The Departments of Health and Human Services (“HHS”), Labor (“DOL”), and Treasury (“IRS”) recently issued additional guidance regarding the implementation of certain Patient Protection and Affordable Care Act of 2010 (“PPACA”) requirements, including: the rapidly approaching deadline for employers planning to apply for early-retiree funding from HHS; additional details on implementing the grandfathered plan rules; and the procedures for reporting the cost of employer-provided health coverage to employees. The DOL has also provided updated information on the status of the automatic enrollment requirement for large employers.

Deadline For Early-Retiree Health Insurance Funding
Pursuant to the PPACA, $5 billion was appropriated to establish a temporary program for partial reimbursement of the cost of providing health coverage to early retirees (including the spouses, dependents, and surviving spouses of early retirees). The program, which was implemented on June 1, 2010, began accepting applications on June 29, 2010. On March 31, 2011, HHS announced that it will stop accepting applications as of May 5, 2011, based on the amount of remaining program funds and the rate at which the funding is being disbursed. A copy of the application and instructions can be found at http://www.errp.gov. All applications must be physically received by HHS (i.e., not postmarked) on or before May 5, 2011.
 

Additional Guidance For Grandfathered Health Plans
On April 1, 2011, the Departments issued a sixth set of FAQs regarding the implementation of the PPACA .

Form W-2 Cost Of Coverage Reporting
On March 29, 2011, the IRS issued interim guidance (Notice 2011-28) regarding the PPACA requirement that employers report the “aggregate cost of applicable employer-sponsored coverage” to employees on IRS Form W-2. Included in the interim guidance is a set of Q&As that addresses, among other things: (1) which employers are subject to the reporting requirement; (2) methods of cost-reporting in specific circumstances (e.g., termination from employment, successor employers, retirees, etc.); (3) how to determine the aggregate cost of applicable employer-sponsored coverage; (4) the coverage required to be reported; and (5) calculating the dollar amount of reportable coverage costs. The IRS emphasizes that cost of coverage reporting to employees is for informational purposes only, and will not cause otherwise excludable employer-provided health benefits to become taxable income.

Although voluntary for the 2010 and 2011 tax years (Notice 2010-69), most employers that provide health coverage to their employees are required to report cost information beginning with the 2012 tax year. (Note, employers that choose to report the cost of coverage for 2010 and/or 2011 may rely on Notice 2011-28.) Transitional relief may be available, however, for: (1) small employers (i.e., employers that file less than 250 Forms W-2 for the 2011 tax year); (2) terminated employees to whom Forms W-2 are provided before the end of the year; (3) multiemployer plans; (4) health reimbursement arrangements; (5) stand-alone dental and vision plans; and (6) self-insured plans not subject to COBRA continuation coverage or other federal law requirements (e.g., church plans).

Automatic Enrollment Requirement For Large Employers
The PPACA requires large employers (those with more than 200 full-time employees) that are subject to the Fair Labor Standards Act to automatically enroll new full-time employees (or continue enrollment for current employees) in one of the employer’s health benefit plans. Employers are not required to comply with the automatic enrollment provisions until regulations are issued and effective, which the DOL intends to complete by 2014. To assist in the development of proposed regulatory guidance, the DOL hosted a public forum (held April 8, 2011) for individual and organizational stakeholders to exchange information and ideas regarding the automatic enrollment requirements. Forum topics included the definition of “full-time employee,” selecting the appropriate plan/benefit package (for employers that maintain multiple health plans or benefit packages) and type of coverage (e.g., single or family) in which employees would be automatically enrolled, and notice requirements for employees who wish to opt out of coverage. A transcript of the forum will be available on the DOL’s website at www.dol.gov/ebsa/healthreform.
 

Designated Freedom of Information Law ("FOIL") officers in governmental agencies, such as school districts and municipalities, often have extensive experience responding to FOIL requests. Knowing that FOIL strongly favors the disclosure of agency records, they may overlook statutory exemptions to disclosure. But, a recent case decided by the New York State Court of Appeals, NYSUT v. Brighter Choice Charter School, shows that the exemptions are alive and well -- particularly when a union seeks personal information about unrepresented employees.

FOIL (Public Officers Law §87 et seq.) was created to ensure the public's right to agency records and imposes a broad standard of open disclosure. FOIL's goal is to help the public make informed choices with respect to the direction and scope of governmental activities. It is this purpose that guides the general rule that all records of an agency are presumptively available for public inspection and copying. Nonetheless, several statutory exemptions are set forth in Public Officers Law §87(2) that permit a responding agency to withhold requested records. To ensure the public has maximum access to government records, these statutory exemptions are narrowly interpreted and the agency invoking the exemption bears the burden of demonstrating that requested material fits squarely within the ambit of the exemption.

In NYSUT v. Brighter Choice, a group of charter schools objected to disclosure of certain information about their employees requested by New York State United Teachers ("NYSUT"). In 2007, NYSUT submitted FOIL requests to Brighter Choice and five other Charter Schools in the Albany area. The request sought extensive information about the teachers and instructors, including their names and home addresses. The Charter Schools provided title and salary information, but objected to the request for the names and home addresses of its employees. NYSUT eventually dropped its request for home addresses. This left only the Charter School's denial of the union's request for the full names of the employees in dispute.
 

