WORKPLACE LAW - Employee Handbook Updates for 2016

Question: Every year there seem to be changes in California law that require me to update my employee handbook.  What new items do I need to include in my employee handbook?
Answer: In recent years state and federal laws have changed, and it is critically important for the policies in your employee handbook to be accurate and up to date to avoid poor communication and legal liability.
For 2016, make sure your handbook is updated to include current and legally compliant policies in the following areas:

  • Mandatory paid sick leave. The Healthy Workplaces, Healthy Families Act (HWHFA) was effective July 1, 2015, and was amended on July 13, 2015 to allow alternative sick leave accrual methods and to clarify employee eligibility standards, pay rates, and recordkeeping requirements.
  • Kin care. If you offer “regular” sick leave in addition to HWHFA sick leave, your policy needs updating to reflect that employees can now take up to ½ of “regular” sick leave hours they accrue per year for the same types of absences covered by the HWHFA.
  • California Family Rights Act (CFRA). New CFRA regulations effective July 1, 2015 include revised definitions of “spouse,” “covered employers” and “eligible employees,” new restrictions on employer contact with the employee’s health care provider, a new medical certification form and poster, and new requirements for providing notifications to employees. The CFRA certification form is available on line at http://www.dfeh.ca.gov/res/docs/Publications/CFRACertificationForm.pdf
  • Minimum wage increase. If your handbook contains details regarding overtime rates, it should be updated to reflect the $10 per hour minimum wage effective January 1, 2016.
  • Reasonable accommodation. The Fair Employment and Housing Act (FEHA) now prohibits employers from retaliating or discriminating against an employee who requests accommodation of a disability or religious belief, regardless of whether the accommodation request was granted.
  • School visit leave. Employers with 25 or more employees are required to allow employees to take up to 40 hours of unpaid leave per year (maximum 8 hours per month) to participate in their child’s school or day care activities.  SB 579 expands leave rights to employees who are stepparents, foster parents, or who stand in loco parentis to a child, and allows leave for employees to find a school or a licensed child care provider, to enroll or re-enroll a child, and to address child care provider or school emergencies.
  • Pregnancy disability leave. Beginning April 1, 2016 employers with 5 or more employees are required to replace the current Pregnancy Disability Leave Notice (Notice “A”) with a revised notice which the Department of Fair Employment and Housing will publish on its website, http://www.dfeh.ca.gov/Publications_Publications.htm

Additional changes will be required starting April 1, 2016 when amendments to the FEHA take effect. These amendments require employers to provide specific information in their harassment, discrimination, and retaliation policies. For employers with 50 or more employees, the sexual harassment training requirements have been clarified and expanded. The new FEHA amendments also prohibit discrimination against an applicant or employee who holds or presents a driver’s license issued under Vehicle Code section 12801.9, issued to persons meeting all other qualifications for licensure except lawful presence in the United States.  The FEHA amendments contain other changes that will require review and revision of your employee handbook.


WORKPLACE LAW – Workplace Violence Prevention

Question: I am concerned about the apparent increase in workplace violence. Is there anything employers can or should do to protect employees and others from workplace violence?
Answer: Workplace violence is a major concern for employers and employees nationwide.  According to the federal Occupational Safety and Health Administration (“OSHA”), workplace violence is any act or threat of physical violence, harassment, intimidation, or other threatening disruptive behavior that occurs at the work site.  Workplace violence ranges from threats and verbal abuse to physical assaults and even homicide, and can affect and involve employees, clients, customers, and visitors alike.
Under OSHA’s “general duty” clause, employers must provide employees with a place of employment free from recognized hazards that cause or are likely to cause death or serious physical harm to employees.  Although “recognized hazards” were traditionally thought of as arising from unsafe work practices, workplace violence now constitutes a recognized hazard which employers have a general duty to guard against.  The California Division of Occupational Safety and Health’s (“Cal-OSHA”) “Guidelines for Workplace Security” describes preventative measures employers may be required to adopt, based on the potential for workplace violence in certain types of at-risk businesses.
Therefore, prudent employers should adopt policies and procedures and provide training aimed at reducing the potential for all types of workplace violence.  Depending on the nature of the employer’s business and its potential for incidents of workplace violence, these policies may stand alone, or be incorporated into the company’s employee handbook, injury and illness prevention program, or manual of standard operating procedures.
First among those policies should be a written “zero tolerance” policy against actual or threatened violence in the workplace.  Policies must not discriminate against employees or others based on race, religion, national origin, or any other protected category.
A workplace violence prevention policy should cover all workers, clients, visitors, patients, contractors, and anyone else who may come in contact with employees. Employers should also establish processes and procedures for:

