On December 10, 2009, Governor Patterson signed into law the Tier V Pension Act  which adds Article 22 to the Retirement and Social Security Law. The legislation creates a new Tier V pension classification for public employees who first join the New York State and Local Retirement/Police and Fire Retirement System (PFRS), the New York State and Local Retirement Systems/Employees Retirement System (ERS) and the New York State Teachers’ Retirement System (TRS) on or after January 1, 2010. Governor Paterson announced that this Legislation will provide more than $35 billion in long-term savings to New York taxpayers over the next thirty years.  However, as reported by the Albany Times Union, others such as E.J. McMahon, Director of the Empire Center for New York State Policy, have challenged such claims.

Below are some of the highlights of the new legislation:
 

Employee Contributions

Most ERS and PFRS Tier V members will contribute 3% of their salary for all their years of public service. The legislation requires members of TRS to contribute 3.5% of their annual wages to the TRS for the duration of their employment. Presently, Tier IV members of ERS and TRS contribute 3% of their salary for their first 10 years of creditable service; members of PFRS are not presently required to contribute at all.

Vesting

No Tier V members will be eligible for service retirement benefits until they have completed a minimum of 10 years of credited service. Currently, employees participating in Tier IV ERS, PFRS and TRS become fully vested after only five years of credited service.

Overtime Earnings Restriction

Overtime earnings are generally included in the employee’s final average salary calculation used to determine a retiree’s pension allowance. In an attempt to prevent “salary spiking” in an employee’s final years of service, the legislation creates an “overtime ceiling” which limits the amount of overtime earnings that may be included in the definition of wages when calculating an employee’s final average salary. The "overtime ceiling" is $15,000 per year effective January 1, 2010. The “overtime ceiling” increases by 3 % each year thereafter.

Early Retirement Eligibility

The legislation also raises the minimum age for retirement without penalty for members of the TRS from age 55 with 30 years of service to age 57 with 30 years of service. While the legislation does not increase the age at which ERS members can retire without penalty (it is still 55), it does, however, increase the amount of the “penalty” that these members incur for retiring prior to reaching age 55.

Other Significant Changes

In addition to creating Tier V, several other issues which significantly impact public employers are addressed by the legislation. First, the legislation makes permanent the prohibition on reductions to retiree health insurance benefits or increases in retiree contribution rates by school districts, unless the same reduction in benefits or increase in contribution rates is made for the corresponding group of active employees.

Finally, the Legislature expressed an intent to enact an early retirement incentive for members of New York State United Teachers ("NYSUT") during a three-month window in calendar year 2010.  If the Legislature follows through and enacts the incentive, NYSUT members in TRS and ERS who have reached age 55 and have accumulated 25 years of service will be permitted to elect to retire early during that window without penalty.

The ERS/PFRS  as well as the TRS have created summaries for their members which outline the above-referenced changes implemented by the legislation as well as some additional changes not specifically cited here.

 Howard M. Wexler contributed to this post.

The New York State Department of Labor (“NYSDOL”) recently posted guidelines and instructions on its website addressing employer obligations under New York Labor Law § 195(1). This recently amended statute requires employers to notify newly-hired employees in writing of their pay rates, pay dates, and, if applicable, overtime rates. The statute also requires employers to obtain written acknowledgments from new employees confirming receipt of this information.

NYSDOL also posted several new “model” forms for employers to use when complying with Section 195(1). The new forms supplement the problematic, one-size-fits-all form published by the agency last year. These new forms are intended to cover several different employee groups, including non-exempt employees who are paid either: (a) an hourly rate; (b) multiple hourly rates; (c) a weekly rate or salary for a fixed number of hours (40 or fewer in a week); (d) a salary for varying hours, day rate, piece rate, flat rate, or other non-hourly pay; or (e) a prevailing rate on a public work project. There is also a new model form for exempt employees.  

