If enacted, President Obama’s proposed American Jobs Act would ban employers with 15 or more employees from discriminating against the unemployed by making it illegal to categorically exclude applicants who are out of work. The impetus for this provision appears to be an increase in job advertisements that explicitly exclude the jobless, using statements such as “must be currently employed.” The bill would not only ban these types of advertisements, but also enable applicants who believe they were not hired because they are unemployed to sue the prospective employer.

The proposed legislation has caused debate over whether it makes sense to exclude an applicant solely because he or she is unemployed given the current economic environment. When U.S. unemployment rates were low, particularly in the late 1990’s, an applicant’s long stint of unemployment was usually a red flag. The assumption was that an individual who could not find and maintain employment when employment was plentiful must have undesirable qualities. In current economic conditions that assumption may be invalid because many qualified applicants are out of work for extended periods through no fault of their own.

Earlier this year, the Equal Employment Opportunity Commission weighed in on the issue, which it described as an “emerging practice,” by holding public hearings on the practice of employers excluding unemployed applicants. At the hearings, employee advocates contended the practice could be illegal already under existing anti-discrimination laws because it could have a disparate impact on minority groups, whose unemployment rate is significantly higher than whites, on older Americans, who have remained out of work longer than young employees in the current recession, as well as on women and the disabled, who also tend to have higher rates of unemployment.
 

Yesterday, the NLRB announced that it is postponing the implementation date of the workplace notice rule that was issued on August 30, 2011. As we previously reported, that rule requires private sector employers to post a notice advising employees of their right to join a union and of their other rights under the National Labor Relations Act. Employers subject to the rule were required to post the notice by November 14, 2011. The implementation date has now been moved back more than two months. Employers are not required to post the notice until January 31, 2012.  The NLRB’s stated reason for the extension is to “allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses.”

Late last year, we posted on the passage of New York’s Wage Theft Prevention Act (WTPA), noting that the Act changed the penalties for violating the New York Labor Law’s prohibition on failure to pay wages. Specifically, the Act increased the liquidated damages penalty for failure to pay wages from 25% of the wages found to be due, to 100% of the wages found to be due. In addition, the WTPA requires an award of those liquidated damages, unless the employer proves it had a good faith basis to believe the underpayment of wages complied with the law, making an award of liquidated damages more likely.

Now, a New York trial court has determined that this liquidated damages provision applies retroactively to claims arising before the Act’s April 9, 2011 effective date. The case involves, among other claims, an alleged failure to pay overtime. The plaintiffs moved to amend their complaint to add the remedies created by the WTPA. In its decision granting the motion, the Court noted that under New York law a remedial statute is applied retroactively unless it impairs vested rights or creates new rights. The parties agreed the WTPA is a remedial statute, and the court concluded that it does not impair vested rights or create new rights. It just changes the penalty imposed with respect to a violation of rights already existing in the Labor Law. As a result of the decision, claims for failure to pay wages which go back several years (the statute of limitations on unpaid wage claims is six years) will be subject to the heightened WTPA penalties.
 

In an important victory for defendants, U.S. District Judge Lawrence McKenna of the Southern District of New York recently issued a decision limiting the attorneys' fees awarded to prevailing plaintiffs to the percentage of the recovery stated in the plaintiffs' retainer agreements with their lawyers, Vysovsky v. Glassman. Ordinarily, when a plaintiff wins a case under a statute that permits an award of attorneys' fees, the court will determine the amount of the fee by multiplying the hourly rate charged by lawyers of similar experience in that field (the “lodestar” rate) by the number of hours proven to have been devoted to the successful claims in the case. The result is a "presumptively reasonable" fee. In Vysovsky, the plaintiffs' lawyers submitted affidavits showing that by this method the defendants would owe them $366,716 - a sum far in excess of the $143,203 awarded by the jury to the eight successful plaintiffs in the case.

Judge McKenna refused to use this method. He granted the defendants' demand that the plaintiffs produce copies of their retainer agreements, and agreed with the defendants that the plaintiffs' lawyers should be limited to the percentage fee in those agreements. This resulted in a total attorneys' fee award of $55,885. Instead of the $350 per hour they requested, the plaintiffs' lawyers ended up with approximately $53 per hour.
 

