Posts belonging to Category legal issues

Although the Genetic Information Nondiscrimination Act (GINA) became law back in 2008, the EEOC — which enforces the law — has filed only two lawsuits since then charging employers with illegally asking employees/job applicants for their family medical histories.

One of those lawsuits — against Tulsa, Okla.-based Fabricut Inc. — was settled last week. The EEOC had charged the company with violating GINA by purportedly asking job applicant Rhonda Jones (whom it was considering for the position of memo clerk) for her family medical history as part of a post-offer medical exam. Fabricut asked Jones to — as a condition of its job offer — undergo an evaluation for carpal tunnel syndrome by her personal physician, and to undergo a pre-employment lab test and physical by its contract medical examiner. Although Jones’ doctor concluded she did not have CTS, the company says its medical examiner says she either had the syndrome or was predisposed to develop it, and it rescinded the job offer. Earlier this month, Fabricut agreed to settle the suit by paying $50,000 and offering other relief without admitting any wrongdoing.

Last week, the EEOC announced another GINA-related lawsuit, this one against Corning, N.Y.-based Founders Pavilion Inc., a nursing and rehabilitation center. According to the suit, the company conducted post-offer, pre-employment medical exams of applicants in which they were asked for their family medical history. The exams were repeated annually if the person was hired.

The EEOC also charged Founders with violating the Americans with Disabilities Act by firing one employee after refusing to accommodate her and refusing to hire two women because of perceived disabilities.

Elizabeth Grossman, the regional attorney in the EEOC’s New York District Office, had this to say in a statement:

GINA applies whenever an employer conducts a medical exam, and employers must make sure that they or their agents do not violate the law.”

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A second slam against President Obama’s recess appointments to the National Labor Relations Board has pundits talking not just about the appointments, but about the overall impact on the notion of recess appointments altogether.

The decision Thursday by the U.S. Court of Appeals for the Third Circuit in NLRB v. New Vista Nursing and Rehabilitation is the second decision by a circuit court to hold that intracession recess appointments (those made during a recess within a session) violate the Recess Appointments Clause of the U.S. Constitution.

As this alert from Ballard Spahr points out, in the earlier ruling in Noel Canning v. NLRB, the U.S. Court of Appeals for the D.C. Circuit concluded Obama acted unconstitutionally when he made three recess appointments to the NLRB. As Ballard Spahr noted previously, ”if upheld by the Supreme Court — which is considering the NLRB’s petition for certiorari [or the high court's review] — Noel v. Canning will invalidate the hundreds of board decisions in which the three appointees participated,” its latest alert states.

One issue at stake in this most recent New Vista ruling is the legitimacy (make that the illegitimacy) of the appointment of former NLRB board member Craig Becker, who was appointed during an intrasession recess of the Senate and was part of the panel that ruled against New Vista. At the Third Circuit, says the Ballard Spahr alert, “essentially adopting the reasoning of Noel Canning, a divided panel concluded that the words ‘the Recess’ in the RAC refers only to an intercession [between-sessions] recess of Congress … .”

Michael Lotito, employment attorney and co-chair of San Francisco-based Littler’s Workplace Policy Institute, cites what you might call the crux of the ruling in this comment on a LinkedIn group site: “Footnote 22 beginning on page 61 [of the New Vista ruling] sums it  up: The president could not do what he did. The recess appointments are toast.” (Look it up in my link above.)

For additional background on all this, including case synposes, here is Morgan Lewis’ take, as posted on the National Law Review website, and here is my latest post on this blog, with links to past posts explaining the controversy around Noel Canning. Also, though the NLRB has not issued a statement about this latest ruling on its website, it does provide this link to a video and opening statements “for the May 16, 2013, Senate committee hearing on pending nominations to the National Labor Relations Board.”

As for the implications of the two rulings, Morgan Lewis paints a pretty clear picture:

The Third Circuit’s decision, particularly when paired with Noel Canning, is far-reaching and critically important, particularly for employers involved in [NLRB] proceedings since March 2010. The invalidation of Becker’s appointment also affects a number of board actions during that time, including the ‘quickie’ election rules — providing for a much faster [union] election process — and the decision in D.R. Horton — invalidating class and collective-action waivers in employment-arbitration agreements. The Third Circuit and the D.C. Circuit have drawn a roadmap for challenging the validity of three years’ worth of board decisions and are now the likely forums of choice for such challenges.”

