Happy *hic* New Year! 2011 labor and employment law year in review

Posted by Robin E. Shea on December 30, 2011

What a year, am I right or am I right? Here is a catalog of the major employment and labor law developments from 2011. And, just to keep it entertaining, I've started off each month with a weird but true off-topic story that was in the news that month. Many thanks to Drudge Report archives for the strange stuff. Thanks also to Esquire magazine's annual Dubious Achievement Awards (sadly, discontinued in 2008) and Dave Barry's Year in Review, both of which I am ripping off paying homage to.

Now, fix me a drink, will ya? We have a lot to talk about.

JANUARY

Ah-choo! Some teenage burglars stole an urn that contained the cremated remains of a man and two great Danes. The teens, obviously not criminal masterminds, snorted the ashes, believing them to be cocaine. 

and . . .

"He*l, they're all disgruntled. I ain't runnin' no da*n daisy farm!" The EEOC reported that for fiscal year 2010 it received a record number of charges, and that retaliation charges surpassed race discrimination charges for the first time in history.

Express yourself. The U.S. Department of Labor issued guidance on its "lactation accommodationLounge Lizards.jpg" provisions in the Patient Protection and Affordable Care Act (aka "Obamacare") and requested feedback from the public.

GINA: It's more than just a pretty name. The Genetic Information Nondiscrimination Act, which prohibits the acquisition, use or disclosure of "genetic information," which includes family medical history information, took effect.

Nice family. I'd hate to see somet'ing happen to 'em, ya know? The Supreme Court held in Thompson v. North American Stainless that the Title VII anti-retaliation provisions extend to fiances and other significant others of the person who engages in legally protected activity.

FEBRUARY

"Of course, you realize this means war." Uber-disgruntled ex-employee Charlie Sheen declared war on his former employers CBS and Warner Brothers.

and . . .

Another county heard from. (Or is it "country"?) Constangy, Brooks launched the most-excellent Employee Benefits Unplugged, which covers income tax, executive compensation, 401(k) and 403(b) plans, fiduciary compliance, and Department of Labor and Internal Revenue Service audits. All of the attorneys in the firm's Employee Benefits Practice group contribute, but the Chief Blogmistress is Jewell Lim Esposito from the firm's Fairfax, Virginia office.

cars in snowstorm - January.jpg

MARCH

I hate to say "You can't make this stuff up," but you really can't make this stuff up. A New York man who had a court appearance on a DWI charge showed up with an open can of beer and (allegedy) was carrying a bag with four more cans of beer. The man, who had prior DWIs, was jailed with no bail.

and . . . 

At the stroke of a pen, entire nation becomes disabled. The EEOC issued its Final Rule interpreting the Americans with Disabilities Act Amendments Act.

Make sure your "paws" know the laws. The U.S. Supreme Court found in Staub v. Proctor Hospital that an employer could be liable under a "cat's paw theory" for employment decisions that were influenced by a supervisor or other member of management who had an unlawful motive.

APRIL

Study: Members of Congress give each other much less grief than they deserve. A Harvard professor conducted a study that concluded that members of Congress spent 27 percent of their time taunting each other.

and . . .

Life begins at Concepcion. The U.S. Supreme Court found in AT&T v. Concepcion that arbitration of class claims was ok and consistent with the policy underlying the Federal Arbitration Act. The Concepcion decision overruled the interpretation of the California courts that class claims could not be arbitrated.

OFCCP starts pilin' on. The Office of Federal Contract Compliance Programs issued a proposed rule regarding the obligations of federal contractors to recruit and hire veterans. Although the desire to helCrocuses - April.jpgp veterans is laudable, the rule would impose significant compliance burdens on federal contractors.

Nothing could be finah . . . The NLRB filed a complaint against Boeing Corporation for opening a production line in North Charleston, South Carolina, instead of the outskirts of Seattle, Washington, where most of its production was located. The Board alleged that the move to right-to-work South Carolina was the company's unlawful attempt to avoid dealing with the International Association of Machinists, which had carried on a number of strikes at the Washington State facility over the years.

MAY

Cannibal Lecter. A man ran an internet ad seeking someone "who would agree to be killed, cooked, and eaten." A Swiss man answered the ad, thinking it was just a fantasy game, but after talking with the "cannibal" on the phone, determined that he was deadly serious. (Tehe. Get it?) The would-be "meal" called the police, who answered the ad undercover and foiled the banquet.  

and . . .

"I'm a victim of soicumstance!" (Probably true.) Bruce Raynor, President of the Workers United affiliate of the Service Employees International Union and International Executive Vice President of the SEIU, was forced out of both positions after being charged with filing misleading expense reports. Raynor, a labor leader for 38 years and who had been president of UNITE and UNITE HERE for eight years before joining Workers United, contended that he was a victim of SEIU politics.

Kiss our apps! The U.S. Department of Labor launched its wage and hour recordkeeping app (at link, scroll down to "Email your timesheets directly to Big Brother!") for iPhones and iPods, with a promise to develop counterparts for Androids and Blackberrys.

Labor pains. The NLRB sued the state of Arizona over a constitutional amendment that protected the right of employees to have secret ballots in union representation elections. The Board contends that state constitutional amendments like Arizona's are preempted by the NLRB. It has also sued the state of South Dakota for the same reason.

Your money, or your life. The OFCCP proposed changing the scheduling letter that it sends to federal contractors who are being audited. The changes would require contractors to provide detailed, individualized information about employees' compensation, among other proposed changes.

 

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Employers, don't be too quick to take that IRS "independent contractor" deal

Posted by Robin E. Shea on September 23, 2011

Don't eat that pretty red apple, Snow White!!! It has poison in it!!!!