It seems like common sense that an attorneys' fee award should be limited by the amount set in the attorney’s retainer agreement with the client. However, it is rare to find reported cases decided that way, because defendants rarely demand copies of retainer agreements in discovery, and because judges are so accustomed to using the "lodestar" method they are reluctant to award attorneys' fees in any other way.

The result in Vysovsky, though unusual, is in perfect accord with the policies underlying the "lodestar" method. The statutes that permit attorneys' fees awards provide that the plaintiff should be reimbursed for "reasonable" fees. If a lawyer writes a fee into his own retainer agreement, it should be considered presumptively reasonable. The "lodestar" method is intended to replicate the rate that the free market would award, but there is no better measure of the free market rate than the retainer agreement that was freely negotiated in that very market.

When a court awards attorneys' fees higher than those provided for in the retainer agreement, the plaintiff's lawyers end up with a premium for taking the case to trial instead of settling. This disincentive to settle increases the cost of justice for everyone -- except for the lucky plaintiffs' lawyers. By holding plaintiffs' lawyers to the fees in their retainer agreements, the courts can insure that no lawyer will have an incentive to turn down a reasonable settlement and instead go to trial in the hope of earning an inflated fee.
 

On September 9, 2011, OSHA announced that it has begun its 2011 Site-Specific Targeting (“SST”) Program, a targeted enforcement effort under which it will conduct comprehensive inspections of worksites across the country. OSHA will select worksites for inspection based on injury and illness data for 2009 collected by OSHA in 2010.

In April 2011, OSHA selected about 14,600 worksites that may receive SST inspections based upon their injury rates, and sent each of these worksites a letter informing them of a possible future inspection.  From that initial list, OSHA designated approximately 3,700 worksites as “primary” inspection targets, and directed OSHA Area Offices to inspect those sites first. Although the list of approximately 3,700 worksites has not been published by OSHA, it is possible for an employer to determine whether it is on the list by following these steps:
 

1.     Calculate your DART and DAFWII rates.

Days Away, Restricted, or Transferred (DART) rate:
The DART rate accounts for injury and illness cases involving days away from work, restricted work activity, or transfers to another position (the total of columns H and I on the OSHA-300 log).
DART rate = 200,000 * (# of DART injuries) / (Total # of hours worked by all employees for calendar year).

Days Away From Work Injury and Illness (DAFWII) rate:
The DAFWII rate accounts for injury and illness cases involving only days away from work (column H on the OSHA-300 log).
DAFWII rate = 200,000 * (# of DAFWII injuries) / (Total # of hours worked by all employees for calendar year).

2.     Compare your DART rate AND your DAFWII rates to the criteria below to determine if your site is a primary inspection site.

Manufacturing establishments with a DART rate greater than or equal to 7.0, or a DAFWII rate greater than or equal to 5.0, are primary inspection sites. There are approximately 3,000 manufacturing primary inspection sites.

Non-manufacturing establishments (except for Nursing and Personal Care Facilities) with a DART rate greater than or equal to 15.0, or a DAFWII rate greater than or equal to 14.0, are primary inspection sites. There are approximately 400 non-manufacturing primary inspection sites.

Nursing and personal care facilities with a DART rate greater than or equal to 16.0, or a DAFWII case rate greater than or equal to 13.0, are primary inspection sites. There are approximately 300 nursing and personal care facility primary inspection sites.

Even if your site is not one of the 3,700 primary inspection sites, you may still be selected for an SST inspection if your facility is on the list of 14,600. Once all primary inspection sites in an area have been inspected, OSHA will inspect secondary inspection sites as follows:

Manufacturing establishments with a DART rate of 5.0 or more but less than 7.0, or a DAFWII case rate of 4.0 or more but less than 5.0, are secondary inspection sites.

Non-manufacturing establishments with a DART rate of 5.0 or more but less than 15.0, or a DAFWII case rate of 4.0 or more but less than 14.0, are secondary inspection sites. (Note that this is more inclusive than last year’s list, which would inspect facilities with DART rates of 7-15, and DAFWII rates of 5-14).

