Documentation of employment activities and workplace investigations is critical for all employers. Federal contractors subject to affirmative action compliance audits by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) must be particularly diligent. The existence or absence of appropriate documentation during an OFCCP compliance audit often dictates the length and ultimate result of the audit.

Some of the records that are essential to the successful completion of an affirmative action audit are:

• proof of listing all non-executive vacancies with the local office of the Department of Labor;
• copies of outreach letters/e-mails to organizations showing efforts to attract qualified minorities, women, individuals with disabilities, and veterans;
• applicant tracking data, identifying race, gender, position applied for, and disposition of all “applicants;”
• identification by race and gender of hires, promotions, transfers, demotions, and terminations;
• annual adverse impact analyses of personnel activities, including applicant/hires, promotions, transfers, demotions, and terminations;
•  annual analysis of compensation for potential disparities due to race and/or gender; and
• copies of EEO-1 and VETS-100 filings for the prior three years.

 

An employer that has not sufficiently documented its hiring and other personnel decisions can face serious problems during an audit, where it has the burden of explaining why particular decisions were made. If the employer does not have a system of recording and maintaining information about its hiring and other personnel decisions, it will be very difficult to recreate the decision-making process during the audit.

Not only must a federal contractor ensure that all personnel activity is documented in order to successfully navigate an audit, it must also take steps to maintain the documentation on a longer term basis. While OFCCP regulations require covered employers to maintain all applicable records for a minimum of two years, many federal and state record retention laws exceed that requirement. Federal and state statutes of limitations on bringing employment claims may also counsel in favor of retaining records for longer than the two year period required by OFCCP.

One record OFCCP will not review during new audits is the I-9 Form used by employers to verify the identity and U.S. employment eligibility of hired individuals. OFCCP Director Patricia Shiu recently announced that OFCCP will no longer inspect employers’ I-9 Forms during on-site compliance reviews. Director Shiu indicated that a new directive pertaining to I-9 inspections would soon be issued.
 

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (“PPACA”), provides that group health plans existing as of March 23, 2010 (grandfathered plans) are not subject to certain provisions of PPACA, including the preventative care mandate, certain nondiscrimination requirements, mandatory internal and external appeal rules, and restrictions on pre-authorizations for OB/GYN, pediatric and emergency care services. On June 17, 2010, the Departments of Labor, Health and Human Services and Treasury (the “Departments”) issued interim final regulations addressing what constitutes a grandfathered plan and what changes to such a plan might result in the loss of grandfathered plan status. The interim final regulations generally provide that grandfathered plan status could be lost by a group health plan if the plan’s insurer is changed, benefits are eliminated, participant cost-sharing requirements are increased, participant co-payments and contribution requirements are increased by more than a permissible level, or annual limits are imposed on the dollar value of all benefits below specified amounts. Special grandfathering rules apply for collectively bargained plans. In addition to other PPACA mandates, a plan that loses grandfathered status is subject to the preventative care, external appeal and other mandates noted above.

Recently, the Departments amended the interim final regulation to provide that a change in a group health plan’s insurer, in and of itself, will not cause an otherwise grandfathered plan to lose grandfathered status if certain requirements are satisfied. Additionally, the Departments issued answers to frequently asked questions (“FAQs”) that, among other things, clarify the application of the grandfathered plan rules. The amendment to the interim final regulation and the FAQs are described below.
 

Amendment to Interim Final Regulations

Under the interim final regulations, a group health plan could lose grandfathered status if the plan changed from one insurer to another after March 23, 2010. This restriction only applied to insured group health plans. A self-insured plan may change third-party administrators without losing its grandfathered status (provided the plan otherwise satisfies the grandfathered plan requirements). The amendment to the interim final regulations provides generally that a group health plan does not cease to be a grandfathered plan merely because the plan (or plan sponsor) enters into a new policy, certificate, or contract of insurance after March 23, 2010. However, grandfathered plan status can be maintained, notwithstanding a change in insurers, only if the plan does not make coverage or cost-sharing changes that would result in the loss of grandfathered plan status. To maintain status as a grandfathered health plan, a group health plan entering into a new policy, certificate, or contract of insurance must provide the new health insurance issuer with documentation of the plan terms that is sufficient to determine whether the health plan has lost grandfathered status based upon the otherwise applicable grandfathered plan rules.

