The U.S. Department of Labor, Office of Federal Contract Compliance Programs ("OFCCP"), recently issued a proposal to revise the regulations applicable to Section 503 of the Rehabilitation Act of 1973, which requires Federal contractors to take affirmative action to hire, retain, and promote qualified individuals with disabilities.  The proposed changes, if implemented, will substantially increase the obligations imposed on Federal contractors with respect to individuals with disabilities.

The OFCCP proposal includes the following requirements:

1. Contractors will need to annually survey their employees, providing an opportunity for each employee who is, or subsequently becomes, an individual with a disability to voluntarily self-identify in an anonymous manner.  In addition, contractors will be required to invite applicants to self-identify as individuals with disabilities at both the pre- and post-offer stages, using OFCCP mandated language.
2. Contractors will be required to document and maintain data on ratio of jobs filled to openings, ratio of applicants with disabilities to all applicants, total number of applicants hired, and ratio of individuals with disabilities hired to all hires.
3. Contractors will be required to engage in mandatory outreach/recruitment efforts that involve listing all employment opportunities (with limited exceptions) with the local employment delivery service, similar to the current obligations under the Vietnam Era Veterans' Readjustment Assistance Act.  Additional required outreach efforts will also be required, including entering into a minimum of three linkage agreements with specific types of outreach sources.  In addition, an annual review and documentation of these recruitment efforts will be required to determine effectiveness in identifying and recruiting qualified individuals with disabilities.
4. Contractors will be required to establish a utilization goal for individuals with disabilities and set hiring goals for each Job Group in the workforce.  OFCCP proposed a utilization goal of 7%.  However, OFCCP is inviting public comments on the use of a 7% goal and appears willing to consider a goal ranging between 4% and 10%.
5. Contractors will be required to implement written reasonable accommodation procedures and include the written procedures in their Affirmative Action Plans.
6. Contractors will be required to annually review and document their personnel processes, as well as physical and mental job qualifications, instead of doing so periodically.
7. Contractors will be obligated to retain outreach documentation and data collection for five years.

Comments on the proposed rule from interested parties may be submitted to the OFCCP on or before February 7, 2012.  OFCCP anticipates a final rule will be published around Fall of 2012.

As all public employers are aware, Section 72 of the New York Civil Service Law ("Section 72") provides both the procedure for placing a public employee on an involuntary leave when he or she is deemed unfit to perform his or her job due to illness or injury, and certain procedural protections to employees who are placed on such leave.  Specifically, any public employee who is placed on an involuntary leave is entitled to written notice of the reason for the proposed leave, the proposed date on which it is to begin, and his or her rights under the statute.  In addition, any such employee is entitled to a hearing concerning the employer's decision to place him or her on leave.

Historically, the protections of Section 72 have been applied only to employees who were placed on an involuntary leave from work.  However, a recent decision by the New York Court of Appeals extended those protections to public employees who are prevented by their employers from returning to work from a voluntary medical leave.

In Matter of Sheeran v. New York Dep't of Transp., 2011 N.Y. Slip Op. 8229 (Nov. 17, 2011), two state employees, who had been deemed unfit for duty and placed on involuntary leaves after attempting to return from voluntary medical leaves, challenged their placement on leave without a hearing under Section 72.  Their respective employers argued that 4 N.Y.C.R.R. Section 21.3, a Department of Civil Service regulation concerning sick leave, and the applicable collective bargaining agreements applied to these circumstances rather than Section 72, because the employees had been on voluntary medical leaves.  The Court of Appeals reversed the Appellate Division, Third Department's dismissal of the petitions, holding that there was no basis in Section 72 for making a distinction between an "employee who has been placed on involuntary leave from a voluntary one and one forced to take an involuntary leave."  In addition, the Court of Appeals noted that a different interpretation of Section 72 "would discourage employees from taking voluntary leave, since they would have greater rights if they remained on the job and waited to be involuntarily removed -- a result the Legislature surely did not intend."