The Charter Schools objected to disclosing employees' names on the ground that the record, if disclosed, would constitute an unwarranted invasion of personal privacy. See Public Officers Law §87(2)(b). FOIL provides a list of eight (8) categories of exemptions that are per se unwarranted invasions of personal privacy. One disclosure that constitutes a per se unwarranted invasion of personal privacy is a list of names and addresses, if the list would be used for solicitation or fund-raising purposes.

Attorneys for the Charter Schools argued that this exemption to disclosure had been properly invoked, and that it permitted the Charter Schools to consider NYSUT's organizational purpose and the nature and format of the information NYSUT sought. The Charter Schools argued they could reasonably infer that NYSUT sought the names of employees for the purpose of soliciting new members and increasing the size of its organization.

In a 4-3 decision, the Court of Appeals agreed, holding: “It appears ... that NYSUT seeks the teachers' names as a convenient mechanism for contacting prospective members. Although NYSUT certainly possesses a right to seek dues-paying members, it may not rely on FOIL to achieve that end.”

In upholding the application of the exemption, the Court of Appeals stressed that its decision did little to undercut the purposes of FOIL. The Court found that disclosure of employees' names to NYSUT: “would do nothing to further the policies of FOIL, which are to assist the public in formulating intelligent, informed choices with respect to both the direction and scope of governmental activities. If anything, it is precisely because no governmental purpose is served by public disclosure of this information that section 87(2)(b)'s privacy exemption falls squarely within FOIL's statutory scheme.”

Moving Forward

If a school district or municipality receives a FOIL request seeking a list of the names or home addresses of its employees, the solicitation or fund-raising purposes exemption should be considered. If the FOIL officer can infer from the organizational purpose of the requesting party that the information is being sought to solicit the employees, the names and home addresses may be withheld. Not all requests from the same entity must be treated similarly. For example, disclosure of names and addresses should be made to a newspaper editorial department that submits a FOIL request in preparation for an opinion piece. In contrast, an agency may withhold a list of names and addresses from a newspaper circulation department that submits a FOIL request, as such could be reasonably inferred to have been made for solicitation purposes. The NYSUT v. Brighter Choice decision establishes that an agency that is aware that a FOIL request has been submitted for solicitation or fund-raising purposes is on firm ground should it choose to withhold a list of names or home addresses.
 

The Occupational Safety and Health Administration (OSHA) has been making significant efforts to educate the Latino workforce regarding safe work practices, OSHA’s safety and health regulations, and workers’ rights. This initiative began in force in April of 2010, when OSHA held the first National Action Summit for Latino Worker Health and Safety in Houston, Texas. Over 1,000 people attended the summit, the stated goal of which was “[r]educing injuries and illnesses among Latino workers by enhancing knowledge of their workplace rights and improving their ability to exercise those rights.” Workshops included topics such as “Innovative Partnerships and Effective Education for Latino Workers: Focus on Latino Construction Workers,” and “Workers’ Rights Under OSHA and DOL: Focus on Construction Hazards.”

Since that initial national summit, OSHA has held several regional summits, including one in northern New Jersey in July, 2010, and another in New York City in November. The latter summit featured a 15-minute skit entitled “How to File an OSHA Complaint.” In February, 2011, OSHA held a summit in Oakland, California, that was featured on the evening Telemundo and Univision newscasts throughout the entire San Francisco Bay Area. Future OSHA summits are scheduled for southern New Jersey and Philadelphia in April. The April 10, New Jersey summit is entitled “Making a Difference: Learn about Your Worker Rights and How to Voice Concerns When Those Rights are Violated.”
 

Clearly, OSHA is encouraging the Latino workforce to look for, and report, any suspected health or safety violations. As Dr. David Michaels, the head of OSHA said in a recent speech, OSHA is trying to “inoculate” the Latino workforce “against rogue employers who seek to exploit them.” With that in mind, how might this initiative affect your workplace, and what actions should you be taking?

• Ensure that all of your employees—both those for whom English is their primary language and those for whom it is not—fully understand your company’s safety and health policies and procedures. It is the employer’s obligation to ensure employees are not exposed to hazards, and thus the employer’s obligation to ensure that non-English speaking employees understand the safety requirements of a particular practice. OSHA provides a list of resources for employers with Latino employees, including a website, and its 800 number with Spanish-speaking operators, 1-800-321-OSHA.
• Make sure that all of your employees, regardless of their primary language, know your company’s procedure for reporting any workplace injuries or illnesses, and that they can report any workplace injury or illness without fear of reprisal.
• Remember the Occupational Safety and Health Act explicitly prohibits retaliatory or discriminatory action against an employee who has raised an OSHA violation. For example, OSHA recently settled a whistleblower case against two construction companies, where an employee was allegedly fired for complaining about an unsafe crane lift. The companies paid $17,500 in back wages.

