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The First 100 Days: Legislation on the Horizon

Date

February 1, 2009

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8 minutes

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This Week: Other Legislation on the Horizon

SUMMARY

Over the last six weeks, we have provided you with legislative updates in three substantive areas: broadening pay discrimination laws, consideration of the Employee Free Choice Act, and expanding leave entitlements. In this, our final installment of this "First 100 Days" series, we discuss provisions of the American Recovery & Reinvestment Act that impact employees, as well as a number of other bills that are likely to be considered – and in some cases become law – in 2009. These bills span the breadth of labor and employment law. On the union front, it is likely that the RESPECT Act, which opens the door to certain front line supervisors being deemed to be part of the same union bargaining unit as the employees they supervise, will become law. In the area of plant closings and layoffs, the FOREWARN Act, which has received significant support from President Obama, would require smaller employers to comply with the Worker Adjustment Retraining & Notification (WARN) Act, lengthen the required notice period for a plant closing or mass layoff from 60 days to 90 days, and impose substantial penalties on employers who fail to comply with its detailed requirements. Likewise, the Protecting America's Workers Act (PAWA) would impose new workplace safety requirements and drastically increase penalties for occupational safety and health violations. Turning to employment policies and contracts, the Arbitration Fairness Act (AFA) would make unenforceable many arbitration agreements between employers and employees. Finally, if passed, the Employee Misclassification Protection Act (EMPA) would raise the stakes on the decision whether to consider an individual an employee or an independent contractor/consultant, instituting significant civil penalties and heightened damages for misclassification.

ACTION ITEMS

  • If you are negotiating employment agreements or other documents, consider adding a jury waiver provision instead of, or in addition to, an arbitration provision.
  • Confirm that your human resources personnel understand the new COBRA premium subsidy provisions contained in the American Recovery & Reinvestment Act (commonly referred to as the Stimulus Bill), and provide the required notice to employees terminated since September 1, 2008 (or ensure that your benefits administrator is doing so).
  • Take a close look at your independent contractors, consultants and any other individual paid on a Form 1099 to ensure that they are properly classified as non-employees.
  • If your company relies on front-line supervisors, evaluate their job duties with an eye toward ways that they may be given additional authority, which could make the difference in determining whether they are deemed part of a bargaining unit. This applies both for unionized workforces and those that may be organized in the future.
  • Make sure that you understand what reductions in force trigger obligations under WARN, and the "baby WARN" statutes that are in place in many jurisdictions. Carefully monitor developments at both the federal and state level before conducting future layoffs.
  • Do a safety audit to confirm that your organization is meeting OSHA safety requirements. If you have had any sort of pattern of injuries (even if the injuries themselves are very minor) take action to prevent future injuries before stricter penalties and other provisions of OSHA amendments potentially come into effect.

DISCUSSION

In this, the last of our "First 100 Days" series, we summarize two provisions of the American Recovery & Reinvestment Act (ARRA) and 5 other bills currently under consideration. Only the ARRA has become law so far, but because each of the other bills has had support from President Obama and the Democrats in Congress, they warrant employer attention.

The American Recovery & Reinvestment Act (ARRA): Commonly referred to as the Stimulus Bill, the ARRA contains two provisions of particular importance to employers. This bill became law on February 17, 2009.

  • The ARRA provides a 65% subsidy of the COBRA or state continuation coverage premiums for certain employees who were/are involuntarily terminated between September 1, 2008 and January 1, 2010. Eligible employees may receive the subsidy for up to 9 months. Information regarding this premium subsidy program must be included in the COBRA notice. In addition, special notice must be provided to any employee terminated on or after September 1, 2008 who did not have a COBRA election in effect on February 13, 2009. We will be sending another DataPoint about these new COBRA provisions in the next week.
  • Also included in the ARRA is a strong whistleblower protection provision, protecting employees who work for companies receiving government stimulus funds. Employers receiving these funds should institute an anti-retaliation policy and reporting mechanisms, and be especially careful in dealing with employees who have raised concerns or complaints regarding the use of funds or the conduct of the business.

Proposed Legislation That Has Not Yet Become Law:

The RESPECT Act: Though it has received far less attention than the Employee Free Choice Act, the RESPECT Act (Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers Act) would dramatically change the composition of union bargaining units. Under current law, the fact that front-line supervisors assign work and direct the work of the employees they supervise generally means that they are not part of the employees' union bargaining units; however, the RESPECT Act would change the definition of supervisor to require management – not just supervising employees or directing their work – for an individual to be deemed a true supervisor and outside the scope of the bargaining unit of the employees he or she supervises. This change to the definition of supervisor has the potential to render front-line supervisors members of the same bargaining unit as the employees they supervise. If this were to happen, front-line supervisors would in essence be required to have split loyalties, adhering to the employer's business needs, while facing pressure to place union or employee interests first. It would also make it much more difficult for employers to continue operating during a strike.

The FOREWARN Act: An amendment to the Worker Adjustment and Retraining Notification (WARN), FOREWARN, if passed in its current form, would drastically increase WARN's reach. FOREWARN would reduce the number of workers that an employer must have to be covered from 100 employees to 50 employees. It would also reduce the number of employees who need be impacted for a reduction to qualify as a covered plant closing or mass layoff. Likewise, it would increase the required notice period from 60 to 90 days. Perhaps most concerning, though, is that FOREWARN, as currently drafted, provides that if an employer fails to provide the required notice, it is liable for double back pay for each day when the employee should have, but did not have, notice of the mass layoff or plant closing.

The Protecting America's Workers Act (PAWA): The PAWA would amend the Occupational Safety & Health Act (OSHA) to cover government employees and other employees previously excluded from OSHA's coverage, increase penalties for OSHA violations, update whistleblower protections, require employers to inform employees of their rights under OSHA, require that all workplace deaths and serious injuries be investigated by the Department of Labor, and give employees and their families the right to meet with the investigators. PAWA would also mandate that employers provide their employees with necessary safety equipment – including personal protective equipment – at the employer's expense.

The Arbitration Fairness Act (AFA): A key focus of consumer rights groups, the AFA (as introduced in the House in mid-February) would amend the Federal Arbitration Act to render invalid and unenforceable any pre-dispute arbitration agreement that requires arbitration of an employment, consumer or franchise dispute. In other words, under the AFA, an employer would not be able to require an employee to arbitrate a dispute unless the employee agrees to arbitration after the dispute has arisen.

The Employee Misclassification Protection Act (EMPA): The EMPA would create substantial additional risk for entities that classify individuals as independent contractors or independent consultants, rather than as employees. While there are certainly some individuals who meet the requirements for non-employee status, many companies over-utilize these classifications, often at the individual's request. Under current law, companies that misclassify individuals as non-employees face penalties under tax, worker's compensation and unemployment laws. The EMPA would add civil penalties (of up to $10,000) and would double liquidated damages if, as a result of the misclassification, the individual is denied minimum wage or overtime. In addition, as currently drafted, the EMPA would require employers to provide the following notice to all non-employees: "Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor." We expect that such a suggestion to contact the Department of Labor, together with the EMPA's generous attorneys fees provision, would lead to significant litigation in this area. The EMPA was co-sponsored by President Obama when he was in the Senate, and we expect that it will gain momentum.

If you have any questions regarding these issues, please contact Laura Friedel or any member of the Labor & Employment Service Group.


Filed under: Employment & Executive Compensation

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