As a result of this decision, public employers must be prepared to follow the procedural requirements of Section 72 any time they deem an employee unfit for duty, regardless of whether the employee was placed on an involuntary leave or was prevented from returning from a voluntary leave.

On January 4, 2012, President Obama announced his intent to make three recess appointments to the National Labor Relations Board (“NLRB”), restoring the quorum that the NLRB had lost a day earlier when Member Becker’s recess appointment expired. The three recess appointees are: (1) Sharon Block, a Democrat who is currently the Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor; (2) Richard Griffin, a Democrat who is currently General Counsel for the International Union of Operating Engineers; and (3) Terence Flynn, a Republican who is currently Chief Counsel to NLRB Member Hayes.

With these recess appointments, the NLRB will once again have a 3-2 Democratic majority. Accordingly, employers can continue to expect NLRB decisions and rule-making efforts that are intended to bolster union organizing efforts, similar to the recent proposed rules requiring employers to post a notice of employee rights under the National Labor Relations Act and amending union representation election procedures.

Republican Senators have complained that these recess appointments bypass the Constitutionally-mandated Senate confirmation process for Presidential nominees. According to a press release issued by Senator Mike Enzi (R-Wyo.), two of the three nominees were presented to the Senate on December 15, 2011, only one day before the Senate adjourned for the year, which provided the Senate with little time to consider and review the nominations.

Just in time for the Winter Solstice, the Occupational Safety and Health Administration ("OSHA") issued a press release on December 21, 2011, advising that the agency launched a web page devoted to hazards workers may face during winter storm response and recovery operations.

OSHA's new web page contains guidance on how employers and workers who are involved in cleanup and recovery operations can avoid injuries and illnesses related to snow storms and other weather conditions.  For example, OSHA offers advice on how to prepare a vehicle for the winter season, how to avoid back aches and heart attacks while shoveling snow, how to safely walk on ice, etc.  Industry-specific guidance on the new web page includes a section on utility workers' repair of downed or damaged power lines.

The web page also identifies several hazards that are associated with working in winter storms, including:  being struck by falling objects, such as icicles, tree limbs, and utility poles; driving accidents; carbon monoxide poisoning; dehydration, hypothermia, and frostbite; and falling while walking on slippery walkways.

The new web page also includes links to guidance from OSHA, the Federal Emergency Management Agency ("FEMA"), the American Red Cross, the National Weather Service, the National Oceanic and Atmospheric Administration, the Centers for Disease Control and Prevention, the National Safety Council, and other agencies and organizations.

The National Labor Relations Board ("Board") announced today that it has agreed to postpone the effective date of its rule requiring employers to post a notice of employee rights under the National Labor Relations Act until April 30, 2012.  This is the second postponement of the effective date of this rule, which was initially scheduled to take effect on November 14, 2011.  After lawsuits were filed against the Board in September challenging the Board's authority to implement the rule, the Board announced in October that it was postponing the effective date of the rule to January 31, 2012.  This most recent postponement to April 30, 2012 comes at the request of the U.S. District Court Judge who recently heard oral arguments with respect to one of those lawsuits.

As anticipated, the National Labor Relations Board ("Board") adopted a final rule amending the procedures applicable to union representation elections, just before losing its quorum when Member Becker's recess appointment expires at the end of this year.  Members Pearce and Becker approved the final rule without the endorsement of Member Hayes.  The final rule will be published in the Federal Register today (December 22, 2011), and will become effective on April 30, 2012.

The amendments to the union representation election procedures, which are summarized in a prior blog post regarding the November 30, 2011 Board resolution to proceed with the drafting of the final rule, are intended to shorten the time period between the filing of a representation petition and the election.

The U.S. Chamber of Commerce and the Coalition for a Democratic Workplace filed a lawsuit on December 20, 2011 in the U.S. District Court for the District of Columbia, challenging the Board's authority to adopt the final rule, and seeking an order enjoining the Board from enforcing the final rule.  We will keep you posted on any significant developments in that litigation.