More succinctly, as this release on the Hot Air site puts it, the rulings have “the potential, not just to mess with these appointments, but with the tradition of the recess appointment, more broadly.”

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Just in case you missed this, the U.S. Court of Appeals for the District of Columbia struck down yesterday a federal rule that would have required employers to nail posters to their bulletin boards or common-area walls informing employees of their rights to unionize.

This Associated Press account on the Newsday site calls the decision against the National Labor Relations Board in National Association of Manufacturers v. NLRB “another blow to the nation’s dwindling labor unions.”

It also specifies details of the ruling, stating that the NLRB violated employers’ free-speech rights in trying to force them to display the posters or face charges of committing an unfair labor practice.

“The court’s ruling is the latest success for business groups that have worked to prevent the NLRB from shifting the legal landscape in favor of labor unions, despite President Barack Obama’s appointment of several labor-friendly board members,” the AP account says.

Here is my latest blog post on this poster controversy, containing links to my previous posts, which should give you a good chronological journey through this tussle.

Meanwhile, this legal alert on the Arent Fox site reminds us that Tuesday’s appeals-court decision on the poster rule comes less than four months after the same court invalidated Obama’s recess appointments of three NLRB members.

Here are three separate blog posts by me on this recess-appointments controversy — from April 2, March 20, and Feb. 19 — for your reading pleasure.

Lastly, this link from Practical Law Co. spells out the reasons behind the DC Circuit decision regarding posters. The court, it says, “held that the NLRB’s poster rule is invalid because each of the three ways in which the NLRB would enforce its poster rule was invalid. In particular, the court found that the NLRB could not lawfully:

• Make a failure to post the notice an unfair labor practice (ULP).
• Interpret a failure to post the notice as evidence of anti-union animus in NLRB proceedings.
• Toll the six-month statute of limitations indefinitely for employees to file ULP charges against an employer that fails to post the notice.”

As always, I will try to keep you posted on developments.

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A Davenport, Iowa, jury awarded the U.S. Equal Employment Opportunity just yesterday the largest-ever verdict in the agency’s history — more than $240 million — in a case involving the long-term abuse of workers with intellectual disabilities.

The class-action case against Hill Country Farms Inc., doing business as Henry’s Turkey Services, was actually covered by me back in April 2011 in this news analysis. Here, too, is the ruling by the U.S. District Court for the Southern District of Iowa, Davenport Division, in September 2012, granting the EEOC partial summary judgment to move forward and also ordering the Goldthwaite, Texas, company to pay the workers $1.3 million for unlawful disability-based wage discrimination.

Coupled with yesterday’s awards of $2 million and $5.5 million for each of the 32 mentally disabled turkey processing-plant workers, for punitive and compensatory damages, respectively, the total judgment — to be exact — comes to $241.3.

The links above, along with this release by the EEOC, spell out all the sad, sordid details of this now-historic case. But just to recap here, the EEOC lawsuit says that, for many years, the owners and staffers of Henry’s Turkey subjected the workers to abusive verbal and physical harassment; restricted their freedom of movement; and imposed other harsh terms and conditions of employment, such as requiring them to live in deplorable and substandard living conditions, and failing to provide adequate medical care when needed.

The EEOC also claims verbal abuses, including frequently referring to the workers as “retarded,” “dumb ass” and “stupid.” Members of the class reported acts of physical abuse as well, including hitting, kicking, at least one case of handcuffing, forcing the men to carry heavy weights as punishment and being dismissive of complaints of injuries or pain.

“The verdict sends an important message that the conduct that occurred here is intolerable in this nation, and hopefully will help to restore dignity and acknowledge the humanity of workers who were mistreated for so many years,” says EEOC Chair Jacqueline A. Berrien.

According to this Fox News account, an attorney for Henry’s didn’t respond to a message seeking comment. But the company’s president, Kenneth Henry, told the Quad-City Times after the trial  that he planned to appeal, calling some of the evidence “terribly exaggerated.”