Workplace safety is a universal issue that must span any language barriers. By ensuring that your non-English speaking employees are fully cognizant of your workplace’s safe work practices and policies, you can minimize workplace hazards and reduce the possibility of a complaint-based inspection.
 

Eight days before the Wage Theft Prevention Act goes into effect, the New York State Department of Labor finally released the notification templates and related information which will assist New York employers in complying with the Act. The documents were posted on the Department’s website Friday.

The Department issued notification templates for the following groups of employees: (a) Hourly Rate Employees; (b) Multiple Hourly Rate Employees; (c) Employees Paid a Weekly Rate or a Salary for a Fixed Number of Hours (40 or Fewer in a Week); (d) Employees Paid a Salary for Varying Hours, Day Rate, Piece Rate, Flat Rate, or Other Non-Hourly Basis; (e) Prevailing Rate and Other Jobs; and (f) Exempt Employees. The templates are available here.

The Department also issued Guidelines for Written Notice of Rates of Pay and Regular Payday, as well as instructions related to the templates. While the Guidelines state that dual language templates are available in Chinese, Haitian-Creole, Korean, Polish, Russian, and Spanish, as of this writing, only the Chinese, Korean and Spanish templates are available.

Finally, the Department also issued a document titled, “Frequently Asked Questions About the Wage Theft Prevention Act,” which provides answers to many of the most common questions employers have about the Act.
 

The information issued by the Department contains few real surprises. Some points of interest:

General

• Though the legislature authorized the Commissioner to expand the required contents of the Section 195 notices to contain "other information" she "deems material and necessary," the notice templates essentially track the requirements set forth in the statute.

Notices

• Employers are NOT required to use the DOL-issued templates and can develop their own, as long as the employer-prepared notices contain all the required information. Notably, the Department expressly states that it "reserves the right to require use of DOL forms in the future, if employer notices do not meet the requirements."
• While the Department states that the New Hire Notice may be "included in" letters and/or employment agreements provided to new hires, it states the notice itself must "be on its own form." This is a significant requirement as many employers had previously satisfied Section 195's requirements by including the necessary information in new hire letters or employment agreements and did not use a separate form.
• Interestingly, the Department backed off its prior position that notices issued to exempt employees must specify the exemption that applies to the employee. The Department now states that employers "may state the specific exemption that applies," but are not required to.
• Annual notices must be provided between January 1 and February 1 with the first notice required before February 1, 2012. The annual notice requirement CANNOT be satisfied by giving notice at some other point in the year (e.g., when annual increases are implemented). Many employers had hoped the Department might recognize that many employers implement annual rate changes in months other than January and allow employers to issue the annual notices when those rate changes occur, rather than in January of each year. Unfortunately, the Department is requiring all employers to issue annual notices in January.
• Employers must issue annual notices even if there have been no changes.
• If employees are paid at multiple hourly or piece rates, the notice should disclose the all the rates that may apply (either on the notice itself or on an attached sheet).
• Notices may be given electronically but there must be a system for the employee to acknowledge receipt of the notice and print out a copy of the notice.
• If an employee refuses to sign the acknowledgment, the Department advises that "the employer should still give the notice and note the worker's refusal on its copy of the notice."

Notice of Changes

• Except for hospitality industry employers, a separate notice is not required when there is an increase in an employee's pay rate, if the increase is reflected on the corresponding wage statement.
• For any reduction in pay rate, the employer must notify the employee in writing before the reduction is implemented.

Wage Statements

• If a retroactive wage increase is implemented, the amount of the retroactive increase must be separately noted on the wage statement in the period in which it is paid.
• Wage statements may be provided electronically, if employees can access and print their statements on a computer provided by the employer.
• The Department will prepare a sample wage statement showing the types of entries which may be necessary, but has not said when it will do so.

 Retaliation

• Employees are protected from retaliation if they complain to their employer, the Department, or the Attorney General about a possible labor law violation.
• If employees believe in good faith that "there is a problem in the workplace, their activities are protected," even if the employer has not actually violated the labor law.
• Even threatening an employee can be considered retaliation. This makes it essential that employers educate supervisors about the Act, and the retaliation provisions in particular.

Remember - the Wage Theft Prevention Act is effective this Saturday, April 9.
 

The U.S. Department of Labor ("DOL") has proposed regulations that more broadly define the circumstances under which a person or entity will be considered to be a plan "fiduciary" by reason of giving investment advice to an employee benefit plan or to a plan's participants or beneficiaries. If the proposed regulations are made final in their current form, the number of plan service providers that will be considered plan "fiduciaries" will increase significantly. Plan sponsors need not take any current action with respect to the proposed regulations, but should be aware that agreements with service providers may need to be reviewed and modified to conform to the regulations.

