Labor and Employment e-Report – Second EditionOctober 30, 2008
Dear Clients and Friends,
Last July, I had the great pleasure of introducing the first edition of Epstein Becker Green's Labor and Employment eReport. At that time, I promised that our next issue would be published in the fall. Though that was just a few months ago, I suspect that many of you share my sentiment that our inaugural eReport, and the subsequent, relatively calm days of summer, feel like they are in the very distant past. The fall season has descended upon all of us with a torrent of increasingly dire economic developments and, concomitantly, novel and formidable business challenges. Adding to our collective anxiety is another inaugural — that of the soon-to-be-decided next president.
Back in July, we also were hard at work developing our twenty-seventh client briefing. While we could not anticipate the current economic crisis, we did believe that our clients and friends would benefit from a thoughtful analysis of the key business and legal issues that were beginning to emerge from the economic downturn, as well as those at the forefront of the 2008 election. On September 25, we held our Labor and Employment briefing in New York and were pleased that so many of you were able to attend. For those of you who could not be there, the briefing, titled "Decision 2008: What's at Stake for Employers," covered a wide range of timely topics concerning the election's potential impact, both legislative and economic, on the Supreme Court and Congress, as well as on such issues as health care, immigration and the protection of intellectual property in turbulent economic times. (The full agenda from the briefing is available at https://www.ebglaw.com/files/23869_labor_invite.pdf)
But for all our expectations about the importance of these issues when we began planning the briefing last spring, little did we imagine just how significant they would become this fall. Indeed, the feedback from the briefing has been unprecedented. As the economic crisis takes painful twists and turns, the relevance of the topics and issues discussed at the briefing is repeatedly confirmed to us by the numerous follow-up questions we continue to receive from attendees.
Thus, the decision on where to place the focus of the second installment of EBG's eReport was, as the kids might say, a no-brainer. The following article, written by EBG partner Allen B. Roberts, recaps several key issues addressed at the briefing and provides a pragmatic analysis of their potential impact on your business. Specifically, Allen's article covers the new amendments to the Americans with Disabilities Act, the Employee Free Choice Act (a proposed law that would, among other things, radically diminish an employer's ability to combat unionization), proposed laws that could dramatically affect an employer's relationship with its "independent contractors," and the latest developments on whistleblower laws.
I am also pleased to announce that we will be holding an additional "special" briefing to address the questions many of you have raised with us in recent weeks arising from the economic crisis. This briefing, titled "Economic Reality Bites: Handling Major Employment Law Challenges Sparked by the Economic Downturn," will be held on December 3 in New York. In 2009, we will present similar briefings in other cities where EBG has offices. The specific topics to be covered, as well as registration details, are available at: https://www.ebglaw.com/showevent.aspx?Show=9280. Please keep in mind that we may be tweaking the agenda over the coming weeks to ensure that the briefing is responsive to the very latest developments on the economy, the law and your business concerns.
Last, but certainly not least, we received many excellent suggestions after our first eReport, some of which have been incorporated. We continue to welcome your comments and suggestions on the eReport, as well as on our Client Alerts and briefings. During these difficult times, your input is especially important to us.
Ronald M. Green
TABLE OF CONTENTS:
- Employment Issues on the Table for a New Year and a New Administration, Allen B. Roberts
- Client Alerts
- Articles and Publications
- Labor and Employment Briefings
Employment Issues on the Table for a New Year and a New Administration
Allen B. Roberts
During Epstein Becker Green's recent Annual Labor and Employment Briefing in New York, I participated in a panel discussion with attorneys in our Business Law Practice Group to address some things employers should anticipate moving into a new year with a new administration. There is little room for doubt that "change" is coming, irrespective of the election outcome.
Several who attended the Briefing have asked me to memorialize and amplify comments I made concerning one newly enacted law and three legislative initiatives that may be forthcoming. I am sharing my response with Epstein Becker Green clients and friends.