  • Defining and recognizing workplace violence;
  • Reporting and investigating actual or threatened violence, abusive or other inappropriate or alarming conduct;
  • Training employees how to react in a workplace violence episode;
  • Creating a safety plan;
  • Resolving employee grievances and complaints; and
  • Protecting employees against retaliation for reporting workplace violence.

The Federal Bureau of Investigation has posted a training video to educate the public on how to respond to an active shooter incident in the workplace.  Employers may consider using this video entitled “Run. Hide. Fight. Surviving an Active Shooter Event,” as a workplace violence prevention training tool, albeit with a warning that the initial scenes in the video are violent and may be disturbing to some viewers.
If an employee has been the victim of unlawful violence or a credible threat of violence in the workplace, the employer can obtain a temporary restraining order and injunctive relief to protect the employee, the employee’s family, and others at the workplace.
Employers who responsibly create and implement workplace violence prevention policies, and train employees and managers, will help to create a safer working environment.
OSHA’s workplace violence website is https://www.osha.gov/SLTC/workplaceviolence/.
The Cal-OSHA Guidelines are available on the California Department of Industrial Relations’ website at http://www.dir.ca.gov/dosh/dosh_publications/worksecurity.html.
The FBI’s “Run. Hide. Fight.” video is available at https://www.fbi.gov/about-us/office-of-partner-engagement/active-shooter-incidents/run-hide-fight-video.


WORKPLACE LAW – Removal of 'alien' from Labor Code (SB 432) and Workers' Compensation Benefit Clarification (SB 623)

Question: I recently heard that there are new California laws removing the word “alien” from the Labor Code and providing Workers’ Compensation benefits to undocumented workers.  Will these laws require employers to make changes in their policies and practices related to immigrant or undocumented workers?
Answer: In 1937, the state Legislature enacted various provisions regarding the employment of “aliens,” defined as any person who is not born in or a fully naturalized citizen of the United States.  The Legislature repealed most of these Labor Code sections in 1970.  However, the definition for “alien” remained as part of the Labor Code.
Since that time, many bills have been signed into law that have strengthened labor law protections for immigrant workers.  Under California law, all employment protections, rights, and remedies available under state law, except as prohibited by federal law, are available to all individuals regardless of immigration status.  Moreover, employers are prohibited from engaging in unfair immigration-related practices for the purpose of retaliating against any person for exercising any right protected under the Labor Code or by any local ordinance.  Employers remain obligated under federal law to verify authorization to work in the United States for all new hires.
As of January 1, 2016, Senate Bill 432 deletes the definition of “alien” from the Labor Code.  Given the historic development of the law in this respect, this change will have little substantive effect on employer responsibilities or employee rights.  It is a largely symbolic change aimed at modernizing the Labor Code to remove a term that is now seen by many as a derogatory term for a foreign-born person.  SB 432 also eliminates a provision of the Labor Code calling for preference for non-alien workers on public works projects.
Employers should review their policies and handbooks to ensure compliance with existing laws related to immigrant and undocumented workers and consider removing the term “alien” if it appears in policies or handbooks.
California’s Workers’ Compensation law requires an employer to compensate an employee for an injury sustained by the employee if the injury arose out of, and in the course of, employment. If an employer fails to pay required compensation, an injured employee may apply for recovery from the Uninsured Employers Benefits or the Subsequent Injuries Benefits Trust Fund.
Prior to the passage of Senate Bill 623, certain California regulations prohibited undocumented workers from receiving workers’ compensation benefits due to their citizenship or immigration status.  These regulations, while remaining on the books, were contrary to California laws granting protections of labor and employment laws to undocumented employees.  Accordingly, the regulations were not enforced, and undocumented employees have been receiving workers’ compensation benefits notwithstanding these regulations.  Senate Bill 623, effective January 1, 2016, provides that a person shall not be excluded from receiving workers’ compensation benefits from the Uninsured Employers Fund and the Subsequent Injuries Benefits Trust Fund solely based on citizenship or immigration status.  Because this bill formalizes an existing practice, it will have little substantive effect on employers and employees.
More information about Senate Bill 432 or Senate Bill 623 is available at www.legislature.ca.gov.