Background

Under the Employee Retirement Income Security Act ("ERISA"), a person is a fiduciary with respect to an employee benefit plan to the extent that the person: (i) exercises any discretionary authority or discretionary control respecting the management or disposition of the plan's assets; (ii) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the plan, or has any authority or responsibility to do so; or (iii) has any discretionary authority or discretionary responsibility in the administration of the plan.
Individuals and entities, including plan service providers, who are considered plan "fiduciaries" are subject to a number of strict duties and responsibilities and are prohibited from engaging in a number of specific acts with respect to the applicable plan. Among other consequences, fiduciaries who fail to satisfy their plan-related duties, or who engage in plan-related prohibited transactions, can be subject to personal liability for losses suffered by the plan.
 

The Proposed Regulations

The DOL's proposed regulation addresses the circumstances under which a person or entity is considered to be a plan "fiduciary" by reason of (ii) above; that is, by giving investment advice for a fee or other compensation to an ERISA-covered plan, to a plan fiduciary, or to the plan's participants or beneficiaries. Two of the key elements of the proposed regulations are the scope of the terms "investment advice" and "fee or other compensation".

"Investment Advice"

The proposed regulations generally provide that a person renders "investment advice" if the person:

• Provides advice, or an appraisal or fairness opinion, concerning the value of securities or other property;
• Makes recommendations as to the advisability of investing in, purchasing, holding, or selling securities or other property; or
• Provides advice or makes recommendations as to the management of securities or other property.

In addition to one or more of the activities noted above, a person renders "investment advice" only if the person also: 

• Represents or acknowledges fiduciary status within the meaning of ERISA with respect to giving advice or making recommendations;
• Has or exercises discretionary authority or control with respect to the purchase or sale of investments for a plan, with respect to management of the plan, or with respect to the administration of the plan;
• Is an "investment adviser" under the Investment Advisers Act of 1940 (which generally includes any person who, for compensation, engages in the business of advising others as to the value of securities or the advisability of investing in, purchasing, or selling securities, or who promulgates analyses or reports concerning securities); or
• Provides advice pursuant to an agreement, arrangement or understanding, oral or written, between such person(s) and the plan, a plan fiduciary, or a plan participant or beneficiary, that such advice may be considered in connection with making investment or management decisions with respect to plan assets, and will be individualized to the needs of the plan, a plan fiduciary, or a participant or beneficiary.

This part of the proposed regulations modifies current law in a number of ways, including the addition of appraisals and fairness opinions in the definition of advice. The DOL believes this change will align the duties of those who provide these opinions with those of plan fiduciaries who rely on them. Among other things, this brings valuations of closely held employer securities for purchase by an employee stock ownership plan, and appraisals of real property considered for purchase by a plan, into the realm of "investment advice." The proposal also specifically includes advice and recommendations as to the management of securities or other property. This could include, for example, advice in connection with the exercise of stock rights (e.g., voting proxies), and advice in the selection of plan investment managers. Another significant change from current law would be that the "advice" need not be provided on a "regular basis."

Limitations

Even if the person's activities with respect to a plan may suggest that the person is a fiduciary, a person will not be considered a fiduciary under the following circumstances:

• Where it can be demonstrated that the recipient of the advice knows, or reasonably should know, that person is, or represents, a person whose interests are adverse to the interests of the plan or its participants or beneficiaries, and that the person is not undertaking to provide impartial investment advice;
• The person provides only investment education information and materials, pursuant to other DOL regulations;
• The person provides general financial information and data to assist a plan fiduciary in the selection or monitoring of securities or other property as plan investment alternatives, if the provider discloses in writing to the plan fiduciary that the person is not undertaking to provide impartial investment advice; and
• The person prepares a general report or statement that merely reflects the value of an investment of a plan, unless such report involves assets for which there is not a generally recognized market and serves as a basis on which a plan may make distributions to plan participants and beneficiaries.

Fee Requirement

In order to be a fiduciary, the provider must provide investment advice "for a fee or other compensation, direct or indirect." The proposal defines this fee requirement to include fees or compensation for advice received by the person from any source and any fee or compensation incident to the transaction in which the investment advice has been, or will be, rendered.

Effective Date and What's Next?

The proposal will be effective 180 days after publication of the final regulations in the Federal Register. Thus, the expansion of the fiduciary definition will not apply for some time. The DOL has reportedly received many comments, some favorable, some not; these rules may change prior to being finalized. Stay tuned.
 

After more than five years of litigation, a defendant school board member was recently awarded over $136,500 in attorneys’ fees and costs from the plaintiff’s counsel in an employment discrimination case. An employer’s recovery of its attorney’s fees in an employment discrimination case is a fairly rare event. Under the federal anti-discrimination laws, when an employee sues his/her employer for discrimination and wins, the employee is considered to be the “prevailing party” and is therefore entitled to recover the reasonable amount of attorneys’ fees incurred in proving that he/she was unlawfully discriminated against. When the sued employer wins, the employer is likewise the prevailing party. However, the employer is generally not able to recoup the attorneys’ fees that were incurred in defending the claims. The policy behind this rule is a belief that an individual who has meritorious discrimination claims may nonetheless chose not to sue to enforce his or her rights out of fear that the individual may lose and have to pay the former employer’s attorneys’ fees. For that reason, the law builds in extra hurdles which victorious employers must overcome. For a prevailing defendant employer to be awarded fees, the employer must typically show that the claim was frivolous and should never have been brought in the first place. In other words, it must show that the employee’s claim had no foundation in either law or fact.