Congressional action frequently follows some dramatic occurrence or seeks to redress some popularly perceived wrong, as with the National Labor Relations Act of 1935, Title VII of the Civil Rights Act of 1964 or the Sarbanes-Oxley Act of 2002. In other instances, legislation may be corrective or restorative, designed to capture or recreate the intentions of legislative sponsors or proponents after court or administrative interpretations do not fulfill initial expectations, as with the recently enacted ADA Amendments Act ("ADAAA") and other proposed legislation.
In a period when change is a hallmark of the campaigns of both presidential candidates and pervades the pronouncements of other candidates and incumbents, we can anticipate the introduction of certain widely discussed and promoted legislative offerings — followed by administrative and judicial interpretation and enforcement.
B. One New Law and Three of Those in the Pipeline
1. ADA Amendments Act of 2008
Following some eighteen years of judicial construction and administrative interpretation, the Americans with Disabilities Act ("ADA") was amended this year, mostly by provisions touted as restoring intent that was not fulfilled, particularly as a result of notable Supreme Court decisions. With the enactment of the ADA Amendments Act ("ADAAA"), having a January 1, 2009, effective date, employers should act affirmatively to ensure that their policies, practices, job descriptions, orientation and training take account of important changes:
The definition of "major life activity" has been expanded to expressly include (i) caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating and working, as well as (ii) the operation of a "major bodily function," such as functions of the immune system; normal cell growth; and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions.
An impairment that is episodic or in remission qualifies as a disability if it would substantially limit a major life activity when active.
The analysis to determine whether an impairment substantially limits a major life activity must be conducted without regard to ameliorative effects of such mitigating measures as medication, medical supplies, equipment, prosthetics, devices or supplies (except for ordinary eyeglasses or contact lenses that are intended to fully correct a person's vision), assistive technology, auxiliary aids or services, and learned behavioral or adaptive neurological modifications.
The term "auxiliary aids and services" expressly includes qualified interpreters or other effective methods of making aurally delivered materials available to individuals with hearing impairments; qualified readers, taped texts or other effective methods of making visually delivered materials available to individuals with visual impairments; and acquisition or modification of equipment or devices.
Protection against discrimination of individuals "regarded" as having an impairment applies to an actual or perceived physical or mental impairment, whether or not the impairment limits or is perceived to limit a major life activity. A "minor" impairment or one that is "transitory," with an actual or expected duration of six months or less, does not qualify for the protection.
The ADAAA promises new compliance challenges and the prospect of claims as new statutory definitions, rights and obligations are tested. Some of the challenges inhere in the new definitions, while others are a product of the difference between employer obligations under the ADA and those under equal employment opportunity laws proscribing discrimination on the basis of some protected status. From a compliance perspective, I believe it is helpful to not regard the ADA as just another equal employment opportunity law. The thrust of equal employment opportunity laws is ensuring equality of treatment to all workers — affording equality of opportunity and treating all people alike irrespective of a characteristic that is granted protected status. In contrast, the ADA admonishes that those within its protective reach must be treated not equally but differently from others, by way of distinguishing, reasonable accommodation. The ADAAA underscores this distinction by clarifying and, in some instances, redefining aspects of employer responsibility to reasonably accommodate.
The ADAAA draws new baselines with newly defined major life activities and protections for conditions controlled by medication and other mitigating measures. The result will be attendant requests for reasonable accommodation. Because certain items are incorporated into the ADAAA definitionally as "auxiliary aids and services," those items and others that are analogous may set new norms and guidelines for measuring the availability and reasonableness of requested accommodations.
Anticipating the predictable requests from employees and applicants occasioned by the ADAAA, employers should be addressing whether job descriptions specifying essential job functions are current and complete and whether policies and practices and programs for orientation and training have been updated to take account of the ADAAA and its impact.