Consistent with its earlier reversal of position, NYSDOL’s guidelines and instructions state that use of the new model forms is not mandatory at this time. Rather, according to the guidelines, employers may create their own forms, or use or adapt the model agency forms, as long as: (a) the required information is given at the time of hiring, before any work is performed; (b) the employee is given a copy; and (c) the employee signs an acknowledgment of receipt, which the employer must retain for six years.

Several additional aspects of the new materials are also noteworthy. First, NYSDOL takes the position that notices to exempt employees —which apparently include employer-created notices—“must state the specific exemption that applies.” This requirement does not appear in Section 195(1). Second, the new model forms do not require the preparer to certify that the contents are true and accurate under penalty of perjury, which represents a change from the original one-size-fits-all form previously published by the agency. Third, the NYSDOL guidelines discuss how employers can craft written notices for commissioned salespersons, which will satisfy both Section 195(1) and Section 191(1)(c) of the New York Labor Law. Section 191(1)(c) requires that the terms of employment for commissioned salespersons (how wages, salaries, drawing accounts, and commissions are calculated) be reduced to a writing.

 

Starting January 1, 2010, employers and certain other entities that administer group health plans will be required, for the first time, to report on an Internal Revenue Service ("IRS") form certain types of group health plan violations and pay the applicable excise taxes. Violations that must be reported include a failure to satisfy health coverage continuation requirements under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), certain requirements under the Health Insurance Portability and Accountability Act ("HIPAA"), certain mental health benefit parity requirements, childbirth hospital stay requirements, and certain health coverage continuation requirements for seriously ill higher education students. Administrators of group health plans were not required to self-report such violations when they were discovered, and the lack of such self-reporting often resulted in any applicable excise taxes not being paid. The IRS has issued regulations that will require such violations to be self-reported, and will require any applicable excise taxes to be paid in a timely manner.

Steps that should be implemented by employers to comply with these new requirements include:

making sure that employees or other persons who are involved in the administration of each applicable group health plan are informed about these new requirements;

implementing procedures that will help ensure the timely discovery of applicable group health plan violations, the timely submission of the IRS form reporting such violations, and the timely payment of all applicable excise taxes; and

to the extent an employer's group health plan is administered by another entity (e.g., a third party administrator, an insurance company or a health maintenance organization), reviewing any agreement with such entity to see if any changes are needed to help ensure compliance with these new requirements.

 

Taxpayers Required To Comply With These New Requirements

The new self-reporting and excise tax payment requirements for certain group health plan violations generally apply to: (1) employers who sponsor a group health plan that is subject to the requirements described in the following paragraph ("Covered Health Plan"); (2) unions and other employee organizations who sponsor a Covered Health Plan; (3) third party administrators of Covered Health Plans (e.g., a third party administrator of a self-insured Covered Health Plan); and (4) certain other third parties who are responsible for providing benefits under a Covered Health Plan (e.g., insurance companies or health maintenance organizations).

Types of Violations That Are Covered By These New Requirements

Violations that must be reported include a failure to comply with the following requirements:

COBRA Health Coverage Continuation Requirements -- Group health plans that are subject to COBRA are required to comply with certain coverage continuation requirements.

HIPAA Preexisting Condition, Creditable Coverage and Special Enrollment Requirements -- Group health plans that are subject to HIPAA are required to, among other things, comply with limitations on preexisting exclusions, certification of creditable coverage requirements, and special enrollment requirements.

HIPAA Nondiscrimination Requirements Based on Health Status Factors -- Group health plans that are subject to HIPAA are not allowed to discriminate based on a health status factor.

Genetic Information Nondiscrimination Requirement -- The Genetic Information Nondiscrimination Act ("GINA") prohibits, among other things, discrimination based on genetic information.

Mental Health Parity Requirements -- The Mental Health Parity and Addiction Equity Act imposes certain parity requirements between mental health benefits and medical/surgical benefits.

Childbirth Hospital Stay Requirements -- The Newborns' and Mothers' Health Protection Act imposes requirements regarding minimum hospital lengths of stay in connection with childbirth.