WORKPLACE LAW - The ACA’s Information Reporting Deadlines Are Fast Approaching—Are You Prepared?

Question: I have heard that some employers are subject to new information reporting requirements under the Affordable Care Act (ACA).  Can you tell me a little bit more about these requirements and the purpose they serve?
Answer: After a one-year delay, the ACA employer mandate, which applies to all applicable large employers (generally, those with an average of at least 50 full-time employees,) officially took effect for on January 1, 2015.  According to the mandate, also referred to as the “pay or play” mandate, an applicable large employer can either “play” by offering minimum essential coverage to all or substantially all of its full-time employees and their dependents, or “pay” by failing to offer such coverage and thereby triggering penalties in the form of nondeductible excise taxes.
To enforce the employer mandate, as well as the individual mandate which requires most adults to show they have health coverage that meets ACA specifications, employers are subject to new IRS information furnishing and reporting requirements.  To comply with these new requirements, applicable large employers must compile data related to the prior calendar year and distribute an IRS Form 1095-C to each full-time employee by March 31, 2016.  Thereafter, applicable large employers must transmit IRS Form 1094-C (with all applicable Forms 1095-C) to the IRS for each legal entity within its controlled group that employs any full-time employees, by May 31, 2016 if filing on paper, and by June 30, 2016 if filing electronically.  Also, while only applicable large employers must file Forms 1094-C and 1095-C, health insurance issuers and carriers, and small employers sponsoring self-insured group health plans have separate ACA reporting requirements.  If you are a health insurance issuer or carrier, or a small employer sponsoring a self-insured group health plan, you can visit https://www.irs.gov/instructions/i109495b/ar01.html for instructions on filing Forms 1094-B and 1095-B.
As these deadlines approach, it is particularly important for applicable large employers to keep in mind that Form 1095-C includes very different information and in some ways is more complicated than Form W-2.  For example, Form 1095-C requires employers to indicate, among other things, the following for each full-time employee on a monthly basis:

  • Whether an offer of coverage was made to the employee;
  • To whom the coverage was offered;
  • The lowest-cost monthly premium for self-only coverage available to the employee; and
  • Waiting periods, safe harbors and enrollment data.

Also, because this information must be communicated to the IRS using a variety of new indicator codes, larger employers may benefit from implementing a system that translates employee payroll and benefits data into the new codes electronically.  Therefore, if you have not already started working on your Form 1094-C and Form 1095-Cs, now is the time to begin.
The IRS conservatively estimates that the Form 1094-C will take approximately 4 hours to complete while the Form 1095-C will take approximately 12 minutes to complete per full-time employee.  An applicable large employer with 150 employees is therefore looking at approximately 40 or more hours of work to prepare its forms for mailing and subsequent filing.  With deadlines fast approaching, applicable large employers are encouraged to begin working on these forms immediately to avoid running up against the furnishing and filing deadlines and triggering the law’s penalty provisions, which may be up to $250 per form for employers that fail to report accurate and timely information.


WORKPLACE LAW – Legal Issues and Best Practices for Using Personality Tests and Algorithm-Assisted Hiring