The interim regulation does not apply to a group health plan that entered into a new policy, certificate, or contract of insurance after March 23, 2010, that is effective before November 15, 2010 (the effective date of the regulation). Such a plan would cease to be a grandfathered plan based upon a change in insurers.

FAQs

Changes That Result In Loss of Grandfathered Status:  The FAQs confirm that the six specific changes identified in the interim final regulations are the only changes that a plan existing on March 23, 2010 needs to consider when evaluating its grandfathered status. In general, the six changes are described in the FAQs as:

1. the elimination of all, or substantially all, benefits to diagnose a particular condition;

2. an increase in a percentage cost-sharing requirement (e.g., raising an individual’s coinsurance requirement from 20% to 25%);

3. an increase in a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points;
 

4. an increase in a copayment by an amount that exceeds medical inflation plus 15 percentage points (or, if greater, $5 plus medical inflation);

5. a decrease in an employer’s contribution rate towards the cost of coverage by more than 5 percentage points; and

6. the imposition of annual limits on the dollar value of all benefits below specified amounts.

Multiple Benefit Packages: The FAQs provide that the grandfathered plan analysis applies on a benefit-package-by-benefit-package basis. Accordingly, if a single group health plan offers three benefit packages (e.g., a PPO, a POS arrangement, and HMO), and only one of the benefit packages loses grandfathered status, that fact alone does not affect the grandfathered status of the other benefit packages.

Tiers of Coverage: As noted above, one of the ways a group health plan may lose grandfathered status is if the employer decreases its contribution rate towards the cost of coverage by more than 5 percentage points. The interim final regulations indicated that this analysis applies on a tier-by-tier basis. The FAQs clarify that, if a group health plan modifies the tiers of coverage it had in effect on March 23, 2010 (e.g., from employee-only and family to employee-only, employee-plus one, employee-plus-two), the employer contribution for any new tier is tested by comparison to the corresponding tier on March 23, 2010. Accordingly, if the employer contribution rate for family coverage was 50 percent on March 23, 2010, the employer contribution rate for any new tier of coverage other than employee-only (i.e., employee-plus-one, employee-plus-two, employee-plus-three or more) must be within 5 percentage points of 50 percent.

However, if a plan adds one or more new coverage tiers without eliminating or modifying previously tiers, and those new coverage tiers cover classes of individuals not previously covered, the new tiers would not cause the plan to lose grandfathered status. For example, if a plan that previously offered employee-only coverage (i.e., did not offer family coverage) added a family tier, the level of contribution toward the family tier would not cause the plan to lose grandfathered status.

Different Copayment Levels: The Departments clarified that if a plan sponsor raises the copayment level for one category of services (e.g., outpatient primary care) by an amount that exceeds the permissible copayment increase standards, but retains the copayment for other categories of services, the change in the copayment for the one category of services will cause the entire plan to lose grandfathered status. Each change in cost sharing is tested against the applicable grandfathered standard in the interim final regulations.

Wellness Programs: The FAQs indicate that penalties (such as cost-sharing surcharges) imposed by wellness programs may implicate the grandfathered rules and should be analyzed carefully (e.g., the imposition of a surcharge could result in a decrease in the employer’s contribution rate by more than 5 percent in violation of the grandfathering rules).

Disclosures: Under the interim final regulations, in order to maintain grandfathered status, a group health plan must include a statement that the plan is intended to be a grandfathered plan in materials provided to a participant or beneficiary describing the benefits provided under the plan . The FAQs provide that such a statement need not be provided each time a plan sends an explanation of benefits to a participant. The Departments do indicate that plan sponsors should attempt to identify other plan communications (such as a plan’s summary plan description) in which the disclosure of grandfathered plan status would be appropriate.

