Hunton Employment & Labor Perspectives

President Obama is not only focused on health care these days.  He is also focused on helping companies keep employees, rather than lay them off, during a tough economic time.  The federal government will actually supplement wages, in certain circumstances, to stop layoffs. In February of 2012, President Barack Obama signed into law the Middle Class Tax Relief and Job Creation Act of 2012.  The chief focus of the Act was extending tax cuts for the middle class.  However, the Act also made substantial revisions to the unemployment insurance system.  One of the key revisions was to provide substantial federal funding for the expansion of state short-time compensation (“STC”) programs, which are sometimes referred to as “work sharing” programs.

On March 13, 2013,  the New York City Council, over Mayor Bloomberg’s veto, passed a law prohibiting discrimination against the unemployed in hiring.  The law, effective June 11, 2013, amends the New York City Human Rights Law to expand the class of protected individuals to include the unemployed.  The law applies to employers in New York City who employ four or more persons (including employees and/or independent contractors).  The law defines an unemployed person as someone “not having a job, being available for work, and seeking employment” and prohibits covered employers from basing employment decisions “with regard to hiring, compensation or the terms, conditions or privileges of employment on an applicant’s unemployment.”  Additionally, it prohibits all employers from advertising that a particular position requires applicants to be currently employed or that the employer will not consider applicants who are unemployed.

In the current economy, with unemployment over 9% and multiple applicants for every position, an out-of-work individual should be doing everything possible to get a new job, right? Perhaps, but not for purposes of “mitigation” under fair employment statutes.

On August 11, 2011, the U.S. District Court for the Western District of New York ruled that a fired employee alleging discriminatory discharge under Title VII had no obligation to enroll in vocational training in order to mitigate his damages from the alleged discrimination. EEOC v. Dresser Rand Co., No. 04-CV-66300, 2011 U.S. Dist. LEXIS 89466 (Aug. 11, 2011).

The national unemployment rate, as reported by the Department of Labor, has stubbornly remained at about 9% or higher for more than two years. As many of these unemployed individuals search for new jobs, some have purportedly been denied available employment opportunities simply because they were unemployed. Unemployment discrimination, as it is often called, is not currently prohibited under federal law. The EEOC and Congress, however, have taken steps focused on so-called unemployment discrimination that could affect how employers conduct their hiring processes.

Unemployment compensation is a federal-state program that provides benefits to eligible workers who become unemployed through no fault of their own. Under the system, the IRS collects from employers an annual payroll tax pursuant to the Federal Unemployment Tax Act (FUTA). The states also collect a payroll tax on a quarterly basis, which they use to pay benefits. The states are permitted to determine their own benefit eligibility requirements, the amount and duration of benefits and set the tax structure for employers so long as their standards do not conflict with federal law.

In yet another employee misclassification case, Kentucky Attorney General, Jack Conway, brought suit against FedEx Corp. alleging that FedEx violates Kentucky state law by misclassifying its drivers as independent contractors.  The Complaint contends that FedEx violated state law in regards to unemployment insurance, workers compensation, payroll taxes, and the Kentucky Consumer Protection Act.  The lawsuit asks the Court to order FedEx to classify its drivers as employees and to pay the contributions and penalties required by state law, which includes back pay dating to 2000 and totaling at least $10 million.