The news account also says it’s highly unlikely the now-defunct Henry’s Turkey Service has anywhere near enough remaining assets to cover the $7.5 million in damages each man was just awarded.

“Do you think I can write a check for that?” Kenneth Henry, 72, the company’s president, told the newspaper.

But federal officials are vowing to recover every last cent they can for the men, who had been “virtually enslaved” for many years, according to developmental psychologist Sue Gant, who  interviewed them at length for the EEOC, the account states.

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In a San Francisco federal courtroom, the long and winding criminal case of David Nosal gets underway again today (after two previous installments), with possible implications for HR and the recruiting world possibly riding on the outcome, according to this piece from Wired:

Beginning today, jurors will begin deliberating their first full day in the two-week hacking prosecution of David Nosal, whose case has had a tortured legal history with two trips to a federal appeals court.

Nosal’s crime, prosecutors say, is this: His former colleagues at Los Angeles-based executive search firm Korn/Ferry International, where he had worked, gave him their passwords to access a proprietary database that the authorities claim helped Nosal build a competing executive search firm.

According to the story, Nosal is accused of violating his former employer’s computer usage policy because he allegedly was not authorized to access its proprietary database:

The 9th U.S. Circuit Court of Appeals, ruling in Nosal’s case for a second time last year, decided that employees may not be prosecuted under the anti-hacking statute for simply violating their employer’s computer use policy. The tossed charges against Nosal stemmed from when Nosal, while still a Korn/Ferry employee, had authorized credentials to access Korn/Ferry’s so-called “searcher” database. He was accused of using the information he allegedly obtained to help build a competing business.

Because of the legalities – and technicalities – involved in all of this, the case’s outcome is being watched from many quarters, so stay tuned!

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The U.S. Supreme Court decision Tuesday in the case of US Airways v. McCutchen appears to be a big one for those handling or administering benefit claims and reimbursements under the Employee Retirement Income Security Act. So say legal experts already weighing in.

Hogan Lovells, the law firm representing US Airways, said in a statement released Wednesday that the decision “provides clear guidance to employer sponsors that reimbursement provisions will be enforced by the courts as written. In essence, the Court ruled that an employee (James McCutchen) who receives medical payments for an injury pursuant to an employer-sponsored health-benefits plan may not avoid the reimbursement requirements of that plan by arguing (as McCutchen’s lawyers had) that such reimbursement is “inequitable.”

Neal Katyal, co-director of Hogan Lovell’s appellate practice and former acting solicitor general of the United States who argued the case, calls the decision “a victory not only for US Airways, but for all ERISA employee-benefits plans, because it prevents individual judges from rewriting plan terms according to their own notions of equity,” which he argued the Third Circuit Court of Appeals had done.

According to this analysis by Michelle Anderson of Fisher & Phillips summing up the decision and its impact, ”the supremacy of a written ERISA-governed plan still reigns as [the Court] reversed the ruling of an appellate court which had held that a court in equity can ignore unambiguous subrogation reimbursement language, and simply rewrite the terms of an ERISA-governed plan in line with its own ideas of what was ‘fair and equitable.’ ”

Here’s what she says the ruling means for employers:

Although this is a win for those self-funded plans governed by ERISA, plan fiduciaries and administrators are wise to review with their counsel the subrogation, reimbursement and attorney fee and costs provisions in the written documents to ensure conformity to the law in this area.

Undoubtedly, those who litigate in the personal-injury arena will continue to develop new theories to test the sufficiency of ERISA, since taking the claim of injured persons who have had their expenses paid by a medical plan will be less attractive if the ability to collect fees and recover damages for their client will be secondary to the rights of the plan.

Her analysis offers a complete synopsis of the case, which many of you probably already know. This piece by Allison Bell on the LifeHealthPro site also sums up the facts of the case, saying the decision basically now establishes that “a federal court can use equitable law principles when a group health plan contract governed by [ERISA] is silent about a legal issue.”