Recommended Actions

Plan sponsors that are in the process of evaluating changes to their group health plans should consider the grandfathered plan rules as part of that process. In undertaking the grandfathered plan analysis, plan sponsors will need to decide whether the additional mandates imposed by PPACA for non-grandfathered plans outweigh the ability of the plan sponsor to modify plan cost-sharing, premiums, and other provisions without constraint.
 

Effective August 15, 2010, a person convicted of driving while intoxicated (DWI) in New York is required as a condition of his or her probation or conditional discharge to install and maintain an ignition interlock device on any vehicle he or she owns or operates. The ignition interlock is a breathalyzer designed to prevent the vehicle from starting if the driver registers an alcohol content level. The new statute (Vehicle & Traffic Law § 1198), which is a provision of Leandra’s Law, also specifically addresses the individual’s operation of an employer’s vehicle.

Employer Rights and Obligations Under Leandra’s Law

Under the statute, an employer is not required to allow the individual to drive its vehicles, or to install ignition interlock devices in its vehicles. Rather, the statute is intended to ensure the employer has notice of the restriction on the employee’s license, and to then provide the employer with the option to allow the employee to drive its vehicles without an ignition interlock. The employee has the burden to notify the employer and to request written permission from the employer to operate its vehicles. Such permission is limited to the operation of the vehicle in the course and scope of employment for business purposes, and only applies to an employer that is not owned or controlled, in whole or in part, by the employee. If the employer grants permission for the employee to drive its vehicles, the employee must notify the court and probation officer that the employer has granted permission, and the employee must carry the written permission while operating the employer’s vehicle.

The statute also prohibits a person from knowingly leasing a vehicle to any individual who is subject to Leandra’s Law, which raises additional practical issues for employers whose employees regularly travel on business. What is not clear is whether employers will violate this leasing prohibition by granting permission to employees to operate vehicles the employer leases directly from a third party, or whether a court would conclude that the employer is free to grant permission because the leased vehicle is the equivalent of an employer-owned vehicle.

No provision of the statute compels the employer’s consent, and in many circumstances it may be reasonable and prudent to deny the employee permission to drive the employer’s vehicles (whether owned or leased). An employer that receives a request for permission should be mindful of the potential vicarious liability it would face under Vehicle & Traffic Law Section 388, if the employee injures a third party while driving in an intoxicated condition. There is also a potential for punitive damages arising from the employer’s knowing consent to the operation of its vehicle by an individual with a restricted license.

Discrimination Based on Criminal Conviction

Other than denying permission, any employment action based on the employee’s disclosure of a DWI conviction must be carefully considered. The New York Human Rights Law and Correction Law prohibit discrimination against an employee based on a criminal conviction unless: (i) there is a direct relationship between the individual’s criminal offenses and the specific employment sought or held: or (ii) the employment would create an unreasonable risk to property or to the safety or welfare of specific individuals or the general public. The statutes require an individualized, multi-factor evaluation by the employer before making an adverse employment decision based on an employee’s criminal conviction record.

Reasonable Accommodation Obligation

Alcoholism can be a covered disability, but the mere fact that an individual has been convicted of DWI and is subject to an ignition interlock restriction will not establish his or her disabled status under either state or federal law. However, to the extent the employee: (i) asserts that he or she suffers from a disabling condition, such as alcoholism; (ii) contends that he or she is able to perform the essential functions of the position; and (iii) identifies the ignition interlock as a potential reasonable accommodation; the employer will need to evaluate its obligations under the Americans with Disabilities Act and the New York Human Rights Law.
 