Health Coverage Continuation Requirements for Seriously Ill Higher Education Students -- Michelle's Law imposes certain health coverage continuation requirements for dependent university and college students with serious medical conditions.

Comparable Contribution Requirements for Health Savings Accounts and Medical Savings Accounts -- Health savings accounts ("HSAs") and Archer medical savings accounts ("MSAs") are subject to requirements that help ensure that comparable contributions are made for nonhighly compensated employees.

Excise Taxes That Apply To Such Violations

The applicable excise taxes vary depending upon the type of violation involved. An excise tax of $100 a day per affected beneficiary generally applies to a violation of the COBRA health coverage continuation requirements. An excise tax of $100 a day per affected individual generally applies to violations of: (1) HIPAA's preexisting condition, creditable coverage, and special enrollment requirements; (2) HIPAA's nondiscrimination requirements based on health status factors; (3) GINA's genetic information nondiscrimination requirement; (4) the mental health parity requirements; (5) the childbirth hospital stay requirements; and (6) the health coverage continuation requirements for seriously ill higher education students. A violation of the comparable contribution requirements for HSAs and MSAs generally will be subject to an excise tax of 35 percent of the aggregate amount contributed to the HSAs or MSAs for all employees within the applicable calendar year.

IRS Form That Must be Filed If a Violation Occurs

If a violation of one of the requirements described above occurs, the applicable employer generally will be required to report that violation on IRS Form 8928 and will be required to pay the applicable excise taxes. If a COBRA health coverage continuation requirement is involved, the applicable third party administrator or insurer could be responsible for filing Form 8928 and paying the applicable excise taxes. If a violation occurs with respect to a multiemployer plan, the plan will be responsible for filing Form 8928 and paying the applicable excise taxes.

Deadline For Filing the Required IRS Form and Paying the Applicable Excise Taxes

For all violations described above other than a violation of the comparable contribution requirements for HSAs and MSAs, a Form 8928 generally must be filed and the applicable excise tax generally must be paid by the due date for filing the federal income tax return for the applicable taxpayer. If a violation of the comparable contribution requirements for HSAs and MSAs occurs, a Form 8928 generally must be filed and the applicable excise tax generally must be paid by April 15th of the calendar year that follows the calendar year in which the violation occurred. Special requirements apply with respect to extensions, multiemployer plans, and multiple employer plans.

Exceptions To the Excise Tax Requirements

With respect to all violations described above other than a violation of the comparable contribution requirements for HSAs and MSAs, exceptions to the excise taxes apply:

if the responsible party did not know, and would not have known even if reasonable diligence had been exercised, that the violation existed; or

if the violation was due to reasonable cause and not willful neglect, and was corrected within 30 days after the first day the responsible party knew, or exercising due diligence, would have known that the violation had occurred (the violation will be considered corrected if the violation is retroactively undone to the extent reasonably possible and the affected individual is put in a financial position as beneficial as the individual would have been in had the violation not occurred).

If a violation of the comparable contribution requirements for HSAs and MSAs occurs, the IRS can waive the excise tax if it is excessive and the failure is due to reasonable cause and not willful neglect.

Penalties That Apply If These Filing and Excise Tax Requirements Are Not Satisfied

A failure to satisfy these filing and excise tax requirements could result in late penalties of up to 50 percent, and interest charges.

Effective Date of These New Filing and Excise Tax Requirements

These new filing and excise tax requirements apply to any Form 8928 that is due on or after January 1, 2010.

