Hunton Employment & Labor Perspectives

Companies doing business in California should note that, on November 23, 2009, the Chief Counsel of the California Division of Labor Standards Enforcement (“DLSE”) issued an Opinion Letter on behalf of Labor Commissioner Angela Bradstreet, in which the DLSE modified its position on the issue of making deductions from vacation and sick leave balances accrued by exempt employees for the purpose of covering partial-day absences.  The Opinion Letter brings California law more in line with the federal Fair Labor Standards Act regarding the “salary basis test” and deductions from exempt employee paid time-off accounts for partial-day absences.

As a recent decision by the U.S. Court of Appeals for the Fourth Circuit makes clear, the fact that an employer prevailed against an employee’s Sarbanes-Oxley claim in an administrative proceeding cannot be used to bar a new trial of the claim in federal court.  The U.S. District Court for the District of Maryland dismissed a former employee’s SOX lawsuit on the ground that it was precluded by an administrative law judge’s granting of the employer’s motion for summary decision.  The Court of Appeals, in a ruling of first impression, held that the lower court erred and vacated its dismissal in Stone v. Instrumentation Lab Co., 4th Cir., No. 08-1970, 12/31/09.

The EEOC reported that workplace discrimination charges reached near-record highs in 2009.  According to the EEOC, there were 93,277 charges filed in fiscal year 2009 -- the second-highest level in its history. 

A recent decision from the California Supreme Court has provided a rare victory for companies with employees in that state.  In Schachter v. Citigroup, Inc., the Court ruled that a forfeiture provision in an employee incentive compensation plan did not violate California wage laws.

The American Recovery and Reinvestment Act of 2009 (ARRA), which provides premium reductions for health benefits under COBRA, was recently amended by the Department of Defense Appropriations Act, 2010 (2010 DOD Act).  Under this new legislation, those involuntarily terminated through February 28, 2010, a change from the prior cut-off of December 31, 2009, are entitled to COBRA continuation assistance.  Furthermore, the legislation extended the length of that assistance to 15 months from 9 months.

A recent decision of the U. S. District Court for the District of Columbia has cast doubt on the view that employees have no reasonable expectation of privacy in work email accounts.  Specifically, in Convertino v. United States Department of Justice,  Judge Royce C. Lamberth held that an employee’s communications with his attorney, sent to and received on the employee’s work email account, were protected from disclosure by the attorney-client privilege, even though the employer regularly accessed and saved such email communications.

The drama in late 2008 surrounding the factory shutdown of Republic Window & Doors in Chicago, Illinois, highlighted for banks and other financial institutions the potential backlash when a debtor business fails.  In that situation, the factory's lender faced a public relations challenge when it declined (with good reason) to continue a line of credit for a failing company.  The company said it could not continue because its lender was not willing to continue funding its operations, and its employees staged a sit in to protest the bank's action.  Illinois Governor (at that time) Rod ...

The Supreme Court last week agreed to decide whether a California police department violated the privacy rights of an employee police officer by reading sexually-explicit text messages on the officer’s employer-issued pager.  The case, Quon v. Arch Wireless Operating Company, is on appeal from the Ninth Circuit, which ruled that in certain circumstances a public employee has a reasonable expectation of privacy in personal text messages -- even when those messages are sent on a device owned and provided by the employer. The decision is directly at odds with current employee privacy law, which generally holds that employees have no reasonable expectation of privacy in electronic communications on employer-provided electronic devices, and it adds to the list of headaches for employers adjusting to the exploding use of instant messaging in the workplace.

What to do with an employee who tested positive for marijuana used to be an easy decision.  That is not necessarily the case anymore.

Thirteen states have legalized the use of marijuana for medical purposes.  Some of these states require employers to accommodate the medical use of marijuana.  Although use of marijuana remains illegal under the federal Controlled Substances Act regardless of whether it is medically prescribed, the U.S. Department of Justice announced in October 2009 that federal agents will target users and distributors of marijuana only when they violate both federal and state laws.  In addition, employers may have to consider whether they must allow employees to use medical marijuana as a reasonable accommodation pursuant to the federal Americans With Disabilities Act (ADA).  These developments have caused employers to re-examine their “zero tolerance” policies with regard to drug use by employees.