An ADAAA Client Alert by Frank Morris and Minh Vu, Co-Directors of Epstein Becker Green's Disability Practice Group, is available here: /publications/president-bush-signs-the-ada-amendments-act-dramatically-expanding-the-americans-with-disabilities-act/.
2. Proposed Employee Free Choice Act
The proposed Employee Free Choice Act ("EFCA") does not spring from the same type of disappointment with judicial construction and enforcement that prompted amendment of the ADA. After all, private sector unionization grew considerably following the 1935 enactment of the National Labor Relations Act ("NLRA"), reaching approximately 33% in the 1940s. With private sector unionization today standing not much above 7%, there is considerable congressional support for fundamental change of cornerstone principles of the NLRA — from primacy of secret ballot elections and employer freedom of expression to the elemental right to collectively bargain by agreeing or disagreeing to proposals without compulsion to make any concession.
If enacted in a form resembling its current version — and upheld and enforced when challenged in available administrative and judicial proceedings — the EFCA would:
Bypass and displace conventional National Labor Relations Board secret ballot elections by allowing unions to gain representation rights once they have acquired signed authorization cards from a majority of the employees in any unit appropriate for collective bargaining;
Fast-track negotiation of a first collective bargaining agreement;
Specify mediation of a first collective bargaining agreement if the parties do not reach agreement within ninety days;
Set the economic and noneconomic terms and conditions of an initial two-year collective bargaining agreement through an arbitration award if mediation has not produced a first contract;
Introduce liquidated damages of two times the amount of back pay to remedy unlawful discharges during a union's organizing drive or during negotiation of a first contract; and
Introduce penalties of up to $20,000 for each separate willful or repeated violation.
The primary impact of a law like the current version of the EFCA may be expected to be felt in industries traditionally targeted by mainstream unions. But it is not out of the question that reality will outgrow those bounds and spill over to industry sectors never before affected by unionization, including clusters of white-collar employees in office environments. If this occurs, it may be because of two elements currently residing within the NLRA. First, there is no requirement that a labor organization win majority support in the most appropriate bargaining unit; all that is required is that the unit be an appropriate unit for bargaining. Second, there is no statutory formality to the entity that can be considered a labor organization entitled to obtain employee representation rights; all that is required is an organization of any kind or an employee committee in which employees participate and that exists, at least in part, for the purpose of dealing with employers concerning any of an array of matters, including grievances, rates of pay or conditions of work. The consequence could be fractionated, distinct employee groups joining together and turning outside to established labor organizations or internally creating their own.
If a card check displaces conventional elections and campaigns, an employer may not have sufficient advance notice to launch a fact-based campaign to dissuade employees from signifying their support for union representation. In any event, the powerful and lawful employer messages that union representation does not ensure better wages, hours, or terms and conditions of employment; that some benefits could be lost; and that employees might fare worse with a union contract than without one — and that there is no assurance that a first agreement could be concluded — will be substantially weakened and may be undermined altogether if mandatory arbitration of a first contract remains a feature of EFCA as enacted. As a practical matter, the EFCA provision for an arbitrated agreement could go a long way toward erasing employee doubt about whether employees would have the power through union representation to obtain a contract with improved terms and conditions. The message that strikes entail risks of lost pay and permanent replacement also evaporates if an arbitrator is legislatively empowered to dictate initial terms of a contract — possibly within six months of the time an employer first learned of the card signing.
Arbitrators potentially could have authority to make determinations on such obvious direct economic costs as pay, health and pension coverage, and fringe benefits, without giving paramount consideration to employer ability to absorb additional costs and liabilities or to employer or employee priorities. Separate from direct economics there is a full array of costly items that are not directly calculable. These include the important rights to manage and exercise control over the workplace, scheduling, subcontracting, promotion and transfer, seniority, and dispute resolution by way of grievances and arbitration. Employers will be met with the additional risks, potential costs and uncertainty of not knowing the weight an arbitrator will attach to union demands, the employer's business and its competitive circumstances, and actual or perceived economic and noneconomic patterns and industry norms.