Question: I hired several temporary seasonal workers, and based on prior experience expect some will not perform well.  I am considering using a testing service to help with future hiring, but I have heard asking the wrong questions can get you in trouble.  Are personality tests a legal way to improve hiring practices?
Answer: Including personality tests or other algorithm-assisted evaluations in the hiring process is becoming very popular.  Such tests can be valuable in assisting in the selection of candidates, particularly in fields with high turnover or for seasonal employees.  It is estimated that the $500 million annual workplace personality testing business is growing at 10-15% per year.  It is believed that the use of such testing has nearly doubled in the last five years, and is now used in approximately 60% of hiring decisions.
However, you rightly note that there are legal compliance issues with utilizing such testing.  Personality testing can seem like a harmless way to increase the quality of candidates selected for interviews.  Yet the questions asked in some tests raise concerns of discriminatory impact, including race and disability discrimination.
For example, studies have shown that for certain jobs, workers with shorter commutes have lower turnover.  But, employers must be cautious in asking applicants whether they live near the jobsite, as such questions can exclude individuals from particular socio-economic groups.
Another concern with such testing is whether it screens out candidates with mental illness disabilities, who would otherwise be qualified for employment.  Questions related to mood, in particular, have been alleged to screen out individuals with bi-polar disorder or depression.  The legal impact of such questioning remains unclear, though the EEOC has investigated several companies’ pre-employment testing practices to determine if they have a discriminatory impact.  The EEOC’s guidance to employers on the use of personality testing notes that while testing companies may provide documentation supporting the validity of their tests, the ultimate responsibility for ensuring the tests are not discriminatory rests with each employer.
Despite such concerns, the popularity of pre-employment testing continues to grow, and there are several best practices that should be followed when considering whether to institute such testing.  Testing must be job-related and its results appropriate for the employer’s purpose.  For example, if your company’s primary goal is reducing turnover, it will need to test for different metrics than if the primary goal is customer satisfaction.  Test results must provide the employer with useful and appropriate information or scores specifically related to the job skills required.  Further, if it turns out that a test has the effect of screening out or limiting a protected group, the employer should determine whether there are any other means of testing that could be equally predictive of job performance without disproportionately excluding the protected group.
In evaluating whether to utilize a pre-employment test, employers should seek tests that are reliable (applicants get the same result when taking the test multiple times), that have demonstrable predictive value, and which seek to measure stable personality traits as opposed to those that ask about mood.  There are many tests available, with a variety of potential benefits, as well as many potential risks.


WORKPLACE LAW – Effect of Raising the Minimum Wage

Question: I recall that the minimum wage is going up soon.  I’m confused because I also keep hearing about the federal minimum wage increasing.  Which is going up, and what impact does that have on employers?
Answer: The possible increase of the federal minimum wage is a hot topic in political debates.  But the minimum wage that is going up in 2016 is California’s.  Effective January 1, 2016, California’s minimum wage is increasing to $10.00.  In addition to changing the pay rate for those employees currently earning the minimum wage, the increase in California’s minimum wage has other impacts as well.
Exempt Employees
Although the duties of employees are a key consideration in classifying them as exempt from overtime requirements, the threshold issue is the employees’ salary, which must be a monthly salary equivalent to no less than two times the state minimum wage for full time work.  Currently, with a minimum wage of $9.00 per hour, that threshold salary is $3,120.00 per month or $37,440.00 per year.   Effective January 1, 2016, with a minimum wage of $10.00 per hour, the salary equivalent goes up to $3,466.67 per month or $41,600.00 per year.  Employers should review their exempt employees’ salaries.  If they do not meet this new threshold, employers must either increase those employees’ salaries or reclassify them as non-exempt workers who are paid by the hour and who must clock in and out and be paid overtime depending on the number of hours they work.
Commissioned Employees
Under Industrial Welfare Commission (IWC) Wage Orders 4 and 7, an employee may be exempt from overtime requirements if the employee’s earnings exceed 1½ times the minimum wage, and if more than half of the employee’s compensation consists of commissions.  Effective January 1, 2016, employers relying on this exemption must ensure that these employees are earning more than 1½ times the minimum wage based on $10.00 per hour, or they could be liable for unpaid overtime.
Credit Toward Meals and Lodging
The IWC wage orders allow employers to provide meals or lodging and to credit the value of those against the obligation to pay the minimum wage, subject to certain limitations, and where there is a voluntary written agreement.  Employers with these written agreements must make necessary adjustments for the increased minimum wage.
Tools
Under the IWC wage orders, when an employer requires tools or equipment to perform a job, the employer will provide and maintain these.  However, if the employee’s wages are at least two times the minimum wage, the employer can require the employee to provide and maintain hand tools and equipment customarily required by the trade or craft.  Employers requiring employees to provide their own hand tools and equipment under this provision must ensure that those employees are paid at least $20.00 per hour effective January 1, 2016.
Finally, as mentioned above, there have been discussions about raising the federal minimum wage, which is currently $7.25 per hour.  If the federal minimum wage is raised to a rate higher than California’s, California employers will have to comply with the federal rate.


