SHRM 2012 EMPLOYMENT LAW AND LEGISLATIVE CONFERENCE

OPENING SESSION

• Michael P Aitken– Discussed the climate in DC right now – with the current

approval rating of Congress being only 11% - what that can mean for the Presidential Election as well as those in Congress looking to get re-elected.

– Key Issues that of focus include:• Mandatory employment verification process• Efforts to overhaul the recognition of unions in the

collective bargaining process• Proposals to amend current affirmative action

requirement for employers in regard to veterans, people with disabilities and others.

Current Stats on Congress

• Fact – Incumbents win re election when unemployment is down– Senate has 33 open seats – 10 because members

are retiring– The House has 41 open seats – 13 because

members are retiring

Obama Administration – focus on Work Flexibility

• New website that shares Research and Employer Best Practices

• www.whenworkworks.org

• The DOL is launching a employer/employee survey on FMLA Issues – no date was announced

DOL Proposed Regulations - FMLA

• Military Leave– Clarifies to include recent veterans– Defines serious injury/illness to include pre-existing

conditions aggravated in the line of duty.– Expands the amount of leave for rest and recover

from up to 5 days to 15 days• Intermittent Leave– Intermittent leave is traced like all other forms of

leave (sick, vacation, personal) provided it is not greater than one hour

The Supreme Court Speaks… Are You Listening?

• Key areas of employment law they are considering– Discrimination– Class and Collective Actions– Retaliation

Discrimination

• Disparate Impact v. Disparate Treatment– Disparate Impact – attack on Practice/Policy “no

intent” but did impact a group of employees– Disparate Treatment – How an individual/group

was treated based on their membership in a group, “there is intent”

Class Certification

• Wal-Mart v Dukes (June 20, 2011)– Issue – whether a federal court may hear a

nationwide class-action on behalf of hundreds of thousands of female Wal-Mart employees, charging the company with engaging in a pattern and practice of pay and promotional discrimination (against women)

How to avoid being a class action target

• Watch for early indicators of exposure• Closely scrutinize individual charges and

resolve early when possible• Be proactive with policies, procedures and

training (this means more than just lip service)• Look at your own stats• Be careful when providing

information/documents

Retaliation

• Facts– Retaliation claims are on the rise– In 2010 retaliation surpassed race discrimination

as the most common type of charge filed with the EEOC

– In 2011, retaliation continued to surpass race discrimination as the most common type of EEOC charge filed

– 37% of the 99,947 federal workplace discrimination charges filed alleged retaliation

Why the increase

• Relatively easy to establish– Protected activity– Adverse action– Causal link between the two

• Juries are predisposed to find retaliation• Recent U.S. Supreme Court cases

U.S. Supreme Court 2011-2012 Term

• Ministerial exception – Hosanna-Tabor Evangelical Lutheran Church and School v EEOC

• Health Care Reform – Dept. of Health and Human Services v. Florida; NFIB v. Sebelius; and Florida v HHS

• FLSA exemption – Christopher v. SmithKline Beecham Corp.

• Immigration – Arizona v. United States

The Enforcers: A U.S. Department of Labor Update

• Miss Classification Initiative – Employee vs. Independent Contractors

• Child Labor Laws– Agriculture– Care providers – example – currently minors can operate

a patient/resident lift – they want this changed• Companionship Services– FLSA – over time exemption

• P3 – Plan/Prevent/Protect– OSHA enforcement

The Enforcers: A U.S. Department of Labor Update - Continue

• FMLA– Proposing new rules for Military Leave• Extend to regular armed forces – but only if they are

deployed to a foreign country• Rest and recuperation from 5 days to 15 days• Extended caregiver leave to Veterans with serious

injury or illness

Enforcement Initiatives

• More Directed Investigations – 35% of investigations are started with no complaining employee

• Employee vs. Independent Contractor– Targeted Industries

• Construction• Janitorial• Home Health Care• Child Care• Transportation/Warehousing• Poultry/Meat Procession• Landscaping• Professional and Personnel Services

Enforcement Initiatives

• The DOL is working with the– IRS– State Regulators– Worker Advocates and Community Organizations– Union

ERISA Update: Keeping Your Benefit Plans (and You!) Out of Trouble

• Question – Because Health Care Reform Act is being legally challenged, do group health plans have to comply with requirement now in effect?– Answer – Only the individual mandate has been

ruled unconstitutional so far – The U.S. Supreme Court heard oral arguments March 26-28, 2012 – Decision expected in June 2012.

