Bernstein Shur’s Labor and Employment Practice Group Highlights Legal Issues to Watch in 2014


Bernstein Shur’s Labor and Employment Practice Group Highlights Legal Issues to Watch in 2014

Edward E. Shumaker, Emily Gray Rice, Glenn Israel, Kai W. McGintee, Kelsey Wilcox Libby, Linda D. McGill, Matt Tarasevich, Naomi N. Butterfield, Ronald W. Schneider, Jr., Steven R. Gerlach, Talesha L. Saint-Marc
Happy New Year from your friends and advisors in Bernstein Shur’s Labor and Employment Practice Group. Usually, the new year comes with reviews of the past. At Bernstein Shur, we look forward to the future with a firm resolution to continue to represent the best interests of our clients. In this alert, we highlight the legal issues to pay attention to in 2014.

First, we welcome Matt Tarasevich and Ron Schneider as the group’s new co-chairs, and we thank Glenn Israel for his stout leadership over the last three years.

Update your job descriptions by Matt Tarasevich

A crucial component for compliance with the Americans with Disabilities Act (and its statutory counterparts in ME and New Hampshire) are accurate job descriptions. Employers are frequently asked to provide reasonable accommodations to employees with disabilities, which the employer may or may not be able to meet. In response to such a request, the essential functions set forth on the job description help guide the employer’s decision. If a discrimination claim is later filed under the ADA for failing to provide the desired accommodation, the administrative agency will likely examine the job description to determine if the essential functions outlined by the employer are really necessary. Since having accurate job descriptions can help the employer make the right decision, and later help avoid costly litigation, a review of the essential job functions in the job description to ensure accuracy and necessity should be at the top of your 2014 to-do resolutions.

Consider whether HIPAA applies to your organization and have necessary and appropriate policies by Ron Schneider

The Office of Inspector General recently criticized the Office of Civil Rights’ Health Insurance Portability and Accountability Act’s enforcement activities. As a result, we can expect to see more random audits of health care organizations and more careful investigations of complaints from those who believe that their protected health information has been disclosed in violation of HIPAA. This past year, organizations have been inundated with requests to sign HIPAA business associate agreements, many times under the incorrect assumption that the organization handles HIPAA-protected health information. Other organizations have learned that they have HIPAA obligations of which they were previously unaware. Even organizations that know that they are covered by HIPAA have learned they do not have the necessary and appropriate HIPAA-compliant policies and procedures. Given the adverse consequences of a HIPAA violation (including heavy fines), it is important for all organizations to understand if and when HIPAA applies to them, and extremely important to have the appropriate policies and safeguards in place.

Be aware of the EEOC’s enforcement agenda by Emily Gray Rice

Employers subject to the jurisdiction of the U.S. Equal Employment Opportunity Commission should be particularly aware of some of the enforcement priorities established by the agency under its FY 2013-2016 Strategic Enforcement Plan. Among other things, the EEOC will target:

  • Disparate pay, job segregation, harassment, trafficking and discriminatory policies affecting vulnerable workers who may be unaware of their rights under the equal employment laws, or reluctant or unable to exercise them
  • Compensation systems and practices that discriminate based on gender
  • Policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or that impede the EEOC’s investigative or enforcement efforts. Despite some judicial defeats, the EEOC remains determined to pursue systemic investigations and litigation to conduct a targeted campaign to deter harassment in the workplace.

Affordable Care Act compliance is essential for 2014
by Steve Gerlach

The Affordable Care Act’s employer mandate (aka “pay-or-play”) comes into effect on January 1, 2015, but staffing and benefits decisions made now will significantly affect employers’ compliance with the mandate—and the cost of that compliance. If not already started, employers should start today to:

  • Determine whether the employer mandate applies to them
  • Determine whether a look-back period or initial measurement period will help in compliance and cost-containment efforts
  • Build infrastructure to track and report information required by IRS regulations
  • Run a “test year” to gather information about compliance and cost vulnerabilities
  • Make staffing and benefits decisions based on the information gathered

Seriously think about how you conduct performance evaluations by Linda McGill

Even if your organization is complying with its published policy (i.e. that employees will be evaluated annually), you must ask whether the evaluation system yields enough value to justify the time, energy and angst that human resources, supervisors and employees invest in the process. As reported in national surveys, most supervisors dread the annual evaluation and doubt its ability to improve a poor performer, and the majority of employees don’t think the annual ritual is at all useful. So should employers abandon employee reviews? Definitely not. Accurate and honest evaluations are a key to employee retention and improved performance and may be “Exhibit 1” in the defense against a claim for discriminatory termination. Rather than treating evaluations as an annual event, consider implementing a continuous management program in which supervisors provide on-going feedback, either as needed or at more frequent intervals, in oral or written form. Immediate and incremental evaluation of an employee’s performance, whether positive or corrective, elicits better results and a fairer opportunity for mutual exchange.

Changing the culture around performance evaluations may require training and practice, but the payoff of more effective supervision and more productive employees is likely worth the effort. If annual evaluations are the best choice for the organization, consider adopting a more narrative format over numerical or task-driven ratings forms, encouraging more meaningful evaluation and honest discussion. Employers should use job descriptions in the evaluation process which will help ensure that the job descriptions remain updated and accurate. Whatever the system, evaluators should focus on goals for improvement rather than past errors and avoid the temptation to rate everyone above average.