You know the old saying, "If it seems too good to be true, it probably is"? Well, it appears that this may be the case with the new "sweet deal" the Internal Revenue Service is offering to employers who agree to reclassify their "independent contractors" [sic] as "employees" in exchange for some admittedly generous breaks.

The IRS announced this week that it is offering a REALLY, REALLY NICE THING to employers. :-)  If an employer promises that it will treat its independent contractors as employees going forward and entersBaby with apple.jpg into an agreement with the IRS, the IRS will assess employment taxes for only the tax year before the agreement was entered and at a reduced rate, with no penalties or interest, and no audits. The program is aimed at small employers, but all employers are welcome. Jewell Lim Esposito at our sister blog, Employee Benefits Unplugged, has more details about the IRS deal and thinks it's great from a pure tax standpoint.

I agree. But, as Jewell also notes, the news release says nothing about amnesty on all liability resulting from a misclassification.

I must admit that I wondered why this Administration, which is usually aggressive toward employers, is all of a sudden being so sweet and lovable?

(I am such a cynic.)

It then occurred to me: But, of course! This is to allow that other agency, the U.S. Department of Labor, which presumably will not be a party to the IRS/employer agreement, to come in and sue the pants off the employer for back benefits and wage-hour violations. Because, you see, misclassified "independent contractors" don't get benefits or overtime, and they may not even be getting the minimum wage once their "fee" is divided by hours worked.

My paranoia was really raging now, and I remembered another news item that came out at the beginning of this week: Secretary of Labor Hilda L. Solis announced a "cooperative" initiative in which the IRS, the DOL, and 11 state governments* are going to start working together to fight misclassification of employees as independent contractors. In addition, the Office of Federal Contract Compliance Programs (the affirmative action guys) and the Occupational Safety and Health Administration are among the agencies who will be receiving and sharing information.

*The 11 states who entered into the memorandum of understanding or have agreed to do so are Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.

(Hat tip to Bureau of National Affairs for both of these news items.)

So! Aha! Putting it all together, here's what the deal really appears to be: A naive (probably small but could be large) employer who has some misclassified folks will read about the IRS deal and think, "What have I got to lose? I'd be a fool to turn this down!" So he signs the agreement with the IRS.

Bam! Six months later, the DOL -- who has received from the IRS the list of unsuspecting employers who entered into this agreement admitting that they were doing it wrong -- comes out for an investigation and hits the employer for overtime and possibly minimum wage violations. Then, the employer's state government -- armed with the same information -- comes out and clobbers the employer for workers' compensation premiums and benefits, and possibly other benefits that the state requires employers to offer to employees. Bam! Bam!

But, wait! There's more! The newly classified employees might have claims for other employment benefits as well, as Microsoft learned the hard way. Bam! Bam! Bam! Then, OSHA and the OFCCP and who knows who else can come in and kick the employer a few more times while he's down. Bam! Bam! Bam! Bam! Bam! (etc.)

THE MORAL: If you have "independent contractors" who are misclassified, by all means get that fixed as quickly as you can. As long as the workers are misclassified, you are potentially liable for back taxes, including FICA, and penalties, back benefits, and back wages. In fact, you can even be liable for severance pay in the event that the faux independent contractor was let go under circumstances that would have entitled her to severance if she'd been an employee. (I actually had this happen to a client once.)

To repeat, if you're doing it wrong, stop it now. But don't be too eager to enter into this deal with the IRS, and definitely do not enter it without consulting with your attorney. Situations vary, and the IRS deal may be good for some, but you also may be much better off taking your chances with an IRS audit (which may or may not ever happen). Meanwhile, you will not be erecting a large neon sign with flashing lights saying, "Here I am, Hilda Solis and everybody else -- I'm guilty -- come and get me!"

Just call me Jim Garrison.

Plan/Prevent/Protect: "Affirmative Action for Everybody!"

Posted by Robin E. Shea on October 25, 2010

Drunken men toasting.jpgThe U.S. Department of Labor is planning to impose new “affirmative action” requirements on employers, requiring them to develop “plans” to address workplace safety, equal employment opportunity, and wage and hour/employee classification issues.

For the most part, these requirements – called “Plan/Prevent/Protect” – will not be limited to federal contractors but, rather, will apply to all employers covered by the relevant laws.

The proposed changes are dramatic, and shift from what the DOL calls “catch me if you can” (in other words, employer is presumed compliant unless the government is given reason to believe otherwise) to “Plan/Prevent/Protect” (in other words, employer is presumed guilty unless it can prove otherwise). “[E]mployers and other regulated entities will be asked to assemble plans, create processes, and designate people charged with achieving compliance,” says the DOL, and “compliance will be non-negotiable . . ..” (Emphasis added.)

The “Plan” component will require employers to enlist employees in “identifying and remediating risks of legal violations and other risks to workers.” The plans must be made available to the workers “so they can fully understand them and help to monitor their implementation.”

The “Prevent” component will require employers to “thoroughly and completely implement the plan in a manner that prevents legal violations. . . . The employer . . . cannot draft a plan and then put it on a shelf. The plan must be fully implemented . . ..”

The “Protect” component will require employers to ensure “that the plan’s objectives are met on a regular basis. Just any plan will not do. The plan must actually protect workers from violations of their workplace rights.”

In the context of compliance with the Fair Labor Standards Act, Plan/Prevent/Protect will require that employers provide information to employees about how their pay is calculated, and prepare a “classification analysis” with respect to any job that it treats as FLSA-exempt. Of course, the analysis will have to be made available to the employees and the government. The DOL will issue proposed regulations on Plan/Prevent/Protect at some unspecified point in the future.