 

Too often employers take for granted that their anti-harassment policies are sufficient to prevent and remedy inappropriate workplace conduct, as well as mitigate legal liability. But failure to regularly update those policies can create significant (and expensive) problems down the road. To limit the risk presented by stale and outdated anti-harassment policies, employers should periodically review them to ensure that they are legally compliant and accurate. When conducting that review, consider in particular three important questions:

     1.     Does My Policy Prohibit All Forms Of Unlawful Harassment?

We occasionally come across policies that prohibit sexual harassment, but are silent as to other types of illegal harassment. This is usually a tell-tale sign that the employer’s policy urgently needs to be updated. Sexual harassment was first recognized by the courts as a form of discrimination in the mid-1980’s. Since that time, the various federal and state anti-discrimination laws have been interpreted to prohibit harassment on the basis of other protected categories, including but not limited to race, religion, national origin, disability, and age. In states such as New York – where the New York Human Rights Law includes no less than fourteen distinct protected categories (and counting) – employers must be sure to amend their policies as necessary to remain current with changes in the law.

     2.     Does My Policy Provide Accessible – And Alternative – Avenues Of Complaint?

Effective anti-harassment policies must provide reasonable methods for employees to bring alleged inappropriate conduct to their employer’s attention. A policy which requires that a complaint be made to a single person, for example the employee’s supervisor, is inadequate because it creates the potential for forcing the employee to complain to the very person accused of wrongdoing. To avoid this obvious chilling effect, employers should make available several avenues of complaint. At the very least, the employee should have the option to present a complaint to someone in his or her immediate chain-of-command, as well as someone outside his or her direct line of authority, such as a human resources manager. Never create the impression (express or implied) that the employee is required to lodge a complaint through a single individual. The more alternatives the better.

Employers should also publish contact information so that employees know exactly how to reach the persons to whom they can complain. Appropriate contact information (e.g., telephone number, e-mail address and/or mailing address) for each avenue of complaint should be included in the written policy and posted prominently in the workplace. That way, an employee has little excuse for not bringing a complaint of harassment to the employer’s attention.

     3.     Does My Policy Provide Reasonable Assurances Against Retaliation?

Just as employers have a legal obligation to implement reasonable measures to prevent and correct workplace harassment, employees have a duty to take reasonable steps to avoid or mitigate the effects of unwelcome conduct. This means generally that an employer can expect an employee to take advantage of an internal complaint procedure provided by the employer. An employee’s failure to lodge an internal complaint may be excused, however, if he or she can show a reasonable fear of retaliation. To minimize this possibility, it is critical that an employer’s policy clearly explain that retaliation against complaining employees will not be tolerated. This message should be reinforced at the time of a complaint. Moreover, the policy statement must also be enforced as necessary.

Of course, these are not the only issues to consider when assessing the effectiveness of your company’s anti-harassment policy and procedures. Keep in mind that the most comprehensive, water-tight, anti-harassment policies are only as good as the manner in which they are implemented and enforced. Courts and administrative agencies are increasingly looking at whether supervisors and employees are given training to reinforce written policies and to otherwise ensure that all employees understand the employer’s internal complaint procedure. While these measures are not technically required by law, it is advisable that such additional steps be taken to enhance the protections afforded by written anti-harassment policies.

 

In recessionary times like these, employers often rely more heavily on independent contractors to avoid the personnel costs associated with hiring regular employees. Doing so, however, creates risks. Now is a good time to make the effort to determine whether your independent contractors are really independent contractors. Just don’t expect the answer to come easily.

The issue of who is properly classified as an independent contractor (as opposed to employee) has been giving employers headaches for decades. As the United States Supreme Court noted over 60 years ago: “Few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent entrepreneurial dealing.” N.L.R.B. v. Hearst Publication, 322 U.S. 111, 121 (1944). It is little wonder that even the Supreme Court is troubled by this legal issue given the difficulties involved in the analysis. For starters, courts and government agencies (both state and federal) use different legal tests to make this determination. As a result, a single set of facts can produce different legal conclusions. Moreover, none of the tests utilized relies on definitive factors. As the Internal Revenue Service (“IRS”) states on its website, “[T]here is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.”

Although the issue is old, it has continued vitality. There has been a significant increase in litigation, government enforcement and legislation over the misclassification of independent contractors in recent years. It is equally clear that the focus on independent contractor misclassification, far from slowing down, will only continue to pick up steam. The remainder of this blog summarizes some recent developments demonstrating that employers need to be very careful when using independent contractors.
 