On October 22, 2010, the Occupational Safety and Health Administration (“OSHA”) announced that it has begun its 2010 Site-Specific Targeting (“SST”) Program, which will conduct comprehensive inspections of worksites across the country. It is incumbent upon employers to know how OSHA selects the worksites that will be inspected, and whether their worksites will be included in this targeted enforcement effort.

OSHA selects worksites to inspect based upon injury and illness data that is reported to OSHA. For the inspection year that has begun, OSHA’s selections depend upon injury and illness data for calendar year 2008 that was collected by OSHA in 2009. Thus, employers will be inspected over the next year, into 2011, based on data that was collected in 2008.
 

In March 2010, OSHA initially selected 14,826 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. Click here to see if your worksite is included on this preliminary list.
From that initial list of 14,826 worksites, OSHA has selected approximately 4,100 worksites as “primary” inspection targets, which OSHA Area Offices are directed to inspect first. Although the list of approximately 4,100 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 3,300 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 500 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 4,100 primary inspection sites, you may still receive an SST inspection if your facility is on the list of 14,826. 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 7.0 or more but less than 15.0, or a DAFWII case rate of 5.0 or more but less than 14.0, are secondary inspection sites.

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.
While employers should be prepared for an OSHA inspection at any time, employers who are on the primary inspection list should take additional precautions and consult counsel as necessary in preparation for an inspection sometime in the coming months.
 

The National Labor Relations Board (“NLRB”) recently filed a complaint against American Medical Response of Connecticut, Inc. (“AMR”), alleging that AMR violated the National Labor Relations Act (“NLRA”) by discharging an employee for posting comments on her Facebook page that were critical of her supervisor. In addition, the NLRB’s complaint alleges that AMR’s social networking policy constituted an unlawful restriction on employees’ rights to communicate with one another about their terms and conditions of employment and otherwise engage in protected concerted activity under the NLRA. A hearing before an Administrative Law Judge is scheduled with respect to the NLRB’s allegations on January 25, 2011.

AMR’s Employee Handbook included a Blogging and Internet Posting Policy that prohibited employees from: (1) posting pictures of themselves which depict AMR in any way unless written approval from the Vice President of Corporate Communications is granted; and (2) making “disparaging, discriminatory, or defamatory comments when discussing the Company or the employee’s superiors, co-workers and/or competitors.” According to the NLRB complaint, an AMR employee named Dawnmarie Souza (“Ms. Souza”) “engaged in concerted activities with other employees” on November 8, 2009, by criticizing her supervisor on her Facebook page. According to a press release issued by the NLRB that accompanied its filing of the complaint, Ms. Souza’s criticism of her supervisor drew supportive responses from her co-workers, which resulted in Ms. Souza making additional negative comments about her supervisor on her Facebook page. Ms. Souza was discharged from her employment with AMR on or about December 1, 2009.

In the complaint, the NLRB alleges that AMR interfered with, restrained, and coerced its employees in the exercise of their right to engage in protected concerted activities, by promulgating its Blogging and Internet Posting Policy and by discharging Ms. Souza. The NLRB also alleges that AMR discriminated against Ms. Souza for her protected concerted activity by discharging her. According to the NLRB’s press release, the NLRB is taking the position that AMR’s Blogging and Internet Posting Policy contains unlawful provisions, including: (1) the provision that prohibits employees from making disparaging remarks about AMR or supervisors of AMR; and (2) the provision that prohibits employees from depicting AMR in any way without permission.

The NLRB’s position regarding the unlawfulness of AMR’s social networking policy appears to signify a departure from a recent opinion issued by the NLRB General Counsel’s Division of Advice on December 4, 2009. In that opinion, the Division of Advice considered an employer’s social networking policy that prohibited, among other things, “disparagement of company’s or competitors’ products, services, executive leadership, employees, strategy, and business prospects.” The Division of Advice concluded that the policy, as written, was lawful because employees could not reasonably construe the policy as prohibiting the types of concerted activities protected by the NLRA. The Division of Advice also found no evidence that the policy was promulgated in response to union organizing activity or was applied for the purpose of discouraging union organizing activity.