Although the data for 2011 is not yet final, OSHA expects problems related to employees falling off scaffolds, roofs, ladders, and other high places to be the top violations cited in 2011.  In addition, the most frequently violated standard subsection is expected to be the rule covering residential construction (29 C.F.R. Section 1926.501(b)(13)).  Other top violations are expected to include:  hazard communication; respiratory protection; lockout/tagout; electrical, wiring methods; powered industrial trucks; electrical, general requirements; and machine guarding.

OSHA's data serves as a reminder to employers that falls are the leading cause of deaths among construction workers.  They account for approximately one-third of all construction fatalities.  Generally speaking, OSHA's fall protection standard requires that anyone working at heights of six feet or more be provided with fall protection.  OSHA does not necessarily mandate the type of fall protection that must be used in any given situation, but rather offers many methods to achieve compliance.  A combination of different fall protection measures are often appropriate.  Fall protection strategies may include some of the following measures:

• Fall prevention methods, such as the use of guardrails, warning lines, controlled access zones, hole covers, or safety monitoring systems;
• Fall arrest systems, including the use of safety nets or full-body harnesses;
• Fall protection plans, which are administrative controls that rely on special training and specific work practices and protocols; and
• Employee training, which focuses on identifying hazards and demonstrating proficiency in the use of fall protection systems.

As we head into 2012, we are reminded of the words of Dr. Carl Sagan:  "You have to know the past to understand the present."  Employers can certainly learn from this past OSHA data by reviewing the adequacy of their fall protection measures, so that they can avoid potential OSHA violations in the future.

On Wednesday, November 30, 2011, the three-member National Labor Relations Board ("Board") approved a resolution by a 2 to 1 vote to move forward on a narrowed version of the rule on "quickie" union representation elections proposed in June.

The resolution authorizes the Board to prepare a final rule to be published in the Federal Register containing six elements that were found in the originally proposed rule.  The goal of the scaled down proposal is to decrease the delays that Board Members Pearce and Becker have argued are impediments to unions winning representation elections.  The six elements of the final rule would eliminate pre-election litigation and appeals over a number of issues.  The six amendments to the existing representation election process are summarized below:

• The first amendment would limit the issues that may be raised at a pre-election representation hearing only to those issues that are relevant to whether a question of representation exists that should be resolved by an election.  In other words, issues pertinent to the scope of the proposed bargaining unit, the supervisory status of certain individuals, and other issues that do not affect whether or not a representation election should be held would only be permitted to be raised after the election.
• The second amendment would give the hearing officer at a pre-election representation hearing the discretion to determine whether or not post-hearing briefs may be filed.
• The third amendment would eliminate the right to seek Board review of a Regional Director's pre-election rulings prior to the election, leaving only the possibility of a post-election review of any such rulings that have not been rendered moot by the election.
• Because pre-election requests for review to the Board would be eliminated, the fourth amendment would end the practice of delaying the scheduling of a representation election for purposes of giving the Board the opportunity to rule on requests for review.
• The fifth amendment would clarify the standard for seeking special permission to appeal to the Board.
• The sixth amendment would give the Board full discretion to determine whether or not it will consider requests for review of a Regional Director's or Administrative Law Judge's disposition of post-election objections to the election.

These proposed amendments, while not as broad as those originally proposed in June, will nevertheless have the effect of speeding up the election process.  This will have a significant impact on the manner in which employers react to the filing of a representation petition.

At this point, the Board will draft the language of the final rule, which must then be approved by a majority of the Board.  The Board currently has a quorum of three members, but will be down to two members when Member Becker's recess appointment expires at the end of this year.  It is clear that Members Pearce and Becker will do everything they can to get the final rule drafted and approved before the Board loses its quorum.