New York State’s Joint Enforcement Task Force on Employee Misclassification (“Task Force”), formed in 2007, continues to address, among other things, the problem of employers who inappropriately classify employees as independent contractors.  According to the Task Force’s most recent Annual Report, it has uncovered approximately 12,300 instances of employee misclassification resulting in more than $157 million in unreported wages. Partly in response to the Report, Senate Labor Committee Chairman George Onorato, D-Queens, and Senate Insurance Committee Chairman Neil Breslin, D-Albany, renewed their push for passage of a bill which would, among other things, levy fines of up to $5,000 per employee for any construction company that misclassifies its workers as independent contractors. The bill also creates a presumption of employment status in the construction industry unless certain factors are established.

On August 21, 2009, the Massachusetts Supreme Judicial Court held in Somers v. Converged Access, Inc. that an employee who has been misclassified as an independent contractor is entitled, under Massachusetts law, to recover any wages and benefits he proves he was denied because of his misclassification, including holiday pay, vacation pay, and overtime. In so doing, the Court rejected the employer’s argument that it should not have to pay any damages because had it known the individual was an employee instead of an independent contractor, it would have paid him a lower hourly rate than he received as an independent contractor.

New York Attorney General Andrew M. Cuomo, Montana Attorney General Steve Bullock, and New Jersey Attorney General Anne Milgram have announced their intent to sue FedEx Ground Package Systems, Inc. (“FedEx Ground”) for violations of state labor laws stemming from the Company’s alleged misclassification of its drivers as independent contractors. The Attorneys General claim that such misclassification deprives drivers of workers’ compensation and other labor and employment legal protections received by FedEx Ground’s employees.

In Mohel v. Commissioner of Labor, a decision dated November 17, 2009, the New York Industrial Board of Appeals found that drivers of a limousine service were employees as opposed to independent contractors under the “right to control” test used by the New York State Department of Labor.

Finally, Beginning in early 2010, the IRS will launch an audit initiative that will audit the federal tax returns of 6,000 companies to assess compliance with tax and labor regulations. As part of this audit, the IRS will examine independent contractor misclassification. The initiative was prompted, in part, by advice from the United States Government Accountability Office to the IRS and United States Department of Labor to step up efforts to reduce the misclassification of independent contractors.

 

On December 21, 2009, the President signed H.R. 3326, which includes the COBRA subsidy changes discussed in yesterday's blog entry. The enactment of this law means that by February 19, 2009, administrators of group health plans must issue a notice describing the COBRA changes to individuals who were eligible for the subsidy or who experience(d) a COBRA qualifying event at any time on or after October 31, 2009. This notice should describe:

• The extension of the maximum COBRA subsidy period from 9 months to 15 months;
• The extension to February 28, 2010, of the qualifying date for an involuntary termination entitling the COBRA qualified beneficiary to the COBRA subsidy as an "assistance eligible individual";
• The right of qualified beneficiaries whose COBRA terminated after October 31, 2009 (due to failure to pay the higher COBRA premium) to reinstate coverage retroactively by paying the subsidized premium (the 35% amount) by February 19, 2010, or by 30 days after the notice is provided, whichever is later;
• The right of assistance eligible qualified beneficiaries who paid the unsubsidized premium for COBRA for periods after October 31, 2009, to receive a refund or obtain a credit of the overpaid amount. (The administrator can choose the option it prefers: refund or credit).

Watch the U.S. Department of Labor website, www.dol.gov/cobra, for more information and, possibly, a model notice.
 

On Saturday, the Senate passed the 2010 Defense Appropriations Bill, which contains an extension of the ARRA subsidy for COBRA continuation of health coverage. The Senate Bill is identical to the House Bill, and the President is expected to sign the bill this week. That signature date is important because it is the "enactment date," which drives some of the payment and notice requirements described below.
 