Although a hearing has not yet been held in the AMR case and a decision has not yet been rendered, the issuance of a complaint in that case indicates that the NLRB will closely scrutinize employer policies that potentially restrict an employee’s right to discuss terms and conditions of employment through social networking sites. Accordingly, all employers (regardless of whether their employees are unionized or not) should take this opportunity to review their social networking policies, and amend those policies to ensure that there is no language that could reasonably be construed by employees as prohibiting concerted activities relating to terms and conditions of employment. Employers who are contemplating the promulgation of a social networking policy should make sure to craft the language of the policy carefully to reduce the risk that the NLRB will find the policy to be an unlawful restriction on employee rights.
 

The Occupational Safety and Health Administration’s (“OSHA”) Outreach Training Program courses are taught by independent trainers and focus on construction or general industry safety and health hazard recognition and prevention. Over the past three years, over 1.6 million students have received training through this voluntary program. In an October 27, 2010 News Release, OSHA announced that it has revised its policy for all Outreach Training Programs to limit the number of hours each day a student may spend in OSHA 10 and 30-hour training classes.  Effective immediately, OSHA now requires trainers to limit classes to a maximum of 7 ½ hours per day. The 10-hour courses must be conducted over a minimum of two days and the 30-hour courses must be conducted over at least four days.
 

The change in policy was sparked by concern that students were missing essential safety and health training as a result of long, mentally-fatiguing class days. Before the change, there was no limit on how long the classes could last each day. Students in the 10-hour course could be sitting in class for 13 hours a day, with lunch and necessary breaks factored in. According to Assistant Secretary of Labor for OSHA, David Michaels, “[l]imiting daily class hours will help ensure that workers receive and retain quality safety training.” OSHA also became concerned after random audits and unannounced monitoring visits revealed that some classes were not meeting the 10- and 30-hour program time requirements.

Classes that exceed 7 ½ hours per day or fail to meet all program content requirements will not be recognized by OSHA and students will not receive completion cards for such courses. However, trainers may submit written requests for exceptions to the new requirements based on extenuating circumstances. OSHA has also established an outreach trainer watch list, and a fraud hotline at 847-725-7810, which the public can call to file complaints about program fraud and abuse.
 

The courts have begun to address the question of whether an employee’s social network profile and postings, including sections only accessible to “friends,” are “private.” Most recently, the New York State Supreme Court for Suffolk County decided that the non-public portions of a plaintiff’s social networking sites are discoverable in litigation when they may contain information relevant to the plaintiff’s claims for damages for loss of enjoyment of life, Romano v. Steelcase Inc.

Ms. Romano sued her employer for, among other things, injuries she sustained that she alleged rendered her permanently disabled. According to the Court’s opinion, the publicly accessible parts of Ms. Romano’s Facebook and MySpace pages contained information which her employer “believed to be inconsistent with her claims” of permanent disability, “especially her claims for loss of enjoyment of life.” For example, publicly accessible photographs showed that Ms. Romano had an “active lifestyle” and traveled from New York to Florida and Pennsylvania during the time she was allegedly home and bed bound due to her injuries. The defendant employer made a discovery demand for access to all of her “current and historical Facebook and MySpace pages and accounts, including all deleted pages and related information”—both the publicly accessible parts of such pages and those parts which Ms. Romano had marked as “private” and made accessible to only her social networking “friends.”
 

In determining that the defendant employer was entitled to the information, the Court concluded that Ms. Romano had no reasonable expectation of privacy in the material. The Court reasoned that because the whole purpose of social networking sites is to share information with others, by creating her Facebook and MySpace pages and posting information and photographs on them, “she consented to the fact that her personal information would be shared with others, notwithstanding her privacy settings.” The Court also concluded that any minimal privacy interest was outweighed by New York’s “strong public policy in favor of open disclosure” in litigation. Because the federal Stored Communications Act prohibits a social networking site like Facebook or MySpace from disclosing the information sought without the consent of the owner of the account, the Court ordered Ms. Romano to provide the necessary consent.