And finally this, from Mayer Brown, stresses the need by employers – in light of this case – to review their ERISA-plan paperwork very carefully:

The Court’s decision in McCutchen establishes that contractual provisions requiring reimbursement of benefits paid according to an ERISA plan will be enforced according to their unambiguous terms. The ruling will thus be of interest to all businesses that offer such plans to their employees or administer them on behalf of other entities. At the same time, the Court’s decision highlights the need to draft reimbursement provisions in ERISA plan documents that are as clear and comprehensive as possible. Doing so will minimize (although likely not eliminate) the potential for courts to apply equitable rules as “gap fillers” when the plan language is silent or ambiguous.

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Consider this a heads-up for the companies offering free meals to employees on campus: The Internal Revenue Service may be coming for its piece of the pie.

That’s according to a recent Wall Street Journal article, which says the IRS is examining whether the free food enjoyed by employees is a fringe benefit on which they should pay additional tax.

What’s piqued the taxman’s interest, it seems, is why grub is being provided gratis to employees. Or at least how firms describe their reasons for doing it.

According to tax rules, offering free food as a way to promote morale or attract prospective employees is considered taxable compensation. The Journal article notes, however, an exception that allows employee meals to remain untaxed if they are served for a “non-compensatory” reason for the “convenience of the employer.” This exception has typically been applied to remote workers, or those in professions in which reasonable lunch breaks aren’t feasible.

According to the Journal piece, though, some attorneys argue that various technology firms could qualify for the exception, “in part because free food encourages longer work hours and is a crucial part of Silicon Valley’s collaborative culture.”

University of Florida tax-law professor Martin J. McMahon doesn’t go for that idea at all. He thinks employees at companies such as Google—famous for the elaborate and eclectic culinary options it makes available to its people—should be paying their share.

 “I clearly think it ought to be taxable income,” he told the paper.

“I buy my lunch with after-tax dollars,” says McMahon, who contends that free meals should often be considered part of compensation packages. “And I have to pay taxes to support free meals for those Google employees.”

(Curious how much a food tax would cost the average Googler? Assuming a fair-market value of between $8 and $10 per meal, a Google employee eating two meals on campus each workday could be looking at taxes on an extra $4,000 to $5,000 a year, according to the Journal.)

The IRS may share McMahon’s opinion, and “often takes a dim view” of employers’ claims that free food is integral to maintaining a collaborative corporate culture, according to employment-tax attorney Thomas M. Cryan Jr., a shareholder with Washington-based firm Buchanan Ingersoll & Rooney.

Cryan Jr. told the paper that he’s worked on audits for multiple Silicon Valley-based tech firms, and has seen the IRS question companies’ practices surrounding complimentary meals.  He offered a few words of caution:

“If they’re in there auditing, and you’re not taxing the meals, they’re going to challenge you on it.”

Employers, he says, typically settle and determine a fair-market value for the meals, which they include in employees’ future paycheck stubs. In these instances, firms frequently give employees a bump in pay, to cover their bigger tax bills.

And, a failure to carefully and correctly treat the taxation of employee meals could prove even costlier for the company. While individual employees would technically be on the hook for any unpaid back taxes, experts say the IRS is more likely to pursue the employer for failing to withhold taxes.

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I know I’ve been writing a lot about the National Labor Relations Board on this blog, but I am truly no authority. Just a curious observer, especially considering the weight the board’s decisions hold and the impact they have on the readers of our magazine.

So my latest curiosity has to do with this recent post on the HR Policy Association’s website, detailing the House Education and the Workforce Committee’s passage during the week of March 18 to 22 of a bill requiring the NLRB to cease all decision-making until the legal status of the Board’s members has been resolved.

As the post states, the “Preventing Greater Uncertainty in Labor-Management Relations Act (H.R. 1120) was prompted by the recent decision in Noel Canning by the D.C. Circuit effectively nullifying the recess appointments of two of the three sitting Board members, thus bringing the Board below the three-Member quorum required for Board decisions.”

For reference sake, here is my latest blog post on the NLRB’s decision to seek the U.S. Supreme Court’s review of Noel Canning v. the National Labor Relations Board, along with a link to the actual decision in that case. As I note there, the NLRB has until April 25 to get its review petition to the highest court. The HRPA says in its post that the Supreme Court review probably won’t happen until “next fall at the earliest.”