Nursing and personal care establishments with a DART rate of 13.0 or more but less than 16.0, or a DAFWII case rate of 11.0 or more but less than 13.0, are secondary inspection sites. 
 

In its third significant case in a matter of days, the National Labor Relations Board overruled longstanding precedent and changed the standard for determining what constitutes an appropriate unit for bargaining in non-acute health care facilities. The Board’s decision in Specialty Healthcare and Rehabilitation Center of Mobile, overrules Park Manor Care Center, a decision which stood for 20 years. In Park Manor, the NLRB applied a “pragmatic or empirical community-of-interest” standard for non-acute health care facilities, including nursing homes and rehabilitation centers, which encouraged larger bargaining units to avoid burdening health care facilities with many smaller units which could be represented by multiple unions. Larger units are also generally more difficult for unions to organize.

In Specialty Healthcare, the union petitioned to be certified as the bargaining agent for 53 CNAs. The employer argued that the group of CNAs was not an appropriate unit by themselves, and under Park Manor, the only appropriate unit was one which included all nonprofessional service and maintenance employees. The Board rejected the employer’s argument, finding that the pragmatic community-of-interest approach announced in Park Manor was obsolete, and that the traditional “community-of-interest” unit determination standard must be applied to non-acute health care facilities. Under the traditional community-of-interest standard, the Board considers whether the relevant groups of employees: 

1. are organized into separate departments; 
2. have distinct skills and training; 
3. have distinct job functions and perform distinct work; 
4. are functionally integrated; 
5. have frequent contact with each other;
6. are interchanged with each other; 
7.  have distinct terms and conditions of employment; and 
8. are separately supervised.

The Board went on to hold that if an employer asserts that a group of employees must be included in the petitioned-for a unit, the employer has the burden to show that there is an overwhelming community-of-interest that would justify enlarging the petitioned-for unit.

The implications of the decision are significant because unions will now be able to isolate particular job classifications and organize facilities on a piecemeal basis, increasing the likelihood of a successful organizing campaign and reducing the amount of resources necessary to successfully organize. The case also increases the probability that multiple units with different unions will be certified in a single facility.
 

The National Labor Relations Board has had a busy few weeks. As we noted in late August, the NLRB approved a Final Rule requiring employers to post a notice of employees’ rights under the National Labor Relations Act. The Board also issued two significant decisions which will help protect unions from challenges to their majority status.

The first case, Lamons Gasket Co., overturns Dana Corp., a 2007 decision holding that when an employer voluntarily recognizes a union based on a showing of majority support, the employer has to post a notice of employees’ rights to petition for an election and challenge the union. Upon posting and a 30% showing, employees could then file a decertification petition within 45 days.

Chairwoman Liebman had made it clear that given the chance, Dana Corp. would be reversed. The opportunity presented itself in Lamons Gasket, where a Board majority simply overruled Dana Corp. Accordingly, the majority status of a union recognized voluntary by an employer may not be challenged by employees for a “reasonable period of time.” The Board defined a “reasonable period of time,” by adopting the definition used in Lee Lumber & Building Material Corp.; not less than six months, but no more than one year.
 

At the same time it decided Lamons Gasket, the Board decided UGL-UNICCO Service Company, which addresses whether an incumbent union should enjoy a period of time insulated from challenge to its majority status where there has been a change in employers due to a merger or acquisition. A long line of Board cases have gone back and forth on this issue.
In general, where there is a change in a unionized corporate entity due to a merger or acquisition, a successor employer that hires a majority of the bargaining unit employees must recognize and bargain with the incumbent union. However, the successor employer has no obligation to adopt the predecessor’s collective bargaining agreement, and may unilaterally set its own initial terms and conditions of employment while bargaining.

Moreover, ever since the NLRB’s decision in MV Transportation, an incumbent union enjoyed only a rebuttable presumption of majority status. The union was presumed to have maintained support of a majority of the bargaining unit employees. However, upon a showing that the union had lost such support, an employer could unilaterally withdraw recognition or a petition for election could be filed by employees or a rival union.