In Capone v. Patchogue-Medford Union Free School District, one of the defendants made that showing. The case arose when an employee terminated by a school district for misconduct sued the district and individual Board of Education members claiming that his termination violated the anti-discrimination laws. One of the Board members sued was Tina Marie Weeks, who had actually voted against terminating the employee. Throughout the litigation, Ms. Weeks argued that the discrimination claims brought against her were frivolous. Ms. Weeks’ attorneys repeatedly put the plaintiff’s attorney on notice of that position, citing binding caselaw, and further advised the attorney that if the frivolous claims were not withdrawn, Ms. Weeks would seek a full fee shift against the plaintiff and his counsel. The frivolous claims were not withdrawn and Ms. Weeks moved for an award of the full amount of attorneys’ fees incurred by her during the litigation. The District Court granted the motion, and ordered plaintiff’s counsel to pay Ms. Weeks over $116,000 in attorneys’ fees and $20,500 in litigation costs.

Hopefully, the Capone decision will serve as a deterrent to future frivolous litigation. When defendant employers are faced with frivolous claims, plaintiff’s counsel should be put on notice, in writing, early on in the litigation and frequently thereafter that their case is frivolous in fact and law. Plaintiffs’ counsel should further be advised that both counsel and the client may be subject to a full fee shift if the frivolous case is not withdrawn. If they do so, defendant employers may be spared the cost of litigating claims which should never have been brought.
 

As reported in the Daily Labor Report, Equal Employment Opportunity Commission officials have disclosed that the White House’s Office of Management and Budget has completed its review of the long awaited regulations implementing the 2008 Americans with Disabilities Amendments Act. The next step is publication of the regulations in the Federal Register. At that time, we will know what the final regulations contain. The Commission was not able to say exactly when that will occur. When it does, we will provide an update.

Last month, New York’s Appellate Division, Second Department determined that offering health insurance coverage to employees’ same-sex domestic partners, but not to opposite-sex domestic partners, does not necessarily constitute sexual orientation discrimination. Putnam/Northern Westchester BOCES v. Westchester County Human Rights Commission.

The case arose when the Joint Governance Board of the Putnam/Northern Westchester Board of Cooperative Educational Services, which provides health care benefits to employees of school districts in Putnam and Northern Westchester counties, extended health care benefits to same-sex domestic partners. Thereafter, a teacher in the Croton Harmon Union Free School District sought coverage for her opposite-sex domestic partner. The Board denied the request, and the teacher brought a claim before the Westchester County Human Rights Commission, alleging discrimination based on marital status and sexual orientation. The teacher prevailed in a hearing before a Human Rights Commission Administrative Law Judge, and the Board commenced a proceeding to overturn the Commission’s determination. The Appellate Division, Second Department did so. The Court concluded that the Board decided to offer the benefit only to same-sex partners because same-sex partners could not lawfully marry in the State of New York, and so could not obtain the benefits offered to employee spouses. Because that was the reason for the Board’s action, the Court concluded the action was not the result of sexual orientation discrimination. The Court also overturned the Commission’s finding of marital status discrimination, because the benefits sought by the teacher did not turn on marital status. In fact, the benefits she was seeking were made available to unmarried couples.
 

As challenging as 2010 was, 2011 promises to be even more challenging for employers trying to remain in compliance in an ever-changing legal and regulatory environment. While coming into full compliance may seem daunting, addressing the ten concerns discussed below will be a meaningful step in that direction.

1.  Meal Periods. New York State requires employers to provide employees who work shifts in excess of six hours a meal period of not less than 30 minutes. Penalties for noncompliance start at $1,000 per offense and increase with each offense. In addition, if an employer automatically deducts meal periods from working time and such deductions do not accurately reflect the meal periods taken, the employer may not be paying employees for all time worked – resulting in far greater legal exposure.

What To Do: Employers should develop and enforce a meal period policy, requiring employees to take their meal periods (which cannot be waived). Employers should also require employees to leave their work area and prohibit employees from performing any work during meal periods. If employees’ meal periods are frequently interrupted, they should be paid for the entire meal period. Employers should also maintain accurate records demonstrating that they are complying with meal period obligations. Employers who automatically deduct for meal periods should have a policy notifying employees of this practice, a mechanism for employees to report when they have worked during a meal period, and should require employees and their supervisors to certify the accuracy of time records. Employers should also train supervisors on the legal obligations associated with meal periods.
 

2.  Exempt Status. With Fair Labor Standards Act litigation outpacing discrimination suits, and New York’s recently enacted Wage Theft Prevention Act taking effect in April 2011, overtime compliance is essential.

What To Do: Before classifying a position as exempt, employers must insure the duties test, salary basis test and salary level test are satisfied. Because many employers give little thought to exempt classifications, employers should review all positions currently classified as exempt and insure these tests are satisfied. If an employer discovers it has misclassified a position as exempt, legal counsel should be sought.