The Romano decision was issued in the context of a litigation discovery dispute between an employer and employee, but the case’s impact is potentially broader because of the general principle it enunciates: individuals do not have a reasonable expectation of privacy in Facebook postings, regardless of the privacy settings they choose. As a result, when a co-worker who is “friends” with an employee presents an employer with photographs that the employee posted on Facebook, and those photos clearly demonstrate the employee was on vacation when he had called in sick, the employer may consider that material in its investigation. The employer may do so even if the employee’s privacy settings would have prevented the employer from accessing the photos directly. Of course, when obtaining investigative material from a co-worker, the employer/investigator must still proceed with caution given Stored Communications Act concerns  

After much anticipation regarding what the reconstituted National Labor Relations Board’s agenda would be, the past month has revealed that one of the Board’s and the Acting General Counsel’s priorities is revamping a number of the Board’s policies on remedies. Those changes are discussed below.

Interest Awards

In late October, the Board issued a decision that changes a long-standing remedial policy on how interest on monetary awards is calculated. In Kentucky River Medical Center, 356 NLRB No. 8, the Board unanimously held that interest on backpay and all other monetary awards will be compounded on a daily basis. This is a break from its previous policy that interest was calculated on a simple basis.

The Board concluded that “compound interest better effectuates the remedial policies of the Act than does the Board’s traditional practice of ordering only simple interest and that, for the same reasons, interest should be compounded on a daily basis, rather than annually or quarterly.” The Board justified its change in policy by pointing to the “norms” in private lending practices, as well as the IRS’ policies regarding compound interest. This case applies retroactively to all pending cases, no matter what stage they are in, unless doing so would be manifestly unjust.
 

Remedial Notices

Another long-standing Board policy required the posting of paper notices of violation in an appropriate physical location within the employer’s plant or office. The Board’s decision in J. Picini Flooring, 356 NLRB No. 9, alters this policy by requiring that employers who customarily communicate with employees using electronic means (i.e. email, internet, intranet), must post remedial notices using those same electronic means. The Board reasoned that in order to achieve the remedial goal of posting a notice, “notices must be adequately communicated to the employees or members affected by the unfair labor practices found.” The Board found that while “traditional means of communication remain in use, email, postings on internal and external websites, and other electronic communication tools are overtaking, if they have not already overtaken, bulletin boards as the primary means of communicating a uniform message to employees and union members.”

10(j) Injunction Initiative

On September 30, 2010, the NLRB’s Acting General Counsel, Lafe E. Solomon, announced an initiative to strengthen the Agency's response to “nip in the bud” cases with a more streamlined and efficient 10(j) injunction procedure. Solomon characterized “nip-in-the-bud” cases as those where a pro-union employee is terminated during the course of a union organizing drive, and the discharge thereby “‘nips in the bud’ all of the employees’ efforts to engage in the core Section 7 right to self-organization.” The new procedure adopts the following timeline:

• Upon the filing of a charge, the Regions must identify potential 10(j) organizing campaign discharges.
• The lead affidavit should be taken within 7 calendar days from the filing of the charge and the charging party’s evidence should be obtained within 14 calendar days of the filing of the charge.
• Where the evidence obtained from the charging party “points to” a prima facie case on the merits, the Region must notify the employer that it is considering 10(j) and request a position statement. The position statement must be submitted within 7 calendar days of the written notification.
• The Region must make a determination of the case on the merits within 49 days from filing, and a decision regarding whether 10(j) relief is appropriate should be made at the same time.
• The Region must then submit all meritorious 8(a)(3) discharge cases to the Injunction Litigation Branch (“ILB”) within 7 days of the merit determination.
• Once the ILB receives the case, it is reviewed and the ILB makes a determination within 2 business days as to whether 10(j) relief is warranted.
• The Acting General Counsel then determines whether he agrees with the ILB’s determination, and his authorization must be submitted within 2 business days.
• The case is submitted to the Board for final review and approval. Once the Board approves, the Region must file the 10(j) papers with the appropriate District Court within 2 business days.