UGL-UNICCO Service overrules MV Transportation, and holds that following a change in corporate entity, an incumbent union’s majority support may not be challenged at all for a “reasonable period of time.” The Board went on to hold that a “reasonable period of time” depends on whether the successor unilaterally sets initial terms and conditions of employment. If the successor adopts the collective bargaining agreement in effect between the predecessor employer and incumbent union, the union may not be challenged for six months, beginning from the time of the first bargaining session. Where, however, the successor unilaterally sets its own initial terms and conditions of employment, the reasonable period of time will be a minimum of six months and a maximum of one year.
 

On September 8, 2011, the Occupational Safety and Health Administration (OSHA) issued its first ever Compliance Directive to address workplace violence. In the past, OSHA had issued citations to employers for exposing their employees to workplace violence -- until Administrative Law Judge Nancy Spies issued her decision in the Megawest Financial case in 1995. In that case, OSHA attempted to use the General Duty Clause of the Occupational Safety and Health Act—which imposes a duty upon employers to keep their workplaces free of “recognized hazards”—to argue that because there had been earlier attacks on employees by tenants of an apartment complex, the employer was liable when employees were again attacked by tenants. Judge Spies rejected that argument, finding the Act was not intended to “police social behavior” and that employers may reasonably believe “that the institution to which society has traditionally relegated control of violent criminal conduct, i.e., the police, can appropriately handle the [violent criminal] conduct.” Since then, OSHA has issued few workplace violence citations.

Judge Spies is now retired, and OSHA is taking another bite at the apple. OSHA’s new directive contains a laundry list of recommendations for “all industries and administrative workplaces.” These include conducting a workplace violence hazard analysis, revising the physical plan of the workplace, training employees, and implementing “engineering controls” that may even include hiring a security consultant.

Employers are required to keep their workplace free of “recognized hazards,” but inherent in that requirement is the assumption that employers can control the condition for which it may be cited. For this reason, OSHA’s attempt to hold employers liable for violent, criminal acts of third parties—who are beyond the control of employers—is troubling.
 

The major concessions agreed to by CSEA in negotiations with New York State have been well publicized. The details of the 5-year deal include a wage freeze for the first three years, 2% increases in each of the last two years and immediate increases in employee contributions toward the cost of health insurance. The deal, which covers 66,000 State employees, will save New York $73 million in the first year alone. In turn, CSEA obtained a no-layoff pledge from Governor Cuomo for the first two years of the contract. Governor Cuomo had been threatening to layoff nearly 10,000 State employees if a contract could not be reached. Will other unions follow CSEA’s lead and accept this kind of deal?

Rick Karlin has an interesting article in the Albany Times-Union addressing this issue.  According to the article, when asked about the odds of such a deal repeating itself at the local level, a CSEA spokesperson responded “If history is any precedent, zero.” But other reasonable unions may be getting the picture. The Syracuse Post-Standard reports that City of Syracuse firefighters ratified a two-year deal that includes two zero’s, along with increased contributions by the firefighters toward health insurance. In the most recent interest arbitration decision in New York, Oswego firefighters were awarded a 0% wage increase in the first year and 2% in the second year.

With a local, public sector workforce in New York that is five times the size of the State workforce, local union contracts that contain at least some of the State CSEA concessions will result in significant cost-savings for local governments. In light of the impending 2% property tax cap, this could be critically important to the fiscal health of local governments.
 

In an earlier post, we reported that the National Labor Relations Board issued a complaint in a case involving the discharge of several employees for posting Facebook messages related to a co-worker’s criticism of their work performance. The case subsequently went to trial before an Administrative Law Judge. On September 2, the ALJ issued an opinion finding that the firings violated the NLRA by interfering with the employees’ right to engage in “concerted activity for the purpose of … mutual aid or protection.”

The Facebook postings occurred after one of the discharged employees learned that a co-worker had complained about the job performance of several employees and had expressed her intent to take the complaints to management. The employee who learned of the criticism posted a message on her Facebook page soliciting comments from other employees about the complaining co-worker’s criticism, and used the co-worker’s name. Predictably, several employees responded expressing various negative opinions about the criticism, the complaining co-worker, and the difficulty of various aspects of their jobs. None of the employees made the posts during work time, and none of them used a work computer. The employer’s Executive Director subsequently met with the five employees and fired all of them for harassment and bullying in violation of the employer’s anti-harassment policy.
 