Wage and hour litigation likely to increase by Glenn Israel

Wage and hour litigation reached a record high in 2013 and this trend is likely to continue into 2014. The typical case involves the alleged violations of the Fair Labor Standards Act such as miscalculating overtime pay, misclassifying non-exempt employees as exempt and failure to compensate employees for work performed off-the-clock. The FLSA was enacted in 1938 and many states quickly followed suit with their own wage and hour laws that contain subtle differences from the FLSA. As the financial consequences of a successful wage and hour claim are significant, it is important to be proactive in addressing wage and hour compliance. When an employee classification or wage calculation error occurs and continues over a period of time, it can impact multiple employees, and the employer’s liability can quickly balloon to a substantial sum.

All employers should regularly review their company policies and practices to make sure they are compliant with wage and hour laws. Areas of particular concern are:

  •  Independent contractors
  •  Exempt versus non-exempt employee classification
  •  Proper calculation of overtime pay
  •  Calculation of pay for travel and training
  •  Proper treatment of pre and post-work activities, meal periods and rest breaks
  •  Proper record keeping procedures

Conduct credit checks carefully and watch the legislature
by Pat Peard

Many employers use credit reports obtained through a consumer reporting agency as part of their background checks on prospective employees. Under both the federal Fair Credit Reporting Act and state credit reporting laws, there are stringent requirements about obtaining and using such reports, particularly if the employer makes a determination that they want to make an adverse employment decision based on a credit report. We are now monitoring a bill which has been introduced in the U.S. Senate by Senator Elizabeth Warren of Massachusetts entitled the Equal Employment For All Act (S. Bill 1837). The bill, if passed, would prohibit employers from requiring employees and potential employees to provide permission for the disclosure of their credit history. Employers would not be permitted to use consumer credit reports for any employment purpose. There are some exemptions in the bill for national security clearances or other reviews required by statute that include credit checks. New Hampshire’s legislature has a similar but less restrictive bill under consideration.

Conduct criminal background checks judiciously
by Kai McGintee and Naomi Butterfield

Among its stated enforcement priorities, the U.S. Equal Employment Opportunity Commission is focusing on eliminating barriers in recruitment and hiring, including the use of broad credit and criminal background checks. According to the EEOC, criminal background checks conducted prior to hiring have a potentially disparate impact on protected classes. The EEOC has urged that employers should use arrest and conviction records only to the extent that the information is job related and consistent with business necessity. How close the relationship between past criminal history and job duties must be and whether an individualized assessment must be made by the employer on a case-by-case basis has not yet clearly been defined. Guidance for employers seeking to avoid liability under Title VII is likely to be issued this year as cases brought by the EEOC in Illinois against Dollar General Corporation and in South Carolina against BMW Manufacturing Company, LLC are pending. Also pending is a case brought by the State of Texas against the EEOC in November of 2013, which seeks to block the EEOC’s April 2012 enforcement guidance requiring that background checks be job related and consistent with business necessity. All three cases are likely to provide guidance for employers seeking to use criminal background checks in employment decisions and may also have an impact on where and how the EEOC chooses to focus its enforcement actions in the future.

Unpaid internships are a trap for the unwary by Kelsey Wilcox

In a still-struggling job market, unpaid internships have become a necessary rite of passage for many college students across the country in order to secure paid work down the road. However, a spate of lawsuits in the neighboring Second Circuit has raised the issue of whether using unpaid interns in the for-profit context is allowable under state and federal wage and hour laws. A federal judge in New York recently held that Fox Searchlight violated minimum wage laws when it used unpaid interns to perform many tasks that regular paid employees would have done on the set of the movie “Black Swan.” The court applied guidelines issued by the Department of Labor, which require that the intern be closely supervised and not displace regular employees, and that the experience benefit the intern and not the employer. The DOL criteria can be viewed by clicking here.

The Fox Searchlight case, and at least one other case with an opposite outcome, are under appeal and the outcome will be closely watched for future guidance. The takeaway for the cautious employer is to think twice before bringing unpaid interns on board, and seek legal counsel before doing so.

The NLRB looks to expand employee rights even further
by Terry Shumaker

While recently announcing that it was giving up its fight in the courts to require employers to post a pro-union organizing poster, the National Labor Relations Board is expected to continue to pursue its agenda of expanding workers’ rights to contest employer actions in non-unionized workplaces. The Obama administration’s NLRB has overturned discharges and other employment disciplinary actions based on Facebook and other social media postings critical of management on the grounds that such activity is protected under federal labor law in the same fashion as union organizing. The new general counsel of the Labor Board has also signaled that he may advocate for the reversal of the Bush-era decision in the Register-Guard case, which ruled that employees had no right to use company email for non-work related solicitations. With at least three more years in place, this NLRB has plenty of time to expand employee rights at management’s expense.

New Hampshire’s Department of Labor to crack down on employee misclassification by Talesha Caynon

On June 19, 2013, New Hampshire welcomed James Craig as the new commissioner of the New Hampshire Department of Labor. Under Commissioner Craig’s leadership, the NHDOL expects to crackdown on independent contractor misclassification by stepping up its investigation and enforcement efforts. Employers who misclassify their employees, particularly those who are repeat offenders, risk facing significant penalties. Employers can reduce the risk of an enforcement action and subsequent penalty by:

  • Reviewing the NHDOL’s Criteria to Establish an Employee or Independent Contractor poster
  • Updating, where necessary, current independent contractor arrangements and/or agreements
  • Consulting with employment counsel

In addition to its heavy concentration on the misclassification of employees as independent contractors, the NHDOL has also recently retained a new staff attorney, who will focus on collecting unpaid fines. With Commissioner Craig’s renewed zeal to reduce violations and with the agency’s intent to collect its fines, employers should remain vigilant in classifying independent contractors.

Bernstein Shur’s Labor and Employment Practice Group will continue to keep you apprised of changing legislation and deadlines and provide tips on compliance and best practices. For more information contact Ron Schneider or Matt Tarasevich.