Take 5: Views You Can Use – October 2010

This October 2010 issue of "Take 5" was written by Joseph D. Guarino, a Member of the Firm in the Newark office.

1. No Extension of COBRA Premium Reduction

The American Recovery and Reinvestment Act ("ARRA") provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010. The premium reduction applied to periods of coverage beginning on or after February 17, 2009. The premium reduction for an individual ended upon eligibility for other group coverage (or Medicare) after 15 months of the reduction or when the maximum period of COBRA coverage ends, whichever occurred first. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. However, individuals who qualified on or before May 31, 2010, will continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare. On July 22, 2010, President Obama signed the Unemployment Compensation Extension Act of 2010, which did not extend the COBRA premium reduction.

2. Department of Labor's Administrative Interpretation on Donning & Doffing

The U.S. Department of Labor ("DOL") is focusing on time that employees spend changing clothes and protective safety equipment ("donning" and "doffing") and whether such time is compensable work time. Under Section 3(o) of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 203(o), the time spent "changing clothes or washing at the beginning or end of each workday" is excluded from compensable time under the FLSA if the time is excluded from compensable time pursuant to the express terms of, or custom and practice under, a collective bargaining agreement. The DOL's recent Administrative Interpretation (No. 2010-2) sets new compensation rules for donning and doffing activities by analyzing the meaning of "clothes" under Section 3(o) vis-√†-vis its legislative history and case law. The Interpretation states, "Based on its statutory language and legislative history, it is the Administrator's interpretation that the § 203(o) exemption does not extend to protective equipment worn by employees that is required by law, by the employer, or due to the nature of the job." In addition, the Interpretation concludes that clothes changing that is non-compensable under Section 3(o) may nevertheless be deemed compensable work time if it is a "principal activity," and, where that is the case, subsequent activities, including walking and waiting, are also compensable work time. Notably, this conclusion is directly contrary to the DOL's 2007 opinion letter that stated that Section 3(o) clothes-changing activities cannot be principal activities. Finally, the DOL's Interpretation notes that, although Section 3(o) pertains to employees covered by collective bargaining agreements, its analysis is instructive for all employers. Whether specific donning and doffing activity is a "principal activity" and compensable should be analyzed carefully to avoid wage liability under the FLSA.

3. Sons and Daughters Under the Family and Medical Leave Act

The DOL issued an Administrative Interpretation on June 22, 2010 (No. 2010-3), which addresses treatment of sons and daughters in nontraditional families under the Family and Medical Leave Act ("FMLA"). The FMLA entitles eligible employees to take up to 12 weeks of unpaid leave to attend to the birth of a son or daughter, or to care for a son's or daughter's "serious health condition." A "son or daughter" is defined by the FMLA as a "biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis." 29 USC §2611(12). The DOL's latest Administrative Interpretation, however, reinterprets the meaning of "son or daughter" under the FMLA as someone who stands "in loco parentis." The Interpretation is based on Congress's purported intention of recognizing the reality of nontraditional families in society, and not limiting leave to those employees who live in "traditional nuclear families." The FMLA regulations define in loco parentis as including those with day-to-day responsibilities to care for and financially support a child. 29 C.F.R. § 825.122(c)(3). Employees who have no biological or legal relationship with a child may nonetheless stand in loco parentis to the child and be entitled to FMLA leave. Id. Previously, FMLA leave to care for a child who was not the employee's son or daughter under the definition of the FMLA had to meet two preconditions: (i) the employee provides the child with day-to-day care, and (ii) the employee provides the child with financial support. Under the Interpretation, however, the FMLA regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.

4. Supreme Court to Review Viability of Third-Party Retaliation Claims Under Title VII

The U.S. Supreme Court granted certiorari to review the decision of the U.S. Court of Appeals for the Sixth Circuit in Thompson v. North American Stainless LP, 567 F.3d 804 (6th Cir. 2009) (en banc), which held that a fired employee lacked standing to bring a Title VII retaliation claim as the mere fianc√© (later husband) of a woman who had brought a discrimination charge of her own. The 10-6 en banc holding of the Sixth Circuit requires a plaintiff to have engaged in protected activity by opposing discrimination in his own right or as an actual party to the case of another. Close relational status alone, the Sixth Circuit held, is not enough. Reviewing decisions of other circuits holding likewise, the en banc court stated that "§ 704(a) of Title VII does not create a cause of action for third-party retaliation for persons who have not personally engaged in protected activity." While this case will not be briefed or argued until the next term, which begins in October, it is interesting to note that the outcome is anything but clear. Despite many assertions that the Supreme Court has been unfriendly to individuals, it has been willing to take up attenuated retaliation claims such as Burlington Northern & Santa Fe Railway Co. v. White, a 2006 decision imposing Title VII liability on an employer that acts to dissuade a reasonable employee from bringing or aiding a complaint, and Crawford v. Metro. Gov't of Nashville and Davidson County, a 2009 decision reversing the Sixth Circuit and holding that a female employee, who was fired after she stated in an internal investigation that she had been sexually harassed, had standing to bring a retaliation claim even though she did not initiate the investigation or even file a sexual harassment complaint. Given the Supreme Court's recent history, the Thompson case bears watching closely.

5. Expect Changes in Regulation Requirements Regarding Disabled Employees

The DOL's Office of Federal Contract Compliance Programs ("OFCCP") issued an Advanced Notice of Proposed Rulemaking on July 23, 2010, soliciting public comment on how to ensure that companies with federal contracts provide equal employment opportunities for people with disabilities. (The comment period ended on September 21, 2010.) While Section 503 of the Rehabilitation Act of 1973 sets forth affirmative action provisions to help ensure equal employment opportunities for disabled workers with companies with federal contracts, it has not been reviewed or revised since 1996. This fact, coupled with the rising and disproportionate unemployment rate for workers with disabilities, motivated the OFCCP to reexamine its affirmative action provisions under Section 503 in order "to make them more effective and to help ensure that more people with disabilities are employed and given the opportunity to advance in employment in the Federal contracting labor force." One way OFCCP is looking to achieve these goals is to potentially adopt measures similar to those required under the Executive Order 11246 program for supply and service contractors. Under that program, covered contractors are required to, among other things, compare the percentage of women and minorities in each job group at an establishment with the availability of women and minorities to work in the job group. Given the OFCCP's increased scrutiny of federal contractors in its compliance reviews, all companies with federal contracts should expect new rules in the near future.