The Appropriations Bill does the following with respect to the 65% COBRA subsidy:

• Individuals who are involuntarily terminated through February 28, 2010, will be eligible for the subsidy (the previous date was December 31, 2009);
• The maximum subsidy period is extended to 15 months from the original 9 months; 
• Individuals whose subsidized COBRA coverage has already ended (some may have ended during November, 2009) have 60 days from the date of enactment (or 30 days after the notice discussed in the next bullet point, if later) to pay the 35% subsidized premium amount and obtain retroactive coverage by the subsidized COBRA. If the full premium was already paid, the "overpayment" amount can be refunded or credited towards future coverage;
• Within 60 days of the enactment of the law, Administrators of group health plans must provide a notice describing the foregoing to individuals who were eligible for the subsidy or who experienced a COBRA qualifying event at any time on or after October 31, 2009;
• The bill also "fixes" a problem recently identified in Department of Labor Q&As: The subsidy will be available to individuals who have a COBRA qualifying event (involuntary termination) through February 28, 2010. The previous law said that a terminated employee had to be eligible for COBRA by the expiration date. This is a subtle difference, but it caused an earlier termination of the subsidy than had been contemplated by Congress.
   

Employers forced to implement voluntary separation or early retirement incentives to deal with the recent economic downturn sometimes make a no-rehire policy part of the package. There may be sound business reasons for doing so, for example, to avoid paying a salary to someone who was supposed to leave employment and is receiving separation or retirement benefits. However, employers who include a no-rehire policy as part of a separation incentive package run the risk of having to defend an age discrimination lawsuit if the policy is later applied to prevent a rehire. Recently, the Equal Employment Opportunity Commission ("EEOC") filed such a suit in federal court in New York. EEOC v. AT&T, Inc., Civil Action No. 09 Civ. 7323 (S.D.N.Y. 2009).

EEOC’s complaint alleges that, among other things, a no-rehire policy violates the Age Discrimination in Employment Act because it has an adverse impact on employees and applicants who are age 40 or older. The theory is that older employees are more likely to be denied employment under a no-hire policy because they are more likely to have accepted a voluntary separation or early retirement incentive.

Whether such a disparate impact claim is even available in the context of a failure to hire is open to question. However, EEOC has obtained a favorable decision on that issue from at least one other court. In EEOC v. Allstate Insurance, Co.,   (8th Cir. 2008), the United States Court of Appeals for the Eighth Circuit considered a similar “no-rehire” policy that applied to “employee-agents” who were terminated as part of a corporate reorganization. Allstate’s policy prohibited the rehire of any terminated employee-agent for one year or for so long as that employee was receiving severance benefits, whichever period was longer. Ultimately, the Eighth Circuit held that the “rehire” policy was an “employment policy” and not a “hiring policy,” and that the policy was therefore subject to a disparate impact challenge under the ADEA. Allstate reportedly settled the case for $4.5 million.
 

As we reported earlier this year, the Equal Employment Opportunity Commission (“EEOC”) has proposed regulations implementing the Americans with Disabilities Act Amendments Act (“ADAAA”). The EEOC published its proposed regulations in September, and the period for public comment recently closed on November 23, 2009. The EEOC will now evaluate the comments it has received and then issue final regulations, which may or may not include changes to the proposed rules.

Consistent with the intent of the ADAAA, the EEOC’s proposed regulations would broaden the definition of what constitutes a protected “disability” under federal law. The EEOC believes that this will have the effect of shifting the focus of litigation away from whether a person’s impairment is a covered “disability,” and to the issue of whether an employer has complied with its obligations under the law.

While many aspects of the proposed regulations appear to reasonably interpret the ADAAA, commentators have noted there are some provisions which, at least arguably, constitute overreaching on the EEOC’s part. Among the most controversial of these provisions are the following:

 

New List of “Per Se” Disabilities

Perhaps the most controversial element of the proposed regulations is the EEOC’s creation of what some commentators have called a “per se” list of protected disabilities. The ADAAA itself neither contains such a list, nor expressly authorizes the EEOC to create one. The EEOC claims its non-exclusive list does not preclude employers from undertaking an “individualized assessment” to evaluate a potential disability. At the same time, according to the agency, the list is intended to ensure this assessment “can be done very quickly and easily with respect to these types of impairments, and will consistently result in a finding of disability.”