WORKPLACE LAW – Tips and Legal Considerations for Holiday Parties

Question: I’m planning a holiday party for my employees in December. I’d like to thank staff for doing such a good job this year.  What legal issues should I keep in mind as I am planning the party?
Answer: The majority of employers host year-end or holiday parties for their employees to express gratitude and provide an opportunity to celebrate.  According to recent surveys, between 80-90% of employers host holiday or year-end celebrations.  You can have a festive and safe holiday party that fosters teamwork by following a few simple suggestions.

  • Christmas Tree, Menorah, Kwanzaa Harvest Basket? To maximize employee inclusion in your holiday party, ask employees to provide you with ideas concerning holiday decorations.  This will allow inclusion of other traditions and holidays, and make employees feel like they are part of the party planning process.  However, make it clear that employees cannot put up whatever decorations they want, wherever they want. A sexy Santa is not appropriate in any workplace.
  • Do I have to go to the party? Make sure your invitations and communications with employees make it clear that they do not have to attend. If employees feel that they have to go to the party, they may claim that the party is work time and they should be paid for that time.
  • Should we have a gift exchange? If you do, let your employees know that your equal employment opportunity and harassment/discrimination policies apply to the exchange of gifts.  Sexual or vulgar gifts are not appropriate. It is helpful to set a dollar limit on gifts if your office has a gift exchange.  Many offices have a “secret Santa” anonymous exchange, or a “white elephant” gift exchange.  Others make donations to charity in lieu of a gift exchange.
  • What about alcohol? If employees are allowed to give gifts of alcohol, make sure they take their gifts home on the day of the party.  It is important to limit the amount of alcohol you provide at the party, as well as how much alcohol you and other owners/managers consume. One idea is to provide drink tickets to limit consumption.  Or, you could charge for drinks and donate all of the money to charity. Serve plenty of nonalcoholic beverages and food, and consider providing vouchers for cab rides home.  Pay attention to how much your employees are consuming, and stop serving if it appears the alcohol consumption is more than moderate.
  • Who picks the music? You should devise the playlist and plan for music that is not sexually suggestive, violent, or offensive.  “I’m Too Sexy For My Shirt,” “Wild Thing” and “Do You Think I’m Sexy?” should not be on the play list at your party.
  • What about employee behavior? Although you are hosting a party, it is an office. Employees and guests should relax and enjoy themselves.  If necessary, remind employees that your workplace policies apply to social events and respond quickly and firmly to inappropriate behavior. The “love train” should not be present at your holiday party.

While there are some legal risks involved in hosting a holiday party, the benefits outweigh the risks. Employees who do not feel connected to or appreciated by their employer are less likely to be engaged, which lowers productivity and morale. Holiday parties express gratitude and promote teamwork, so enjoy your celebrations, carefully and thoughtfully.