Recent complaints filed by the Office of Federal Contract Compliance Programs ("OFCCP") and the Equal Employment Opportunity Commission ("EEOC") against employers suggest that those federal agencies are aggressively pursuing allegations of discriminatory hiring practices.

On November 29, the OFCCP filed an administrative complaint against Cargill Meat Solutions, a federal contractor, alleging that the company violated Executive Order 11246, by favoring Asian and Pacific Islander applicants over applicants of other races and by favoring male applicants over female applicants.  In the complaint, the OFCCP alleges that over 4,000 qualified applicants were unlawfully rejected based only on their race or sex.  Significantly, the OFCCP seeks cancellation of the company's government contracts worth more than $550 million.

In the last several months, the EEOC has also filed two high-profile lawsuits against employers for alleged discriminatory hiring practices.  In September, the EEOC filed a lawsuit against Bass Pro Shops in the U.S. District Court, District of Massachusetts, alleging that the company engaged in a pattern or practice of failing to hire African-American and Hispanic applicants.  In the lawsuit, the EEOC alleges that managers made overt racist comments acknowledging the company's discriminatory hiring practices, and stated that African-American applicants did not fit their corporate profile.

In October, the EEOC filed a lawsuit against Texas Roadhouse in the U.S. District Court, Southern District of Texas, alleging that the company systematically failed to hire individuals over 40 years of age for "front of the house" positions.  In the lawsuit, the EEOC alleges that only 1.9% of the "front of the house" employees are over 40 years of age (which the EEOC believes is a statistically significant disparity when compared to the general population, industry statistics, and the applicant pool) and that the company instructed managers to hire younger employees by emphasizing youth in its hiring training.

At this point, these enforcement actions by the OFCCP and EEOC have not resulted in any final determinations or judgments.  Nevertheless, these enforcement actions serve as a useful reminder for employers of all sizes to continually monitor their hiring practices and periodically train managers who have hiring responsibilities to ensure compliance with federal, state, and local laws.

Section 2715 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (“PPACA”), mandates that group health plans provide a summary of benefits and coverage (“SBC”) to all participants and beneficiaries. The SBC is a brief description intended to provide a consistent and accurate description of benefits and coverage so that participants can easily compare different plans. On August 22, 2011, the Departments of Labor (“DOL”), Health and Human Services (“HHS”), and Treasury (“IRS”) (collectively, the “Departments”) issued proposed regulations to implement the SBC requirement, along with a proposed SBC template, instructions, and a uniform glossary of key terms.

The PPACA states that plans will be required to furnish SBCs beginning March 23, 2012. However, the Departments stated in their seventh set of PPACA frequently asked questions (“FAQs”) that plans are not required to comply with the SBC requirement until final regulations are issued. The FAQs also provided assurances that the effective date of the final regulations will afford sufficient time to comply with the SBC requirements.

Furnishing the SBC

All group health plans must provide SBCs, including insured, self-insured, and grandfathered plans. The plan sponsor or administrator (or third-party administrator) must provide the SBC for self-insured plans, and the insurer or plan administrator must provide it for insured plans. The SBCs must generally be provided without charge in connection with initial eligibility, renewal, HIPAA special enrollment, and upon request. The SBC is a stand-alone document in addition to ERISA’s other disclosure requirements. However, the Departments are soliciting comments on how the SBC can be coordinated with other disclosures (for example, open-enrollment materials), and whether the SBC should be provided within a summary plan description.