3.  Other Wage and Hour Concerns. Employers must also be mindful of limits on deductions from wages (e.g., overpayment of wages, debts to the employer), the need to pay nonexempt employees for all hours worked, including those worked remotely (e.g., via Blackberry or other mobile device), and the proper way to calculate regular rate of pay for overtime purposes.

What To Do: Employers should review their wage and hour practices and work with legal counsel to develop appropriate guidance on each of these subjects.

4.  Misclassification of Workers. The United States Department of Labor has identified combating employee misclassification as a priority in 2011 and with a recent study finding 1 in 10 private sector New York employers having not properly classified workers, the potential exposure is clear. Misclassification of an employee as an independent contractor carries with it a broad range of liability, including: unemployment insurance, workers’ compensation, social security, tax withholding, temporary disability, and minimum wage and overtime.

What To Do: Employers should review their relationship with any worker identified as an independent contractor. In doing so, particular attention should be paid to whether the individual is in the business of providing these services, the duties performed, the control exercised over the work performed, the method of payment, and how payments are reported. These relationships should be memorialized in a written agreement (while understanding that labeling an individual an independent contractor does not end the analysis) that has been reviewed by counsel and accurately reflects the relationship between the parties.

5.  Reasonable Accommodations/Leaves. With the recently adopted Americans with Disabilities Act Amendment Act (ADAAA) and employers still working toward complying with the last round of regulatory changes to the Family Medical Leave Act (FMLA), reasonable accommodations and leaves will remain a focal point in 2011.

What To Do: Covered employers should review their FMLA policy and forms and, if necessary, update them. Employers should also adopt a policy detailing the reasonable accommodation obligation and the procedure for requesting accommodation, and insure supervisors can identify accommodation requests. Finally, employers must be aware that an employee requiring leave for a medical condition may not be limited to the 12-week FMLA entitlement given the availability of leave as a reasonable accommodation under the ADA and New York Human Rights Law.

6.  Caregiver Discrimination. As women now outnumber men in the U.S. workforce and mothers of young children are twice as likely to be employed as their counterparts 30 years ago, caregiver discrimination has gained greater attention and, in 2010, was described as an issue that would be “front and center” for the EEOC.

What To Do: Employers should educate supervisory personnel on what constitutes caregiver discrimination and insure those involved in the hiring process know what can and cannot be asked about caregiving responsibilities. In addition, parental/caregiving leave policies should be reviewed to ensure they do not discriminate on the basis of gender.

7.  Harassment. While harassment has been a long standing concern for employers, recent statistics demonstrate that workplace harassment is evolving - with more than 50% of harassment claims based on a protected status other than gender (e.g., disability, race, national origin) and sexual harassment charges filed by men increasing significantly.

What To Do: Employers should review their harassment policy to ensure it covers to all forms of harassment, describes/provides examples of what constitutes harassment, references conduct outside the work environment (including on social media), provides multiple avenues of complaint (directing victim to someone other than the harasser), presents an overview of the complaint procedure, and insures that the parties will be notified of the outcome of investigations. Employers should also train all those identified as avenues of complaint, as well as supervisors and managers, and should consider training all personnel.

8.  Retaliation. With EEOC charges alleging retaliation increasing 45% from 2006 to 2009 and retaliation now tied with race as the most common form of discrimination alleged, concerns related to retaliation are self-evident.

What To Do: Employers should develop or review their policy on retaliation and insure it accurately reflects recent legal developments and provides a complaint mechanism. Employers should educate supervisors on what constitutes retaliation and, when a complaint of harassment or discrimination or other violation of law is received, employers should address retaliation concerns with the source of the complaint, the person about whom the complaint was made, and any witnesses. Employers should also show sensitivity to the timing of adverse actions in relation to employee complaints and involve human resources and/or legal counsel in decisions impacting employees who recently engaged in protected activity.

9.  Employee Relations. While the Employee Free Choice Act (“EFCA”) appears to be dead, the underlying goal of EFCA – to increase unionization of the private sector workforce - will be advanced through National Labor Relations Board decisions and regulatory action. These potential changes -- commonly referred to as “EFCA 2.0” -- include narrowing the National Labor Relation Act’s definition of supervisor, expanding the protection of employee use of employer provided e-mail to solicit support for unionization, accelerating the speed of union elections, expand union access to employer property, and banning “captive audience” employee meetings.

What To Do: Given the likelihood at least some of these changes will be implemented, employers should pro-actively take steps to assess and, if necessary, improve employee relations. Employers should confirm that their supervisors satisfy the NLRA’s definition of supervisor (and are therefore excluded from NLRA protection and cannot unionize), educate supervisory personnel on the importance of open communication and positive employee relations and give supervisors the tools to succeed in this area. Employers should also take steps to address employee concerns that might otherwise lead to widespread employee dissatisfaction.