WORKPLACE LAW - Medical Marijuana Use in the Workplace

Question: What do I do if my employee comes to work under the influence of marijuana?  What if the employee has a prescription? Can I discharge the employee or do I have to allow the employee to come to work under the influence?
Answer: This situation presents a dilemma for some employers.  Marijuana is an illegal drug under federal law.  Employers have legitimate concerns regarding employing individuals who are using marijuana and coming to work under the influence.  These workers may present safety and productivity issues, among other concerns.
California’s Compassionate Use Act permits individuals to use prescribed marijuana where that medical use is deemed appropriate and has been recommended by a physician for treatment of specific illnesses.  Most individuals who use medical marijuana do so because they suffer from some condition that would qualify them as a disabled individual under the Americans with Disabilities Act (“ADA”) and California’s Fair Employment and Housing Act (“FEHA”), which prohibit employment discrimination against disabled individuals.
However, the ADA does not apply where a person claims discrimination on the basis of medical marijuana use.  The ADA states that the term “individual with a disability” does not include an individual who is currently engaging in the illegal use of drugs.  Therefore, even if an applicant or employee has a prescription for using marijuana, the protections of the ADA do not apply.  A Ninth Circuit Court of Appeals case held “doctor-recommended marijuana use permitted by a state law, but prohibited by federal law, is an illegal use of drugs for the purposes of the ADA, and that the plaintiff’s federally proscribed medical marijuana use therefore brings them within the ADA’s illegal drug exclusion.”  The Ninth Circuit also held that the interpretation of the term “illegal use of drugs” under the ADA includes the use of marijuana taken under doctor supervision, and that medical marijuana does not receive special protection under the ADA. The Ninth Circuit concluded its opinion by stating:  “A contrary interpretation …would allow a doctor to recommend the use of any controlled substance—including cocaine or heroin—and thereby enable the drug user to avoid the ADA’s illegal drug exclusion. Congress could not have intended to create such a capacious loophole, especially through such an ambiguous provision.”
The California Supreme Court has also held that employers are not required to accept or accommodate an employee’s use of medical marijuana.  In Ross v. RagingWire Technologies, an employee was discharged from his job after testing positive for marijuana, which the employee used under a doctor’s care to control chronic back pain.  The California Supreme Court upheld the employee’s discharge, explaining that the operative provisions of the Compassionate Use Act do “not eliminate marijuana’s potential for abuse or the employer’s legitimate interest in whether an employee uses the drug.  Marijuana…remains illegal under federal law because of its high potential for abuse, its lack of any currently accepted medical use in treatment in the United States, and its lack of accepted safety for use … under medical supervision.”
While there may be disagreement over whether medical marijuana should be permitted in the workplace, under current law medical marijuana users are not protected by the ADA or the FEHA, and employers do not have to accommodate or accept medical marijuana use in the workplace.


WORKPLACE LAW -New Law Regarding Sexual Harassment

Question:

I read about a new law related to sexual harassment in the workplace. Does this new law change anything?

Answer:

California Governor Jerry Brown recently signed into law Senate Bill 292, which revises the definition of sexual harassment under the California Fair Employment and Housing Act (FEHA). The new definition makes it clear that employees who assert claims of sexual harassment need not show the harassment is motivated by sexual desire. The new law becomes effective Jan. 1, 2014. New legislation is sometimes passed to overturn existing case law, or to clarify conflicting decisions. Such is the case with Senate Bill 292.

The FEHA prohibits workplace harassment because of sex, which includes  sexual harassment, gender harassment, and harassment based on pregnancy, childbirth, or related medical conditions. Under current law, there are two theories of sexual harassment in the workplace:  (1) quid pro quo, which occurs when a term of employment is conditioned on the submission to unwelcome advances; and (2) a hostile work environment, which occurs when the harassment is so severe or pervasive that it alters the conditions of employment and creates an abusive work environment.

The difficulty arises in determining when harassment amounts to discrimination because of sex. In 1998, the United States Supreme Court issued a decision stating that the critical issue is whether members of one sex are exposed to disadvantageous terms or conditions of employment to which members of the other sex are not exposed. The Supreme Court held that for an aggrieved employee to prove a hostile work environment due to harassment based on sex, the employee must provide sufficient evidence of:

(1) sexual intent or desire on the part of the alleged harasser toward the employee; or
(2) general hostility by the alleged harasser toward a particular sex, of which the employee is a member; or
(3) comparative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace. 

Then, in 2011, the California Court of Appeal in Kelley v. Conco Companies held that to prove unlawful sexual harassment because of sex, a plaintiff in a same-sex harassment hostile work environment case must establish that the harasser was motivated by sexual desire. In Kelley, Mr. Kelley, a male construction worker, was subjected to language that was “graphic, vulgar, crude, offensive, demeaning, and sexually explicit.” The statements made to Mr. Kelley by his male supervisor and other male workers expressed sexual interest and solicited sexual activity. However, the Kelley court dismissed the case finding that there was no evidence that would lead a reasonable trier of fact to conclude that the words directed at Mr. Kelley were an expression of actual sexual desire or intent by the supervisor or co-workers, or that they resulted from Mr. Kelley’s actual or perceived sexual orientation. The Court’s holding stated that there was no “credible evidence that the harasser was homosexual” or that the harassment was “motivated by sexual desire.” Under California law, the mere fact that words may have sexual content or connotations, or discuss sex, was not sufficient to establish sexual harassment.