 

On October 28, 2010, the Internal Revenue Service announced that the dollar limitations for pension plans and other items, beginning January 1, 2011, would remain generally unchanged from the limits in effect in 2010.  Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. These limitations usually are adjusted annually to reflect cost-of-living increases. Many other limitations applicable to retirement plans are adjusted at the same time and in the same manner as the Section 415 limit. Some of the limits to be applied in 2011 are listed below.
 

Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan -- $245,000

Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans -- $16,500

Catch-up Contribution Limit for Persons Age 50 and Older in 402k, 403(b) or SARSEP Plans -- $5,500

Limitation on Annual Additions to a Defined Contribution Plan -- $49,000

• Note, in no event may annual additions exceed 100% of a participant's compensation.

Limitation on Annual Benefits from a Defined Benefit Plan -- $195,000

• Note, in no event may a participant's annual benefit exceed 100% of the participant's average compensation for the participant's high three years.

Highly Compensated Employee Compensation Threshold -- $110,000

• Note, Generally an employee is considered "highly compensated" if the employee: a) was a five-percent owner of the employer at any time during the current or preceding year; or (b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.

SEP Compensation Threshold -- $550

Social Security Taxable Wage Base for Social Security Tax (6.2%) -- $106,800 

•  For Medicare Tax (1.45%) -- No limit

Health Savings Accounts

• Individual Contribution Limit -- $3,050
• Family Contribution Limit -- $6,150
• Catch-Up Contributions -- $1,000

 

Immigration and Customs Enforcement (“ICE”), the enforcement unit of the U.S. Immigration Service, is continuing its vigorous efforts to police the Immigration Reform and Control Act (“IRCA”), with a particular emphasis on employer audits and enforcement actions. IRCA prohibits employers from knowingly hiring or employing unauthorized workers, and requires employers to verify the work authorization of employees through the Form I-9 employment verification process at the time of initial employment.  Under the current Administration, ICE has dramatically ramped up I-9 audits and enforcement actions. In the fiscal year ending September 30, 2010, ICE conducted over 2,000 employer audits, compared to only 250 just three years ago. The dollar value of penalties assessed and the number of debarments of federal contractors for IRCA violations has also significantly increased.

ICE’s aggressive approach was highlighted last month by two investigations. First, a national retail clothing company agreed to pay a $1 million fine based on an ICE audit of its electronic I-9 verification system. While the audit did not reveal any evidence of the employment of unauthorized workers, there were systemic deficiencies in the employer’s compliance program that motivated ICE to demand the substantial fine.

In addition to seeking civil penalties and potential debarment from federal contracts, ICE has pursued criminal charges against employers and company officers. IRCA authorizes criminal penalties for employers that engage in a “pattern or practice” of knowingly employing unauthorized workers. In one recent case, ICE identified 16 unauthorized workers through an I-9 audit of company records. The company advised ICE that the employees had been terminated, but a subsequent investigation revealed that at least two of the workers remained on the payroll and had been advised by the business owner to “go out and get good social security numbers.” The business owner and the company vice president now face criminal charges for knowingly continuing to employ unauthorized aliens.

These enforcement actions derive from ICE’s 2009 comprehensive strategy to reduce the demand for illegal employment and protect employment opportunities for lawful workers. Under this strategy, ICE focuses its resources on the auditing and investigation of employers suspected of knowingly employing illegal workers. In conjunction with this initiative, ICE has conducted high-profile, targeted audits of employers with connections to public safety and national security, as well as those employers identified during ICE investigations as potential employers of unauthorized workers.