Here’s how Committee Chairman John Kline (R-Minn.) sums it up in the HRPA piece:

The best way to avoid further damage is for the President to work with the Senate to confirm a full slate of qualified nominees.  In the meantime, Congress must take action to prevent a bad situation from becoming much worse.  H.R. 1120 is an appropriate congressional response that will help ensure America’s workplaces aren’t forced to confront even more uncertainty.

Meanwhile, and this is where my curiousity comes in, here is the NLRB’s summary of decisions for the week of March 25 through 29. Looks like there’s no slowing down there. And I’m not hearing or seeing any evidence that this committee’s bill passage has gotten the NLRB’s attention or raised its concern. No statements or news stories there that I can find.

Just curious. Just sayin.

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As The Highest Court in the Land weighs the constitutionality of The Defense of Marriage Act, the latest figures from healthcare benefits consultancies Mercer and Aon Hewitt find a growing number of companies already offering same-sex domestic partner benefits to their employees.

According to recent Aon Hewitt data culled from 1,300 employers, 78 percent of companies offer domestic partner benefits. Among those organizations, 71 percent offer same-sex coverage. That number stood at 19 percent in 2007, according to Aon Hewitt.

New York-based Mercer’s recent survey finds the number of companies providing same-sex benefits increasing as companies get larger. More than half of the companies surveyed indicate offering health coverage to same-sex domestic partners, according to Melissa Jimeno, a consultant in the firm’s healthcare practice. Among large employers, the number climbs into the 60 percent to 75 percent range.

The percentage of employers participating in Mercer’s survey that reported offering health coverage to same-sex domestic partners, by company size:

• 500 to 999 employees – 36 percent

• 1,000 to 4,999 employees – 52 percent

• 5,000 to 9,999 employees – 62 percent

• 10,000 to 19,999 employees – 67 percent

• 20,000 or more employees – 75 percent

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According to this Reuters story, the U.S. Supreme Court just ruled in favor of Comcast Corp. in an antitrust case over how much it charged cable TV subscribers in the case of Comcast v. Behrend.

In a 5-4 decision, the court said a group of cable TV subscribers in the Philadelphia area who accused Comcast of overcharging them as part of an effort to monopolize the market could not sue as a group.

While the case itself did not touch on workplace issues per se, attorney Raul Zermeno of Fisher & Phillips says the ruling will likely reduce employers’ exposure to class-action litigation launched by employees, and that the decision will “significantly impact” the future of employment-related class-action lawsuits nationwide:

The Court held that a plaintiff must introduce evidentiary proof to show that the case is susceptible to awarding damages on a class-wide basis, before class-action status is granted. Class-action classification is the most important decision in a class action because it puts pressure on defendants to settle regardless of the merits of the case.  This decision will most likely limit the number of class actions filed and impact class-action litigation.

Meanwhile, Gerald Maatman and Rebecca Bjork, attorneys with national employment firm Seyfarth Shaw, say Comcast v. Behrend  addresses whether a class may be certified without resolving whether a plaintiff has introduced admissible evidence, including expert testimony, to show a case is susceptible to awarding damages class-wide — a key question left open by 2011’s Wal-Mart Stores, Inc. v. Dukes case.

(Maatman and Bjork also wrote on the ruling in greater detail in a post from Seyfarth’s Workplace Class Action Blog here.)

The Seyfarth Shaw attorneys say the court clarified that, to certify a Rule 23(b)(3) class, the plaintiffs will need to establish that their expert analysis has adequately explained how the data show that a classwide determination of damages is possible.

They also note that the Comcast decision ultimately means that plaintiffs, generally speaking, will have less leverage to pressure defendants to enter into settlements in many types of class-action lawsuits, including workplace class actions, that rely heavily on statistical and other kinds of expert evidence.

In short, as the Supreme Court has focused attention on class-action law, as it will continue to do this term in the area of class arbitration, it has brought into perspective the importance of defendants’ efforts to fully engage in the ‘battle of the experts,’ as success in the certification arena may very well depend upon it.

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