Elimination of “Condition, Manner, or Duration” Analysis

The proposed regulations would redefine the term “substantially limits,” by eliminating the previous “condition, manner or duration” evaluation used by employers to determine whether an impairment substantially limits a major life activity. Instead, the regulations state this evaluation should be made on the basis of “common-sense” and “without resorting to scientific or medical evidence” by comparing an individual’s limitation to “the ability of most people in the general population.” (The ADAAA does not expressly address this issue, and the statute’s legislative history suggests that the drafters intended to preserve the “condition, manner, or duration” analytical device.)

“Major Life Activity” of “Working”

The proposed regulations would also alter the framework employers are required to use to analyze whether an impairment substantially limits the major activity of working. (The ADAAA is silent on this issue as well.) Specifically, under the proposed regulations, “an impairment substantially limits the major life activity of working if it substantially limits an individual’s ability to perform, or meet the qualifications for, the type of work at issue.” This new framework would replace current law which requires an inability to perform a “broad range” or “class” of jobs.

Less controversial, but nonetheless noteworthy, are the following provisions:

Expansion of “Major Life Activities” and “Major Bodily Functions” Lists

The proposed regulations would expand the list of “major life activities” found in the ADAAA, to include: sitting, reaching and interacting with others. Similarly, the proposed regulations would expand the ADAAA’s list of “Major Bodily Functions” to include: hemic, lymphatic, musculoskeletal, special sense organs and skin, genitourinary and cardiovascular.

Expansion of “Mitigating Measures” List

The proposed regulations supplement the ADAAA’s list of mitigating measures, which may not be considered in determining whether an individual has an impairment which substantially limits a major life activity, to include surgical interventions that do not permanently eliminate an impairment. However, EEOC takes the position that mitigating measures may be taken into consideration for other purposes, for example, to determine whether a reasonable accommodation is required or to determine whether an individual poses a “direct threat” in the workplace.

Although it is not known when the EEOC will issue its final regulations, Commissioner Constance Barker has stated it could be as early as March 2010. We will continue to monitor and report on any noteworthy developments.
 

The recently enacted National Defense Authorization Act for Fiscal Year 2010 amends the Family and Medical Leave Act (“FMLA”), by expanding the availability of “military caregiver leave” and “qualifying exigency leave.” The legislation does not include an effective date, so it is prudent for employers to adjust their workplace practices and policies now in order to comply with the new law. The coverage expansions are explained below.

Military Caregiver Leave Expanded to Cover Certain Veterans

The FMLA provides that eligible employees may take up to 26 weeks of job-protected leave in a single 12-month period to care for a “covered servicemember” with a serious injury or illness. The term “covered servicemember” was defined as a member of the Armed Forces, including a member of the National Guard or the Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness. The new law expands the definition of “covered servicemember” to include veterans who are undergoing medical treatment, recuperation, or therapy for a serious injury or illness and who were members of the Armed Forces, including the National Guard or the Reserves, at any time during the five years preceding the date on which the veteran undergoes such treatment, recuperation or therapy.

Military Caregiver Leave Expanded to Cover Preexisting Injuries

As noted above, the FMLA’s military caregiver leave provisions require that the covered servicemember have a “serious injury or illness.” Pre-amendment, the “serious injury or illness” must have been incurred in the line of duty on active duty in the Armed Forces. The recent amendments expand this definition to include illnesses or injuries that existed prior to the beginning of the covered servicemember’s active duty and were aggravated by service in the line of duty on active duty. With respect to a veteran who was previously a member of the Armed Forces, including the National Guard or the Reserves, a “serious injury or illness” is defined as “a qualifying injury or illness” that was incurred in the line of duty, or aggravated by service in the line of duty while on active duty in the Armed Forces and that manifested itself before or after the individual became a veteran.