What to Do?

• Make sure group health plans are in compliance with all applicable provisions that became effective for plan years beginning after Sept. 23, 2010.

• Start implementation planning for provisions becoming effective in 2013, if planning needs to start before late June 2012.

Do You Need To Fess UP?

• Failure of group health plan to comply with any requirement of the Health Care Reform Act results in excise tax on employer– $100/day/affected individual

Disclosure

• Define Contribution Plans– 401-k time lines:• Disclosure from service providers – due 7/1/12• General disclosure by plan fiduciary 8/30/2012• Quarterly disclosure - no later than 45 days after end

of calendar quarter – due 11/14/2012

Summary of Benefits

• After 9/22/2012– Must use a standard glossary of terms – Can not exceed 8 pages– Must be included with enrollment materials– Must be provided 30 days before the plan year

The Safe Harbor rule of 2002 is still in effect

Health Care Reform – 2 Years Later

• Timeline for top priority 2012-2013 activities:– $2500 health FSA contribution cap– Higher Medicare payroll tax on wages exceeding $200,000

individual; $250,000 couple– Form W-2 – track Health Care for reporting in 2013– No cost sharing for Women’s preventive services for non-

grandfathered plans– Employers notify employees about exchanges– Medical device manufacturers fees start– Change in Medicare retiree drug subsidy tax treatment takes

effect– Exchanges initial open enrollment period to being in the fall

Focus 2012-2013

• Summary of Benefits and Coverage (SBC)– Must use the government-supplied SBC template– Must use uniform glossary

• Which Plans?– SBCs are required for all insured and self-funded group

health plans (grandfathered or not), including stand-alone health reimbursement arrangements and certain health flexible spending arrangements

– SBCs are not required for “excepted benefits” or health savings accounts

– Many ex-pat plans largely exempt from providing SBCs.

Focus 2012-2013 Continue

• Employers can provide stand-alone SBCs or combine them with other plan materials, such as summary plan descriptions (SPDs), as long as the SBC is displayed at the start

• SBCs only for benefit package in which participant is enrolled, eliminating unnecessary multiple versions.– Can be paper or electronic

Focus 2012-2013 Continue

• W-2 reporting– Employers must report value of employer-

sponsored health coverage on employee W-2 forms• Information reporting only; won’t affect tax treatment of

coverage• Private sector employers• Federal, state and local governments• Exemptions: Churches/religious organizations self-

funded plans. Employers issuing fewer than 250 W-2s and Indian tribal governments

W-2 Continued

• What must be included:– Group health plans– Mini-med plans– Medicare supplemental– Employer flex credits– On-site medical clinics– EAPs– Wellness Programs– Non integrated dental and vision – Employee salary reduction amounts to FSA– HAS contributions– HRA contributions– Employer contributions to multi employer plans– Government provided military coverage– Accident, disability, AD&D– Workers’ compensation– Other hospital/fixed indemnity

Additional Women’s Preventive Services

• Non-grandfathered plans must cover 100% in-network women’s preventive services meeting criteria issued in 2011 guidelines, including:– All FDA-approved contraceptive methods, sterilization procedures,

counseling– Lactation support, counseling– HPV and HIV testing– Domestic violence screening, counseling– Counseling on sexually transmitted infections– Screening for gestational diabetesProjected cost increases range from 0% - 0.5% (2013) but may range from 0.5% - 1.5% longer term.Shifting rules for religious-affiliated employers

More on the horizon in 2014

• Shared responsibility– What is employer shared responsibility?– Which employers are subject to shared

responsibility?– How will an employer’s size be determined.