The main issue in the case was whether the conduct in which the employees had engaged was protected concerted activity within the meaning of the NLRA. Relying on analogous NLRB precedent, the ALJ noted that expressions related to defense of job performance are protected activity. In response to the employer’s argument that the activity was not “concerted” because it was individualized, the ALJ concluded that the activity was concerted because the employees’ Facebook messages were the first step toward group action to defend themselves against accusations they could reasonably believe would be brought to management. The opinion states that: “Employees have a protected right to discuss matters affecting their employment amongst themselves. Explicit or implicit criticism by a co-worker of the manner in which they are performing their jobs is a subject about which employee discussion is protected by Section 7. That is particularly true in this case, where at least some of the discriminatees had an expectation that [the complaining co-worker] might take her criticisms to management.”

Finally, the ALJ rejected the employer’s argument that it was merely enforcing its anti-harassment policy. The Judge concluded that the policy, which prohibited harassment based on protected characteristics, was not violated because there was no evidence the complaining co-worker was harassed, and no evidence she was harassed based on one of the protected characteristics listed in the policy.
 

The U.S. Department of Labor, Office of Federal Contract Compliance Programs (“OFCCP”) recently issued a proposal to revise the Scheduling Letter and itemized listing of documents which federal contractors are required to submit during an affirmative action compliance audit.  The OFCCP’s current Scheduling Letter and itemized listing will expire on September 30, 2011.

The OFCCP is seeking to both add new requirements and make changes to existing data requests. The proposed modifications include:

1. Adding two new items which require submission of employment policies covering the FMLA, pregnancy leave, and accommodations for religious observances and practices and also submission of the last three years of contractors’ Veterans’ Employment Reports (VETS-100 and/or VETS-100A).
2. Clarification of information requested in connection with collective bargaining agreements and information on reporting requirements for the preceding year.
3. Changes to current employment activity requests to require submission of more detailed demographic information related to hires, applicants, promotions and terminations, as well as requiring data submissions by job group and job title, instead of by job group or job title. In addition, the proposals would require more detailed demographic information on compensation by submitting aggregate data as opposed to disaggregate data.
    

 

OFCCP ’s Director, Patricia Shiu, stated in a webchat held on July 12, 2011 that the OFCCP will review the “few comments received” and “will make a determination regarding the letter and the itemized listing in the very near future.” She further stated “our goal is to complete our consideration of the comments, any revisions needed, and return the document with any appropriate revisions to OMB by no later than the end of July.” Shiu added that the OFCCP will follow Office of Information and Regulatory Affairs protocol and will provide a second public comment period prior to issuing a final Scheduling Letter and itemized listing. Although the current Scheduling Letter and listing are set to expire September 30, 2011, Shiu stated “we do not anticipate that an emergency extension will be needed.”

The second comment period regarding the OFCCP’s proposed Scheduling Letter changes has not been announced. However, it appears fairly certain that Scheduling Letter changes will be enacted for audits conducted after September 30, 2011.
 

As described in a September 2010 post, the Patient Protection and Affordable Care Act of 2010 (the "Act") generally prohibits all group health plans and health insurance issuers (including grandfathered plans) from imposing annual or lifetime dollar limits with respect to certain "essential health benefits" (as defined in Section 1302(b) of the Act) for plan years beginning on or after September 23, 2010. For plan years beginning prior to January 1, 2014, however, plan sponsors may apply certain "restricted annual limits" ("RAL") in accordance with the interim final regulations, issued jointly by the Internal Revenue Service, the Department of Labor, and the Department of Health and Human Services ("HHS") on June 28, 2010.

The RALs are intended to provide transitional relief to certain group health plans and health insurance issuers that currently impose annual limits on essential health benefits. However, in recognition of the difficulties that the annual limit requirements would create for existing limited benefit plans, or "mini-med" plans (e.g., a temporary health insurance plan with a $10,000 annual limit on essential health benefits), the Act authorized HHS to establish an annual limit waiver program for eligible plans or policy issuers. The waiver program is described in the June 28, 2010 interim final regulations ("IFR").