SBC Contents and Appearance

The SBC must include:

• Uniform definitions of standard insurance and medical terms;
• A coverage description, including cost sharing;
• Exceptions, reductions, and limitations on coverage;
• Cost-sharing provisions, including deductible, coinsurance, and copayment obligations;
• Renewability and continuation of coverage provisions;
• A “coverage facts label” that includes examples of common benefits scenarios;
• For coverage on or after January 1, 2014, a statement of whether the plan provides “minimum essential coverage” and meets the “minimum value requirements”;
• A statement that the SBC is only a summary and that the plan document, policy, or certificate should be consulted for further information about coverage;
• A contact number for consumers to call with questions, and a web address for obtaining a copy of the plan document or policy;
• A web address for obtaining a list of network providers (for plans maintaining one or more provider networks);
• A web address for obtaining more information about any prescription drug formulary; and
• Information on premiums for insured plans, or cost of coverage for self-insured plans.

The SBC must be presented in a uniform format, contain terminology the average plan participant can understand, be no more than 4 double-sided pages (i.e., 8 pages), and be printed in at least 12-point font. The SBC must also be presented in a culturally and linguistically appropriate manner. In counties where at least 10% of the population is only literate in the same non-English language, (1) plans must provide interpretive services and written SBC translations upon request in the relevant non-English language, and (2) an English version of the SBC must disclose that language services are available in the relevant non-English language. This rule is similar to the PPACA notice requirements for claims and appeals procedures.  

The SBC may be transmitted in paper or electronic form. If electronic, plans subject to ERISA and the Internal Revenue Code must meet the DOL’s electronic disclosure requirements.

Notice of Material Modifications

Plans must provide notice to enrollees of midyear material modifications to SBC content at least 60 days before the effective date. The notice rule is inapplicable to modifications made during coverage renewal or reissuance. The requirement may be satisfied either by providing a separate notice describing the modification or an updated SBC. A timely SBC also satisfies ERISA’s summary of material modifications (“SMM”) requirement. For both the SBC and SMM requirements, “material modification” means any coverage modification that, independently or in conjunction with other contemporaneous modifications, an average plan participant would consider an important change in coverage. The change could be a coverage enhancement or reduction. Without a timely SBC, an SMM must be provided no later than 210 days after the close of the plan year in which the modification was adopted, or, if it is a material reduction in covered services or benefits, no later than 60 days after the date on which the modification was adopted. 

Uniform Glossary

The plan must make a “Uniform Glossary” of insurance and medical terms available to participants and beneficiaries within seven days of their request. The SBC template and instructions on the DOL’s website contain all required definitions. A request may be satisfied by providing an internet address where participants can review the glossary, including the plan sponsor’s, HHS’s, or the DOL’s website. A paper copy, however, must also be made available upon request.

Recommended Action

Despite the effective date uncertainty, final regulations will probably be issued in the near future. Therefore, plan administrators and sponsors should begin working with their providers and third-party administrators to compile the information needed to meet the SBC requirements.

In a little-recognized effort to generate “mandate relief” associated with its recently-enacted “Tax Cap,” the New York Legislature amended General Municipal Law (“GML”) § 72-c to enable more municipalities to recover expenses related to the initial training of their police and peace officers in the event that such officers decide to transfer to another municipality within their first three years of service.

Historically, GML § 72-c permitted only municipalities with populations of “ten thousand or less” to seek reimbursement for expenses incurred in the training of members of its police force who commenced employment with another municipality’s police force within three years of graduating from the police training program.  Because police training is funded by municipal tax dollars, GML § 72-c originally served to protect small municipalities against the debilitating financial losses associated with the departure of their newly-hired and trained police officers for larger, more lucrative and/or more desirable jobs. Without the protections of GML § 72-c, these small municipalities would never see the benefit of the costly training they had provided to the departing officers.

In light of the ongoing financial hardships currently faced by all municipalities across New York, effective June 24, 2011, the Legislature eliminated the requirement from GML § 72-c that the municipality which provided the police training “hav[e] a population of ten thousand or less” to be eligible to seek reimbursement.  According to the legislation, if a police or peace officer commences employment with another police department within three years of graduating from police training, any municipality, regardless of size, can recover training expenses from the officer’s new employer.  The amount that a municipality may recover includes: “… salary, tuition, enrollment fees, books, and the cost of transportation to and from training school ….” The formula for calculating the recoverable amount reimburses the prior municipal employer on a pro rata basis. Simply put, the new municipal employer must pay the officer’s prior municipal employer the per diem cost of training expenses for each day from the officer’s last day of service with the original employer until he/she would have worked for three years.