Qualifying Exigency Leave Expanded to Cover Members of the Regular Armed Forces

The FMLA also provides eligible employees with up to 12 weeks of job-protected leave in a single 12-month period for a “qualifying exigency.” Until the most recent amendments, “qualifying exigency” leave was limited to eligible family members of individuals serving in the National Guard or Reserves. The most recent amendments expand the scope of “qualifying exigency” leave to include active-duty members in the regular Armed Forces. The covered military member must be on “covered active duty.” For servicemembers in a regular component of the Armed Forces, “covered active duty” means duty during deployment to a foreign country. For members of the National Guard or Reserves, it means deployment to a foreign country under a call or order to active duty.

The Secretary of Labor, in consultation with the Secretary of Defense and the Secretary of Veterans Affairs, is responsible for issuing regulations to implement the most recent amendments. It is not certain when those regulations will be issued.

 

As calendar year 2009 draws to a close, employers who do business with the federal government should examine whether they are required to have an annual affirmative action plan (“AAP”), and, if so, whether it is up to date. Executive Order 11246 (“EO 11246”) requires federal contractors and subcontractors who have 50 or more employees and at least one contract worth more than $50,000 to have an affirmative action plan, to update that plan annually, and to keep and analyze a wide variety of employment data during each plan year.  Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans Readjustment Assistance Act of 1974 create additional affirmative action plan obligations related to veterans and individuals with disabilities. A covered contractor's failure to satisfy its AAP obligations is typically revealed through an audit by the Office of Federal Contract Compliance Programs (“OFCCP”).  OFCCP is part of the United States Department of Labor and is charged with enforcing EO 11246. OFCCP selects contractors for audit using its Federal Contractor Selection System, which utilizes a variety of neutral criteria. The ultimate sanction for failing to comply with AAP obligations is debarment from federal contracts.

What contracts are covered by EO 11246? In general, a covered contract is one whereby the contractor agrees to supply goods or services to a federal administrative agency or department. Special rules apply to banks and construction contractors. A subcontract is covered if the subcontractor furnishes supplies, services or property necessary for the performance of any one or more covered primary contracts, or if the subcontractor agrees to perform any portion of the covered contractor’s obligations to the government. Generally speaking, receipt of some form of federal financial assistance does not create a covered contract. However, employers should examine the terms of any federal agreements to ensure that the agreement itself does not require an affirmative action plan.

If you are required to have an affirmative action plan, the plan, or separate plans, must cover each of your establishments, even if only one establishment has the covered contract. OFCCP defines an establishment as a facility which produces goods or services such as a factory, office, store or mine. Although it is clear that all of a contractor’s establishments must have a plan even when only one has a federal contract, questions related to when a parent or subsidiary must have a plan simply because a related corporate entity has a covered contract can be more difficult to answer. Whether some or all of the entities must have an AAP turns on whether the corporate entities are truly separate, a question that is answered using a multifactor test. The most important factor is common control of labor and employee relations.
 

Without acknowledging that it is doing so, today the New York State Department of Labor ("DOL") changed its position on whether employers are required to use DOL’s form in order to comply with Section 195 of the Labor Law. Effective October 26, 2009, Section 195 requires employers to provide all new hires with notice of their wage rates, pay dates, and, if applicable, overtime rates. The statute also requires that employers obtain written acknowledgments from new employees confirming receipt of this information, which must conform to any "content and form" requirements established by DOL. Shortly after the effective date of the statute, DOL issued a problematic, highly controversial, one-size-fits-all form for providing that information, and mandated its use by employers for all classes of employees. Today, DOL reversed position by posting a notice on its website that states no particular form is required to comply with the statute and that DOL’s form is only a sample.   Employers may create their own forms, use the DOL sample, or adapt the DOL sample form.  The notice also states that DOL plans to come up with several different types of sample forms in the future, including a form for exempt employees.