• No waiting periods longer than 90 days• Exchanges• Individual coverage mandate

Employment Background Screening; Navigating Turbulent Waters to Stay in

Compliance and Out of Litigation

• Fair Credit Reporting Act (FCRA)• State law Considerations– Credit Checks– Criminal History Information

• EEOC Focus & Related Litigation• Recommendations for Employers

Fair Credit Reporting Act (FCRA)

• Mandates responsibilities of third-parties who collect information about applicants or employees (Consumer Reporting Agencies)

• Mandates requirements for users of this information (End-User)

• Mandates requirements for the entities that furnish information to the Consumer Reporting Agencies (Furnisher’s)

What is a Consumer Report

• Any written, oral or other communication of any information made by a CRA concerning a consumer’s– Credit worthiness, credit standing, credit capacity– Character– General reputation– Personal characteristics, or– Mode of living

• Which is used or expected to be used or collected for one of the “permissible purposes” (e.g., employment purposes)

Examples: criminal history, employment references, education verification, driving records

End-User Responsibility Under the FCRA

1. Permissible Purpose– Employment– At the Written Direction

2. Disclosure & Authorization– Separate from application– Specific state requirements

3. Adverse Action– Two-step process for employment

4. Certification To CRA– Generally in the agreement with CRA

Permissible Purpose

• Before running a background check, a person must have a “permissible purpose” under the FCRA– Employment is most common– At the written direction of the consumer– Insurance– Issuance of credit– Response to court order

Disclosure & Authorization

• Employers utilizing consumer reports for employment purposes must:– Disclose in a separate document that a consumer

report may be obtained– Obtain written authorization from the individual

prior to ordering the report• FTC opinion is that both disclosure and authorization

can be in one document• Recent litigation challenging applicant tracking systems• Recent litigation on challenging electronic signatures

Adverse Action – Two Step Process

• Adverse action is: Any action taken that is adverse to the interest of the consumer

• Before adverse action is taken employers must provide consumer with:– A copy of the consumer report– A summary of the consumer’s rights under the

FCRA– Any state law rights

Waiting Period

• Between pre-adverse action notice and adverse action notice an employer must WAIT– FTC’s opinion is that 5 business days is reasonable– Purpose is to allow a consumer to dispute the

accuracy of completeness of the report BEFORE have adverse action taken

– Many employers fail this part by contacting the applicant by phone before giving pre-adverse action notices

Adverse Action – Two Step Process (cont.)

• Adverse Action– Notice of the adverse action– Name, address, and toll-free number of the CRA

that furnished the consumer report– Statement that the agency did not make the

decision to take the adverse action and is unable to provide the specific reasons why the action was taken

Adverse Action – Two Step Process (cont.)

• After the adverse action is taken, the employer must provide the consumer with: – Notice of the consumer’s right to obtain a free

copy of the consumer report from the agency within 60 days

– Notice of the consumer’s right to dispute the accuracy or completeness of any information in the report furnished by the agency.

Certification Requirements

• Employers utilizing consumer reports for employment purposes must:– Certify to the CRA that:• The employer will distribute the required written

disclosure and obtain the required written authorization;• The information will not be used in violation of any laws

or regulations; and• The employer will comply with the adverse action

requirements

FCRA Penalties

• Negligent Noncompliance– Actual damages (back pay sometimes compensatory)– Attorney’s fees

• Willful Noncompliance– Actual OR Statutory

• $100-1000 per person

– Attorney’s fees– Punitive damageSTATUTE OF LIMITATIONS IS EARLIER OF 2 YEARS FROM “KNEW OR SHOULD HAVE KNOW” OR 5 YEARS FROM THE REPORT.

Ban the Box

• Campaign to removing check boxes on applications asking the applicant about arrest or convictions– Currently full restrictions in – HI, MA, Philadelphia,

PA– Partial restrictions to specific inquires, CA, CT, HI,

MA, KY, WA

Take away – Consider the timing of the questions in your hiring process

EEOC’s E-Race Initiative

• E- Race (Eradicating Racism and Colorism in Employment)– The EEOC is in the process of identifying “issues,

criteria and barriers” that contribute to race and color discrimination in the workplace

– Part of these efforts involve reviewing pre-hire processes and other selection and testing criteria.

Who does it apply to:

• Employers• Independent contractors• Background screening companies• Temporary staffing companies– What is the EEOC asking for:• Employment applications• Hiring criteria• Background screening policies and procedures• Other testing procedures and criteria

Employer Best Practices

• Review Employment Applications• Review Background Screening

Policies/Procedures• Review and narrow the positions for which

you are running credit checks• Consider timing of background checks