In response to the decision in Kelley v. Conco Companies, Senator Ellen Corbett introduced Senate Bill 292 to overturn the decision in Kelley and clarify that sexual harassment under the FEHA does not require proof of sexual desire towards the plaintiff.
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WORKPLACE LAW -Age Discriminationand Retire Health Benefit Packages

Question:

I understand that in 2000, the Third Circuit Court of Appeals held that if an employer offers different retiree health benefit packages to younger and older retirees, it is in violation of the Age Discrimination in Employment Act of 1967 (ADEA). Is this true?

Answer:

The court decision you reference shook up employers that offered retiree health benefits – a once commonplace benefit that is now on the decline. In Erie County Retirees Association v. County of Erie, an employer offered one health benefit plan to its retirees who were Medicare eligible, and another to its younger retirees. The Medicare eligible retirees were offered a Medicare HMO plan, whereas the younger retirees were offered a point of service plan or an indemnity plan. The Medicare eligible retirees claimed that their plan violated the ADEA because it provided them with inferior coverage based on their age (65 or over) as compared to the plan offered to the younger retirees and, at the same time, the employer was spending less for health coverage for their plan than the plan for the younger retirees.

The ADEA is the federal law that prohibits employment discrimination against persons 40 years of age or older. It provides that an employer must either offer equal benefits to older and younger workers, or it must incur the same costs on behalf of older and younger workers. This is known as the “equal benefit or equal cost” standard. In the Erie case, it was ultimately found that because the plan offered to the Medicare-eligible retirees provided fewer benefits and cost less to the employer than the plan offered to the younger, non-Medicare-eligible retirees, it neither provided an equal benefit nor was incurred at an equal cost and was therefore discriminatory.

After the Erie decision, many employers took the position that they would either reduce or eliminate the retiree health benefits they were providing. As a result, the Equal Employment Opportunity Commission (EEOC) enacted regulations allowing employers to coordinate the health benefits they offer retirees with Medicare or comparable state health benefits without violating the ADEA. Under the EEOC regulation, employers that provide retiree health benefits can continue coordinating those benefits with Medicare without ensuring that Medicare eligible retirees are receiving the same benefits as younger retirees. For example, an employer may continue to offer “Medicare Bridge Plans” that provide insurance to retirees under 65 to bridge the gap between the time they retire and the time they become eligible for Medicare. Similarly, employers may continue to provide supplemental health benefits to Medicare-eligible retirees without having to show that the benefits are identical to benefits provided to early retirees who are not Medicare-eligible. These Medicare “wraparound or supplement policies” are typically used to provide Medicare-eligible retirees with prescription drug coverage.

It is important to note that the ADEA continues to apply to retirees. The EEOC regulation only exempts from the ADEA the practice of coordinating retiree health benefits with Medicare or comparable state health benefits. Otherwise, an employer offering different health benefit packages to younger and older retirees that are not coordinated with Medicare or a comparable state health benefit must meet the ADEA’s equal-benefit or equal-cost standard.
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WORKPLACE LAW -Minimizing Legal Risk When Hiring

Question:

I hear about lawsuits involving the hiring process. How can I structure my hiring process to minimize the risk of lawsuits?

Answer:

Hiring is a necessary part of conducting business that all employers must navigate. Although the hiring process is heavily regulated and fraught with potential pitfalls for employers, there are certain general steps employers can take to design a hiring process that is consistent with the requirements of state and federal law. The following are some of the most common legal risks employers face in the hiring process:

  • Exposure to discrimination claims – State and federal law prohibit employers from discriminating against applicants and employees on the bases of numerous protected categories, including age, gender, race, religion, sexual orientation, national origin, citizenship, and disability.
  • Loss of the presumption of at-will employment – In California, unless employers do or say something to create an agreement for employment for a definite term, employees are presumed to be “at-will” employees, meaning both the employer and the employee may terminate the employment relationship at any time, for any reason or no reason.
  • Violation of state and federal background check regulations – Under state and federal law employers who conduct background checks on potential employees must make specific disclosures to employees/applicants and may be required to obtain the employee/applicant’s consent.

