Labor and Employment Law Update - July 2010

Wage & Hour Compliance
One topic that continues to have the most decisions and expensive settlements are class action wage and hour lawsuits. Millions of dollars are being awarded against employers or employers are paying such sums to settle these class action lawsuits.

The major issues involved in these lawsuits are the following:

  • employees not getting their uninterrupted 30-minute meal break and not being compensated when they do not;
  • automatic meal break deduction;
  • misclassification of employees as exempt; 
  • unauthorized hours worked;
  • failure to record work time as required for telecommuting employees; 
  • donning and doffing activities;
  • on-call time; and
  • travel time.

And disgruntled former healthcare employees are also filing wage and hour lawsuits. In February, a Detroit Medical Center CRNA was terminated for committing time card fraud and theft of pay during a two-month period. Thereafter, in June, she filed a wage and hour lawsuit claiming that she and her fellow co-workers were forced to do overtime work for which they were not paid. She claims the Medical Center did not keep records showing how long nurses actually worked as she and her co-workers only listed their scheduled hours on their time cards regardless of how long they worked each day. She is seeking class action status.

The Department of Labor also intends to step up its oversight of intern programs because it believes that most unpaid interns are actually employees entitled to at least minimum wage. And a new amendment to the Fair Labor Standards Act prohibits employers from discriminating against an employee because he or she has received a premium tax credit. As such, it is important to review wage and hour policies and practices to make sure employers are complying with the law and that, if required, employers can prove that they are complying with the wage and hour laws. The burden of proof as to recordkeeping is on the employer to prove compliance with the laws in these lawsuits. A wage and hour audit by outside counsel may be a good idea at this time. Make sure your outside counsel is knowledgeable about the intricacies of wage and hour law.

EEOC’S Final ADAAA Regulations
While completing the final regulations under the ADA Amendments Act is a priority for the EEOC, the regulations will not be published any sooner than late summer. As the new amendments will allow many more employees to claim they are disabled, employees will need to grant many more accommodations.

Tax Credits Under the Hire Act
Employers who hire previously unemployed individuals can claim a 6.2% OASDI/Social Security tax exemption on wages paid to the new hires. An affidavit (IRS Form W-11) signed by the eligible works is required for the exemption. The credit should be claimed on Form 941 as part of the reconciliation of payments and credits to total tax liability.

OSHA Revised Regulations Provide Damages for Each Individual Violation
When an employer is found to have violated safety standards, each employee affected by the violation counts as a separate violation. Accordingly, penalties between $7,000 and $70,000 can be assessed against an employer for each employee affected by the violation.

Federal Agencies’ Plans for Employers
OSHA is working on its “i2p2” standard which will shift the burden and responsibility of identifying workplace hazards to the employer. OFCCP plans to participate with the Department of Labor’s initiative to prevent misclassification of workers as independent contractors.

The Wage and Hour Division will create regulations affecting recordkeeping under the FLSA (August), the FMLA (November) and child labor (July).

Misclassification of Workers
The IRS has announced plans to audit 6,000 businesses and other organizations a year between 2010 and 2013 as part of its Employment Tax National Research Project. Employers and employee benefit plans which misclassify workers as independent contractors run significant tax and other risks.

Personnel Policies Which Discourage or Prohibit Employee Discussion Are Unlawful Under the NLRB
Work rules and policies which could be interpreted by employees as hindering their ability to exercise their Section 7 rights (to act concertedly) can be the basis for an unfair labor practice. Policies which limit employee communications need to be closely scrutinized and rewritten so that it is clear to employees that they can gather together and they can discuss wages, hours and conditions of employment with each other except when they are working.

Union Developments
Unions won 68.5% of representative elections conducted by the NLRB in 2009. That percentage was the highest in 25 years.

The first annual National Nurses United Staff Nurse Assembly was held in May. The standards the national union set are:

  • enhanced staffing based on individual patient acuity with minimum, specific nurse-to-patient ratios and contract language to enforce ratio standards; 
  • restrictions on floating to units where nurses are not experienced;
  • a ban on mandatory shift rotation and mandatory overtime;
  • mechanisms to contain exposure of patients and nurses to communicable diseases;
  • improved retirement security through defined benefit pension plans and employer-paid retiree medical benefits;
  • limits on the introduction of new technology that displaces nurses or RN professional judgment;
  • workplace safety protections; and 
  • provisions that enhance and promoteunity and collective strength for unionized nurses.

The nurses also agreed that NNU affiliates will not sign concessionary agreements that undermine RN contract standards, including:

  • takeaways in compensation, health and retirement benefits, or work hours or schedules;
  • two-tier plans that establish reduced pensions, lower pay, or other reduced standards for new hires;
  • merit pay agreements or other proposals that erode seniority or years of service as an RN; and
  • layoffs of RNs or displacement of RNs with other staff.

Mary Kay Henry is the newly elected SEIU president. Her goals are to return to organizing (top priority), reform political strategies to build at the grassroots level and review SEIU’s relationships with the rest of organized labor.

Court Decisions

U.S. Supreme Court Decisions
An employer’s practice can be challenged each time it is used even if it was not challenged when it was implemented. Lewis v. Chicago.

An employee does not have to be a prevailing party in an ERISA case, only a party who has achieved “some degree of success on the merits.” Hardt v. Reliance Standard Life Insurance Co. 

ERISA plan administrators who previously made a single honest mistake in interpreting the plan are still entitled to deferential review when they subsequently interpret the plan. Conkright v. Frommert.

An enhanced attorneys’ fees award in a civil rights case can only be awarded where there is superior performance and should only be done in extraordinary circumstances. Perdue v. Kenny.

The search of a police officer’s text messages on an employer purchased pager was lawful as it was a reasonable search. The Court found the search was reasonable as it was motivated by a legitimate work-related purpose and was not excessive in scope. However, the Court held open what privacy expectations an employee may have in his or her workplace given the rapid changes occurring in communication and information transmission. Of importance in the case was that the employer had a written policy reserving the right to monitor and log all network activity including e-mail and internet use with or without notice. The employer warned employees that “user should have no expectation of privacy or confidentiality when using the pagers.” Ontario v. Quinn.

The NLRB must have at least three members to have a valid quorum to act. This decision invalidates more than 500 decisions issued by the NLRB during a 27-month period where there were only two members on the NLRB. New Process Heal, L.P. v. NLRB.

Federal Appellate Court Decision
Positions held by temporary workers are not vacant positions for purposes of the ADA. The Court held, “A position is ‘vacant’ for the purposes of the ADA’s reassignment duty when the position would have been available for similarly-situated nondisabled employees to apply for and obtain. (Duvall v. G-Pac. Consumer Products L.P.  – 10th Circuit)

von Briesen & Roper Legal Update is a periodic publication of von Briesen & Roper, s.c. It is intended for general information purposes for the community and highlights recent changes and developments in the legal area. This publication does not constitute legal advice, and the reader should consult legal counsel to determine how this information applies to any specific situation.