevailing party to make it easier for plaintiffs to obtain an award of attorneys' fees;
(e) allow the National Labor Relations Board to award back pay to undocumented workers; and
(f) amend the Federal Arbitration Act to prohibit mandatory, pre-dispute arbitration agreements for federal constitution or statutory claims except as part of a collective bargaining agreement. The proposed Arbitration Fairness Act would likewise prohibit mandatory, pre-dispute arbitration agreements of employment disputes or civil rights claims.

What to do now: Employers with mandatory, pre-dispute arbitration programs may want to revisit those programs to determine if they continue to meet their business needs. Employers should also continue to implement, monitor and enforce their anti-discrimination policies and training, and review their insurance policies. If the Civil Rights Act of 2008 is enacted, there will likely be an increase in employment lawsuits with increased verdicts and settlements. The increased risk will likely also impact premiums, deductibles and other terms of insurance policies.

5. Amendments to Family Medical Leave Act.
The Healthy Families Act, if adopted as drafted, requires certain employers to provide employees with seven days of paid sick leave annually to use for their own medical needs or to care for the medical needs of family members.

What to do now: Larger employers may not be impacted by this legislation. Smaller employers, however, may need to budget for additional paid time off.

6. Sexual Orientation as a Protected Characteristic
The Employment Non-Discrimination Act of 2007 proposes to make actual or perceived sexual orientation a protected characteristic.

What to do now: Employers in states that do not already prohibit discrimination on the basis of sexual orientation may need to revisit their policies to ensure they are sufficiently flexible to cover new protected characteristics.

7. Amendments to the Equal Pay Act
The Paycheck Fairness Act proposes, among other things, to amend the Equal Pay Act to strengthen the remedies and enforcement provisions for wage-based sex discrimination by (a) prohibiting retaliation; (b) increasing penalties; and (c) authorizing the Secretary of Labor to seek additional compensatory or punitive damages for violations. There is also "paycheck" legislation pending that would overturn the U.S. Supreme Court's 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. This legislation would amend Title VII to provide that each discriminating paycheck is a separate violation of the statute.

What to do now: Employers may want to review their pay practices to ensure there are no gender-based discrepancies.

8. FOREWARN Act
The FOREWARN Act proposes to amend the WARN Act by (a) requiring employers to give employees 90-days advance written notice of a plant closing or mass layoff; (b) requiring employers to notify the Secretary of Labor at least 60 days in advance of a plant closing or mass layoff; and (c) doubling the penalty for employers who fail to provide the requisite notices.

What to do now: Other than tracking this legislation, there is nothing employers need to do now to prepare for compliance.

9. Misclassification of Independent Contractors
Employers should expect continued stepped-up enforcement action by the IRS, state and local taxing authorities, state and local workers' compensation and unemployment agencies, the Department of Labor and equivalent state agencies, and private plaintiffs over employees being misclassified as independent contractors. In addition, the Independent Contractor Proper Classification Act of 2007, if adopted, would amend the Revenue Act of 1978 to:

(a) require employers to treat workers misclassified as independent contractors as employees for employment tax purposes upon a determination of misclassification by the Secretary of the Treasury;

(b) repeal the ban on Treasury regulations or revenue rulings on employee/independent contractor classifications; and

(c) eliminate the defense of industry practice as a justification for misclassifying workers as independent contractors.


Notably, the Act would also require the establishment of a procedure for workers to petition for a determination of their status as employees or independent contractors and would prohibit employers from retaliating against any employee who filed a petition.

Additionally, the Act would require employers to maintain a list of their independent contractors, including names and tax identification numbers, for three years, and to notify independent contractors (a) of their federal tax obligations; (b) that certain labor and employment protections are inapplicable to independent contractors; and (c) that they have the right to seek a status determination from the Secretary of the Treasury.

A similar piece of legislation, the Employee Misclassification Prevention Act of 2008, has been introduced in the House of Representatives. The bill proposes imposing penalties on employers who misclassify employees as independent contractors and would also require, among other things, the Department of Labor to perform targeted audits focusing on employers in industries that frequently misclassify employees.

What to do now: Companies that use independent contractors should audit their classifications and ensure they are proper. Companies should also maintain separate, written agreements with each independent contractor that specify the contractor's status, notify the contractor of his or her tax obligations, and include an acknowledgment that the contractor is not entitled to unemployment compensation, workers compensation, or other benefits through the employer.

10. Erosion of ERISA Preemption and Deference
In 2008, the Supreme Court issued a couple of decisions that are likely to make it easier for plan participants to sue for benefits and to overcome motions to dismiss. In 2009, employers should expect to see increased pressure from labor and consumer groups for legislation to increase the remedies available under ERISA, particularly for erroneous denials of medical or disability benefits, and to create more exceptions to ERISA preemption of state regulations aimed at health insurers and benefits providers. In addition, employers will likely see additional efforts by state and local governments to mandate a minimum level of employer-provided medical benefits and increased efforts by plaintiffs' groups to water down the deference afforded to decisions by plan fiduciaries.

What to do now: With the increased scrutiny the Department of Labor is giving to certain issues, including 401(k) fees, as well as the likely up-tick in ERISA lawsuits that will be filed, companies would be wise to review plan documents and processes and ensure that appointed fiduciaries understand their responsibilities. Decisions to deny benefits should also be well-documented and reasonable.

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