The aggressive enforcement attitude of ICE should be an urgent reminder to senior human resources personnel to: (i) re-evaluate I-9 procedures; (ii) conduct self-audits of I-9 records; (iii) remain alert to circumstances that may suggest an issue with an employee’s work authorization; and (iv) avoid any conduct that could be interpreted by ICE as encouragement of, acquiescence in, or constructive knowledge of, fraudulent I-9 documentation.
 

As all federal contractors and subcontractors should know, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), is the federal agency charged with enforcing the non-discrimination and affirmative action obligations imposed on federal contractors and subcontractors by Executive Order 11246 (E.O. 11246). Although OFCCP’s ability to pursue a more ambitious agenda under the Obama administration has recently been hampered by budget issues, the Agency has been far from dormant. Its recent activity should serve as a warning to federal contractors that they may face a more aggressive Agency once the budget issues are straightened out. Some of OFCCP’s most recent activity is described below.

Settlements In Hiring Discrimination Cases

As reported in BNA’s Daily Labor Report, this month alone, OFCCP has announced the approval of three consent decrees which settled allegations of discrimination in hiring. In all three matters, the case was generated not by the filing of an individual complaint of discrimination, but by an OFCCP compliance audit which uncovered apparent statistical evidence of discrimination. On October 7, 2010, OFCCP announced that it had entered into a consent decree with one of the nation’s largest Coca-Cola bottlers. The litigation arose out of an OFCCP compliance audit of the employer’s Charlotte facility, during which OFCCP concluded there was evidence of a statistically significant adverse impact on minority applicants for sales support positions. The employer agreed to pay a class of African-American and Hispanic applicants $495,000.

In a consent decree filed with the United States Department of Labor’s Office of Administrative Law Judges on October 20, OFCCP and a Texas employer settled allegations of sex discrimination in hiring which arose out of an OFCCP compliance evaluation at one of the employer’s California facilities. The employer agreed to pay $167,000 to members of a class of female applicants, to hire some of the applicants and to provide future compliance reports to OFCCP. The very next day, OFCCP announced that it had entered into a $570,000 settlement with a subsidiary of Tyson Foods in another hiring discrimination case. That case was also generated by an OFCCP compliance audit which uncovered a statistically significant adverse impact in hiring which disfavored white and African-American applicants and favored Hispanic applicants.

All three settlements serve as timely reminders of the benefits federal contractors can obtain by following the hiring practices prescribed in their affirmative action plans, properly tracking applicant flow data, and analyzing that data regularly to determine whether the hiring practices are generating any potential adverse impact. Failure to do so creates the risk of potential liability even without the filing of a complaint by an applicant, if OFCCP conducts a routine compliance audit.

OFCCP Jurisdiction Over Health Care Providers

In an unrelated development also reported in the Daily Labor Report, OFCCP continues to assert jurisdiction over health care providers that provide services to federal employees pursuant to a government contract or subcontract. On October 18, a Department of Labor Administrative Law Judge found that a Florida hospital which provides medical services to active and retired military personnel, pursuant to a contract with another federal contractor administering a health care plan for those individuals, was a federal subcontractor covered by E.O 11246, and was subject to OFCCP’s jurisdiction. The Administrative Law Judge relied on a case decided last year, which held that University of Pittsburgh Medical Center branches are federal subcontractors because they have a contract with the federal Office of Personnel Management to provide health care services to federal employees. That ruling is currently being challenged in United States District Court.
 

Last month we posted on several bills signed into law by Governor Paterson in late August, one of those is the Construction Industry Fair Play Act, which applies to construction industry contractors in New York and is designed to deal with the problem of worker misclassification in that industry. Among other things, the Act creates a presumption that workers in the industry are employees, not independent contractors, unless three statutory criteria are met. The Act, which went into effect Tuesday, also provides for fines and criminal penalties for willful misclassification of employees. The New York State Department of Labor has issued a fact sheet explaining the statute. The Agency has also issued a poster which construction industry employers must display in a “prominent and accessible place on the job site.”