On September 3, November 5, and December 9, 2010, HHS's Center for Consumer Information and Insurance Oversight ("CCIIO") issued guidance, which explains the requirements for the annual limit waiver application process. Waivers previously granted in accordance with that guidance are valid for one year.
 

September 22 Deadline: On June 17, 2011, the CCIIO issued supplemental guidance which includes procedures for obtaining an extension of existing waivers, and revisions to the application process for new applicants. Additionally, the supplemental guidance requires plans or policy issuers to provide eligible participants and policy subscribers with an "Annual Notice," provide HHS with an annual update, and retain waiver-related records in case of an HHS audit, as described below. Significantly, HHS announced that all waiver extension requests and new applications for waivers must be received on or before September 22, 2011. New application and extension request forms are available on the CCIIO's website. Plans or policy issuers that do not receive approval for an extension or waiver will be required to come into compliance with the annual limit rules under the Act and the IFR.

Extensions for Plans or Policy Issuers with Existing Waivers: Plans and policy issuers that wish to extend existing waivers (i.e., those received for the plan or policy year beginning on or after September 23, 2010, but before September 23, 2011) must request a waiver extension by submitting the extension request form described above. The request should include updated contact information, enrollment information for the plan or policy, the plan's or policy's current annual limit, and a signed attestation that the plan or policy continues to satisfy the eligibility criteria for obtaining a waiver. Once the initial waiver extension is granted, plans or policy issuers must submit the same information at the end of each applicable calendar year (i.e., December 31, 2012 and December 31, 2013).

Existing waivers may be extended until January 1, 2014, so long as the plan or policy issuer: (1) provides the information described above by the end of each calendar year for which the extension applies; and (2) retains all records pertaining to the waiver application in the event of an HHS audit (see discussion below).

For New Waiver Applicants: Under the supplemental guidance, a plan or policy-issuer is eligible to apply for a new waiver if: (1) the plan or policy was issued prior to September 23, 2010; (2) the plan or policy issuer (with respect to the policy) has never applied for or been granted a waiver; and (3) the plan or policy coverage does not exceed the RAL amount for the applicable plan year (see footnote 1). New applications will be reviewed using factors listed in the CCIIO's November 5, 2010 guidance. Applicants may also submit optional supplemental information to demonstrate how the plan's or policy issuer's compliance with the IFR (in the absence of a waiver) would result in a "significant decrease in access to benefits" or a "significant increase in premiums."

Annual Notice Requirement: Under the CCIIO's December 9, 2010 guidance, plans or policy issuers with existing annual limit waivers must provide an "Annual Notice" informing all eligible participants and subscribers that the plan or policy does not satisfy the minimum restricted annual limits for essential health benefits and has received a waiver of the requirement. Mandatory language for the Annual Notice is provided in the June 17, 2011 supplemental guidance. Plans or policy issuers may not use other notice language to satisfy this requirement, unless the plan or issuer obtains permission from the CCIIO. The Annual Notice must be provided each year the annual limit requirements are waived, and must be provided conspicuously, in bold 14-point font, on the front of plan or policy materials that describe the plan's or policy's terms of coverage (e.g., summary plan descriptions).

Record Retention: Plans or policy issuers with existing waivers must retain all waiver-related records (including documentation used in supporting the plan's or issuer's original waiver application). If, during audit, HHS determines the waiver data provided by an applicant contains material mistakes or omissions, HHS may withdraw the waiver or extension, and require the plan or policy issuer to come into compliance with the annual limit rules under the Act and IFR.

ACTION REQUIRED: Plans or policy issuers seeking to extend existing waivers or to apply for new waivers should prepare (or have prepared) extension requests or new applications in accordance with the requirements and procedures contained in the CCIIO's June 17, 2011 supplemental guidance, for submission on or before September 22, 2011.

Plans or policy-issuers that have been granted a waiver or extension should review the revised compliance requirements described in the supplemental guidance, which include providing an annual update to HHS, providing an Annual Notice to all eligible participants and policy subscribers, and retaining all waiver-related records to avoid issues that could arise in an HHS audit.