10.  Technology-Related Issues. With technology evolving at an unprecedented pace and social media use expanding rapidly, technology-related concerns are vast and problematic. While not every technology-related concern can be anticipated, let alone avoided, there are common sense steps employers can take to limit potential exposure.

What To Do: Employers should adopt, and distribute a policy concerning the use of the employer’s technological resources, and obtain employee consent to accessing, intercepting and monitoring of their use thereof. Employers should also adopting a policy addressing social media use, both at and outside work, and ensure that social media concerns are addressed in other non-technology policies (e.g., workplace harassment, references). Finally, employers should determine if and how they will use social media in the hiring process and put policies and procedures in place to ensure hiring managers do not inadvertently gain access to applicants’ protected status (e.g. age, national origin) in the process.

A version of this post was previously published in the Saratoga Business Journal.

We have posted previously on the amendments to New York Labor Law Section 195, the so-called Wage Theft Prevention Act, which creates certain employer obligations to notify employees of their wage rates and other information. As the April 9, effective date approaches, employers should be preparing to provide the following notifications and information.

Notification at Time of Hire

Whenever a new employee is hired, Section 195 now requires employers to provide the following information to each new hire before the new hire begins work:

• Rate or rates of pay
• Basis of pay (e.g. hourly, shift, day, week, salary, piece, commission, or other)
• Allowances, if any, claimed against the minimum wage (e.g., tips, meals, lodging)
• Identification of the regular pay day.
• Name of employer (including any doing business as name)
• Address and phone of employer
   

Acknowledgement of Receipt by Employee

In addition, the statute requires employers to obtain an employee acknowledgement of receipt of the information. That acknowledgement must be in English and the employee’s primary language. The acknowledgement must include an affirmation by the employee that the employee accurately identified to the employer his/her primary language, and that the notice was in the language so identified. In order to comply with this requirement, the employer will have to ask each employee what his/her primary language is before the notice is provided. Due to non-discrimination concerns, employers should not obtain this information before an offer of employment is made.

Commissioner’s Templates

The statute requires the Commissioner of Labor to prepare dual language templates for the notice and acknowledgement. The statute does not state that employers must use them, but if they do, they will not have any liability for mistakes made in the primary language. As of this date, the templates are not available.

Electronic Notices

According to a 2010 New York Department of Labor opinion letter on the pre-amendment Section 195, notice and acknowledgement may be electronic if:

1. the employee can access a computer and print a copy of the notice at any time and at no cost;
2. affirmative steps are required by the employee to acknowledge receipt of the notice (i.e., an employer cannot rely on passive receipt of an e-mail); and
3. the acknowledgement includes statements ensuring that the employee has received and reviewed the notice and that the employee is aware that his/her actions have legally significant consequences.

Annual Notices

The statute also requires employers to provide notices to all employees on or before February 1 of each subsequent year of employment. The annual notice content and acknowledgement requirements are identical to the requirements for a new hire notice.

Wage Statement Requirements

The amendments to Section 195 also mandate the inclusion of certain information in all employee wage statements. Nothing in the statute prohibits an electronic statement. There are no acknowledgement or primary language requirements.

For all employees the following information is required with every payment of wages

• Name of employee
• Name of employer
• Employer’s address and phone
• Rate or rates of pay
• Basis of rate of pay (hourly, shift, day, week, salary, piece, commission or other)
• Gross wages
• Deductions
• Allowances, if any are claimed as part of the minimum wage (tips, meals, lodging)
• Net wages

For non-exempt employees, the following additional information must be provided.

• Regular hourly rate or rates
• Overtime rate or rates
• Number of regular hours worked
• Number of overtime hours worked

Notification of Changes

Finally, whenever any of the information provided in either the new hire notice or the annual notice is changed, the employer must notify the employee in writing at least 7 calendar days before the change. This notification is not necessary if the changed information is reflected in the employee wage statement described above. Nothing in the statute prohibits electronic notification of changes, and there is no primary language requirement.
 

On December 21, 2010, New Jersey Governor Chris Christie signed legislation establishing a 2% cap on the aggregate increase in base salary per year that can be provided in an interest arbitration award. The New Jersey law may serve as a model for a similar effort in New York. Since he has taken office, New York Governor Andrew Cuomo has vowed to introduce changes to reduce the cost of State and Local government. He has stated that “New York is at a crossroads, and we must seize this opportunity, make hard choices and set our state on a new path toward prosperity…We simply cannot afford to keep spending at our current rate. Just like New York's families and businesses have had to do, New York State must face economic reality.” In order to achieve his cost saving measures, Governor Cuomo has introduced legislation calling for a 2% cap on property taxes. In addition, he has established by Executive Order a Mandate Relief Redesign Team as well as theSpending And Government Efficiency (Sage) Commission which will conduct a rigorous and comprehensive review of mandates imposed on local taxing districts and government spending “with the goal of saving taxpayer money, increasing accountability and improving the delivery of government services.”