GML § 72-c, as amended, will provide many municipalities – especially those with large police departments that have historically served as “feeder” organizations for other police departments around the State – with a new means of recovering some of the lost costs it once incurred. In these turbulent economic times, these recovered costs could help financially-strapped municipal budgets. Whether it actually provides significant “mandate relief” for municipalities, or it simply results in new forms of litigation, is yet to be determined.

Last week, the Second Circuit Court of Appeals affirmed a Southern District of New York decision denying IBM Corporation's application for a preliminary injunction to enforce a broad non-competition agreement and to prevent a former high-level executive from working for Hewlett-Packard.  The case illustrates the high standard under New York law to obtain preliminary injunctions to enforce non-competition agreements.

The case involved Giovanni Visentin, who worked for IBM in numerous roles during his 26 years of employment.  His most recent position was General Manager of IBM's Integrated Technology Services ("ITS") business.  In that position, he was responsible for the development and sale of ITS products and services throughout North America.  In January of 2011, Mr. Visentin submitted his resignation from IBM to accept a position with Hewlett-Packard in the position of Senior Vice President, General Manager, Americas for Hewlett-Packard Enterprise Services.

Mr. Visentin had signed a non-competition agreement during his employment with IBM, which, on its face, seemed to preclude Mr. Visentin from working in his new position at Hewlett-Packard.  The non-competition agreement provided that Mr. Visentin would not, during his employment and for a period of 12 months following the termination of his employment, become employed by any competitor of IBM in any geographic area in the world for which Mr. Visentin had job responsibilities during his last 12 months of employment with IBM.  Clearly, Hewlett-Packard is one of IBM's principal competitors.  However, the Southern District of New York held that the non-competition agreement was overly broad and refused to grant the preliminary injunction requested by IBM.

The Court reiterated the standard under New York law that "properly scoped non-competition agreements are enforceable to protect an employer's legitimate interests so long as they pose no undue hardship on the employee and do not militate against public policy."  The Court also recognized that the protection of confidential information and trade secrets are legitimate interests of an employer in enforcing a non-competition agreement.  The Court found, however, that the evidence did not support IBM's contention that any of its confidential information or trade secrets would be in jeopardy as a result of Mr. Visentin's employment with Hewlett-Packard.

The evidence indicated that Hewlett-Packard took steps to fence Mr. Visentin off from his former IBM clients and to avoid any overlap in responsibilities between his position with IBM and his new position with Hewlett-Packard.  The new position was structured so that it was different from his IBM position in terms of subject area, geographic scope, and level of responsibility.  For example, Hewlett-Packard narrowed Mr. Visentin's responsibilities during his first 12 months of employment (i.e., the length of the non-competition agreement) to include primarily segments of Hewlett-Packard's business for which he did not have responsibility during his employment at IBM.  In the few segments for which Mr. Visentin did have responsibility during his employment at IBM, Hewlett-Packard made sure that Mr. Visentin worked only with existing Hewlett-Packard clients.  In the geographic regions where Mr. Visentin had no responsibility during the last year of his employment with IBM, Mr. Visentin was responsible for Hewlett-Packard's full range of products and services for all existing and potential clients.

Based on all of these factors, the Court concluded that IBM had not satisfied its burden of demonstrating that any of its confidential information or trade secrets would be disclosed or relied upon by Mr. Visentin as a result of his new position at Hewlett-Packard, and refused to grant the application for a preliminary injunction.

For an employer seeking to hire a new employee who may have signed a non-competition agreement with a former employer, this case can serve as a blueprint of the steps that the employer can take to minimize the risk that the non-competition agreement will be enforced.