In the past two months, both the House and Senate have proposed legislation that would extend the COBRA subsidy for health insurance created by the America Recovery and Reinvestment Act of 2009 (ARRA). The ARRA subsidy will begin to expire on December 1, 2009 without government action.  As the subsidy expires, unemployed Americans receiving the subsidy will see their COBRA premiums increase from 35% to 100% of the premium cost.

Last week, Secretary of Labor Hilda Solis announced the Department of Labor's planned launch of an ambitious new public awareness campaign called "We Can Help."  The campaign, set to debut in early 2010, is designed to help inform workers about their rights under federal wage and hour laws.

Title II of the Genetic Information Non-Discrimination Act of 2008 (GINA) covering employment goes into effect on November 21, 2009.  GINA, which was enacted in May 2008, prohibits employers from discriminating on the basis of genetic information and from intentionally acquiring genetic information from employees or applicants.  The Act also imposes strict confidentiality requirements on employers, and requires them to segregate and maintain all such information in compliance with the Americans with Disabilities Act.

On November 5, 2009, the U.S. Senate Committee on Health, Education, Labor, and Pensions held an initial hearing on the Employment Non-Discrimination Act of 2009, S. 1584 (“ENDA” or “the Act”).  ENDA would prohibit discrimination in employment on the basis of sexual orientation and gender identity, which currently are not prohibited factors under federal law or under the laws of a majority of states.

Employees who have family members serving in the armed forces will have new expanded rights under Section 565 of the recently-enacted National Defense Authorization Act for Fiscal Year 2010.  This provision further amends the Family and Medical Leave Act (FMLA), which was amended only a year ago to allow leave to care for family members with needs relating to military service.

Many employers recognize the advantages of “alternative” work arrangements with independent contractors, consultants, freelancers, temporary staffers, and “as needed” workers.  Generally, employers utilize these arrangements because they hope to obtain cost savings and increased flexibility, particularly in an uncertain business climate.  In some companies, use of a contingent worker expands working capacity without increasing employee headcount, which can be particularly attractive during a hiring freeze.

Companies doing business in California, particularly retailers, should be aware of a recent revision to the California Financial Code that sets out new accessibility requirements for point-of-sale devices.  A point-of-sale device includes any device used by a customer for the purchase of a good or service with a debit, credit or cash card where a personal identification number (PIN) is required. 

On July 15, 2009, the EEOC issued guidance entitled "Understanding Waivers of Discrimination Claims in Employee Severance Agreements." In this guidance, the EEOC generally explains the waiver of discrimination claims through release agreements and answers questions employees may have about the effect of those agreements on the filing of charges of discrimination and on severance pay. These questions include the following: "May I still file a charge with the EEOC if I believe I have been discriminated against based on my age, race, sex or disability, even if I signed a waiver ...

Previously we have discussed the risks associated with contingent worker arrangements (engagements of independent contractors, consultants, freelancers, temporary staffers, and “as needed” workers, etc.).  These risks will continue to grow in the coming months, as more claimants emerge seeking damages, government agencies increase their enforcement efforts, and state and federal legislators create new restrictions and penalties associated with classifying workers as independent contractors.

President Obama recently nominated Victoria A. Lipnic for a seat on the five-member Equal Employment Opportunity Commission (EEOC).  Lipnic is Republican, with an extensive background in employment law.  During the prior Administration, she served as Assistant Secretary of Labor for Employment Standards from 2002-2009.  In that capacity, Lipnic oversaw the Department of Labor’s largest agency, and led the teams that revised the Part 541 overtime regulations under the Fair Labor Standards Act (FLSA), and the Family and Medical Leave Act (FMLA) regulations.
 

Government agencies are being urged to step up their efforts to address the potentially widespread problem of improper classification of workers as independent contractors, according to a recent study by the United States Government Accountability Office (GAO).  In a 70-page document, the GAO concluded that the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) have not sufficiently focused on misclassification in the past, and that they have not consistently assessed penalties against companies found to have improperly classified workers.