With Governor Cuomo calling for such wide-reaching changes, and groups such as the New York Conference of Mayors (NYCOM) calling for the Governor to implement changes to Interest Arbitration (e.g., redefining “ability to pay”, prohibiting the consideration of non-economic items, limiting the number of times that a union can consecutively go to interest arbitration), it is possible that legislation similar to that signed by Governor Christie in New Jersey will be introduced in New York. In fact, former Gubernatorial candidate and Suffolk County Executive Steve Levy has already publicly embraced New Jersey’s 2% interest arbitration cap, and has indicated that he plans to call on the New York State Legislature to enact similar legislation. According to Mr. Levy, such a cap would, “save the county of Suffolk between $7 million and $10 million per year for the police force alone, considering the police union received a 3.5 percent increase in the most recent round of mandatory arbitration.”
 

What Does the New Jersey Legislation Provide?

The 2% cap – which mirrors New Jersey’s 2% cap on property tax increases – provides that an arbitrator shall not render an award which, on an annual basis, increases base salary items by more than 2% of the aggregate amount expended by the public employer on base salary items. The legislation provides that the aggregate monetary value of the interest arbitration award does not have to be distributed in equal annual percentages over the life of the agreement. Therefore, the monetary value of an award may exceed 2% in an individual contract year, provided that the monetary value of the award in the other contract year(s) is adjusted so that the aggregate monetary value of the award over the term of the agreement does not exceed the maximum 2% increase.

As defined by the new legislation, “base salary” means “the salary provided pursuant to a salary guide or table and any amount provided pursuant to a salary increment, including any amount provided for longevity or length of service.” Also included in an employee’s “base salary”, and therefore subject to the 2% cap, are “any other item agreed to by the parties, or any other item that was included in the base salary as understood by the parties in the prior contract.” The legislation specifically excludes from “base salary non-salary economic issues such as pension, health and medical insurance costs.” Non-salary economic issues are defined by the legislation as any economic issue that is not included within the definition of base salary. The legislation also prohibits an arbitrator from awarding “base salary items and non-salary economic issues which were not included in the prior collective negotiations agreement.”

In addition to the 2% cap, the legislation makes several other changes to the overall interest arbitration process: capping the fees that an arbitrator can receive; randomizing the arbitrator selection procedure if the parties cannot agree to an arbitrator; requiring that arbitrators receive yearly ethics training; allowing a party to file a petition with the Public Employment Relations Commission (PERC) alleging that the other side is not negotiating in good faith; and vesting PERC with the ability to assess the non-prevailing party the cost of all legal and administrative costs associated with the filing and resolution of the petition.

The entirety of the legislation, not just the 2% base salary cap, sunsets after 39 months. The legislation also establishes an eight-member task force designed to study the effect and impact of the changes made by the legislation. This task force will presumably make a recommendation as to whether the changes to the interest arbitration process should be continued once the legislation sunsets.
 

An appellate court in California recently held that an employee’s email exchanges with an attorney via the employee’s work email account were not protected by the attorney-client privilege, Holmes v. Petrovich Development Co. According to the Court’s opinion, when Gina Holmes began working for Petrovich Development Co., she read and signed the company’s employee handbook, which contained a policy regarding use of the company’s technology resources. The policy advised employees that: (1) the company’s technology resources, such as computers and email accounts, were for business purposes only; (2) employees had no expectation of privacy in the information or messages “created or maintained” on the company’s technology resources, including any emails sent or received on a company email account; and (3) the company could “inspect all files or messages … at any time for any reason at its discretion” and would periodically monitor files and messages. When Holmes got into an argument with the CEO about becoming pregnant a month after being hired, she exchanged two emails with an attorney via her company email account in which she explained her situation and asked about her rights. The next day, and after meeting with the attorney, Holmes quit her job claiming a hostile work environment and constructive discharge.

Holmes subsequently brought suit against the company. The trial court granted summary judgment dismissing some of her claims, and a jury found for Petrovich on the remaining claims, including invasion of privacy.  On appeal, Holmes argued, among other things, that the trial court erred in permitting the e-mails to her attorney to be entered in evidence, contending they were protected by the attorney-client privilege. Such communications between an attorney and client can be privileged. For example, in Stengart v. Loving Care Agency, Inc., emails sent by an employee at work via her personal email account were held to be privileged where the employer’s policy permitted employees to use company computers for “occasional personal use.” In Holmes, however, the Court held that because Holmes had been advised of the company’s technology resources policy before the emails were exchanged, but nonetheless chose to engage in an email exchange via her company email account, Holmes’ emails with the attorney were not privileged. As the Court held: “… the e-mails sent via company computer under the circumstances of this case were akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard by [her employer]. By using the company’s computer to communicate with her lawyer, knowing the communications violated company computer policy and could be discovered by her employer due to company monitoring of e-mail usage,” the emails lost any protection they otherwise would have had.

While the question of whether attorney-client communications over an employer’s computer network are protected is not a settled issue, and turns on the facts of the case, the lesson to employers from the Holmes case is clear. Employers should institute and disseminate to employees an appropriate technology resources policy that makes clear employees have no right to privacy in the emails they send or receive via an employer email account and that such emails can be monitored by the employer at any time.