To minimize the potential for discrimination claims, cast a wide net in advertising a position to recruit a diverse pool of applicants. Limiting advertising to word of mouth tends to result in a homogeneous group of applicants and employees. In drafting advertisements, avoid express or implicit references to protected classes. For example, job advertisements seeking “recent college grads” may draw a claim of age discrimination. Both on the job application and in interviews, employers should seek job related information only, and should avoid all inquiries into an applicant’s age, date of birth, gender, race, religion, sexual orientation, national origin, citizenship, and disability.

The job application is a useful tool to help minimize the risk of a claim. The application form should include the following:

  • A statement that you are an equal opportunity employer and that you do not discriminate on prohibited bases.
  • A statement that, if hired, the employment relationship will be terminable at-will by either party, for any reason or no reason.
  • Appropriate authorizations for reference checks, background investigations, and any pre-employment testing.
  • A statement signed by the employee that all information provided on the application is complete and accurate, and that false, misleading, or incomplete information could lead to a decision not to hire the applicant and could be grounds for termination if the applicant has already been hired.

Carefully review employment applications and obtain any missing or unexplained information during the job interview. Check references and follow up on the information gathered through background checks. Varying notice and disclosure requirements will apply under California law and the federal Fair Credit Reporting Act depending on the type of background check conducted. These requirements are complex, and California law is broader and more protective than the laws of other states. Employment applications authorizing background investigations and the documentation used for these investigations should be carefully reviewed by legal counsel.
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WORKPLACE LAW -Equal EmploymentOpportunity Commission Enforcement Priorities

Question:

Several fellow business owners I know feel they are being “targeted” for investigations by the Equal Employment Opportunity Commission (“EEOC”). Are workplace investigations increasing? What should a business owner do if the EEOC comes knocking on the door?

Answer:

Earlier this year, the EEOC approved a new Strategic Enforcement Plan, in which it announced its six top national enforcement priorities. The EEOC is focused on:

  • Eliminating barriers in recruiting and hiring
  • Protecting immigrant, migrant and other vulnerable workers
  • Addressing emerging and developing employment discrimination issues
  • Enforcing equal pay laws
  • Preserving access to the legal system
  • Preventing harassment through systemic enforcement and targeted outreach

Many of the local enforcement actions involve investigating and preventing harassment and discrimination in the workplace. The EEOC has identified some new trends in this area, including discrimination against victims of domestic violence, transgender employees and applicants, national origin discrimination, and harassment and discrimination against teen workers.

Unfortunately, workplace violence continues to occur, and prudent employers take safety precautions when an employee may be the target of domestic violence. The EEOC is finding that some employers are discriminating against employees who are the victims of domestic violence or stalking. Although federal law does not explicitly prohibit discrimination against those workers, companies who treat such employees differently may be open to complaints of discrimination based on an employee’s sex or real or perceived impairments. In California, an employer with 25 or more employees may not discharge or in any manner discriminate or retaliate against an employee who is a victim of domestic violence or a victim of sexual assault for taking time off from work.

Last year, the EEOC announced that discrimination against transgender employees constitutes sex discrimination under Title VII of the Civil Rights Act of 1964. In California, discrimination against transgender individuals is a prohibited form of sex discrimination.

National origin discrimination claims are on the EEOC’s enforcement radar because these claims have increased 76 percent between 1997 and 2011. The trend is illustrated in the case of truck driver Ismail Aliyev, who filed a national origin discrimination suit against FedEx, arguing that the company fired him because of his Russian accent. FedEx requires commercial truck drivers to be able to communicate in English. Mr. Aliyev alleged that even though his English is understandable FedEx fired him after a weigh station gave FedEx a warning about Mr. Aliyev’s ability to communicate in English.

Finally, the EEOC has increasingly focused on harassment and discrimination against teen workers. The agency launched a Youth@Work Initiative, designed to educate student workers about their on-the-job rights and responsibilities. EEOC enforcement efforts include a recent $1 million settlement in its suit against the owner of 25 fast food restaurants who allegedly allowed male employees to sexually harass female workers, including teenagers.
EEOC investigations are normally triggered by either a formal charge of discrimination or a complaint to the agency. If an employer receives a complaint letter or notice that a charge has been filed, the employer may be asked to submit a statement of position, respond to a request for information, permit an on-site visit by EEOC investigators, and provide contact information for or have employees available for witness interviews. Employers are required to cooperate in such investigations, and it is prudent to consult legal counsel if the EEOC comes knocking.
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