3. Independent Contractors Under the Proposed Taxpayer Responsibility, Accountability and Consistency Act and the Proposed Employee Misclassification Prevention Act
The Government Accountability Office has estimated that some 10.3 million workers, or approximately 7.4% of the total workforce, were classified in 2005 as independent contractors, a percentage comparable to the private sector workforce that is unionized. To address the possible misclassification of employees as independent contractors, the House Taxpayer Responsibility, Accountability and Consistency Act and the Senate Employee Misclassification Prevention Act have the potential to:
create a definition of "independent contractor" intended to have universal applicability;
require employers to maintain records of independent contractor classifications;
mandate notice to individuals of their classification and grant a right to challenge that classification;
provide economic relief to those misclassified, with liquidated damages;
impose civil penalties for misclassifications;
require audits by state unemployment insurance agencies and by the U.S. Department of Labor ("DOL"); and
allow information sharing by the Internal Revenue Service and the DOL.
For employers whose independent contractors are reclassified as employees, the consequences include employee eligibility for such items as overtime pay, pension and welfare benefits, and workers' compensation and unemployment insurance benefits, as well as employer liability for statutory payroll contributions and withholdings and deductions from employee pay. Once a reclassification occurs, there is the further prospect of individual or class claims to restore the value of lost compensation and benefits dating back to the applicable statute of limitations.
4. Proposed Whistleblower Protections
Current discontent voiced by whistleblower advocates and legislators regarding administrative and judicial construction of whistleblower protection laws, notably the Sarbanes-Oxley Act, can be expected to lead to legislative initiatives. There is a relative abundance of limited-purpose whistleblower protective legislation aimed at particular subjects or industry or employer characteristics. But no broad federal legislation mirrors that of certain states, protecting whistleblower activity in the nature of disclosure, participation in proceedings or objection concerning violation of "any law, rule or regulation."
The most recent federal whistleblower law is the Consumer Product Safety Improvement Act ("CPSIA"), signed by President Bush on August 14, 2008. The CPSIA protects employees for their properly reported disclosures and participation in proceedings by way of testimony or otherwise, just as it protects their objection or refusal to participate in conduct violative of the full panoply of federal consumer product safety laws and orders, rules, regulations, standards and bans, relating to consumer products anywhere in a manufacturing, private labeling, distribution or retail sales channel. The CPSIA shows its pedigree in Sarbanes-Oxley and other whistleblower laws, but it also introduces new legislative clarity to issues where administrative or judicial determinations have disappointed whistleblower advocates or legislators, codifying substantive and procedural terms that met varying administrative and judicial constructions. While it retains the controversial and unsettled Sarbanes-Oxley provision for preliminary reinstatement of discharged whistleblowers once they have established a prima facie case, it advances from Sarbanes-Oxley to affirmatively announce protection for employees acting within the scope of their duties and to specify that trial by jury is available.
CPSIA could be a harbinger of legislative reform of existing law, and it may supply elements to a more comprehensive general law having an expanded reach and accomplishing protections not available in the current mosaic of federal whistleblower legislation.
A CPSIA Client Alert by Douglas Weiner and me is available here: /publications/new-law-builds-employee-whistleblower-protections-into-consumer-products/.
C. What It All Means
It is difficult to know the business climate of 2009 and beyond. Nevertheless, there are clear indicators of more activism, accompanied — or manifested — by new legislation and regulatory enforcement of those and existing laws. Employers are likely to encounter an environment marked by legislative initiatives that introduce new employee rights and reverse familiar mainstream constructions. In that climate, it is only reasonable to expect that claims by employees or on their behalf will have elevated prominence.
Notwithstanding the immediacy of other pressures that so many employers currently grapple with, there is merit to investing now in programs, policies and procedures that anticipate and avert expensive involvements that may be the product of changes promised as we head in to a new year with a new president and a new congressional term.