5th annual labor and employment law briefing · 2014-06-11 · 5th annual labor and employment law...

5TH ANNUAL LABOR AND EMPLOYMENT LAW BRIEFING:

Strategic Guidance for Legal Trends and Developments

THURSDAY, JUNE 12, 2014

The Ritz-Carlton Philadelphia

#LaborLawTrends

5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments

© Blank Rome LLP 2014. All Rights Reserved

Employment & Labor Year In Review ‐and What’s Looming for 2014

Presented by

Scott F Cooper Blank Rome LLP

#LaborLawTrends; @BlankRomeLLP

Scott F. Cooper, Blank Rome LLP

Stephanie Kaplan, Blank Rome LLP

• What you need to know about major developments in the Courts, Congress, local governments and various

i

Introduction

agencies

• Issue Spotting

• Really fast

10 #LaborLawTrends; @BlankRomeLLP

Page 1




• Last year was a top ten list

• This year

So how are we doing to do this?

• This year . . . .


Page 2



Employment Law Jeopardy

WorldGone Wild?

Wouldn’t Want to be “U”

Show Me the

Money

Whistling a Tune (up)

Super Size My Gov

Family Matters

Potpourri


Topic 1:World Gone Wild?

How World Events Will Affect Employment in 2014 and Beyond

Page 3



• Global and domestic events will affect employment issues in most dramatic ways in decades

Economy and Global EventsOld World or New World?

• Return of “Old World” tensions in Europe

• Energy Revolution in the United States

• Extreme weather

• “New Normal” from recession still not settled


• Stronger economy pressures wage increases

• Employee demands increase as mobility options

Management Challenges

• Employee demands increase as mobility options increase

• Return to the “Age of Good Managers”

“In bad economic times, you fire people you do not want to.


In good economic times, you hire people you do not want to. “

Page 4



• More diverse workforce than ever

• Per Title VII and EEOC: Religious accommodation

Increasing Global Influence of Religion at Work

required unless undue hardship

• Employers cannot act based on the discriminatory religious preferences of others

• Religious belief must be sincerely held


• The Equal Employment Opportunity Commission (“EEOC”) recently issued publications addressing workplace rights and

ibiliti ith t t li i d d i

EEOC Guidance on Religious Attire

responsibilities with respect to religious dress and grooming under Title VII of the Civil Rights Act of 1964.

• The EEOC explains that Title VII applies to all religious practices or beliefs that are “sincerely held.” A belief can be sincerely held even if it is recently adopted.

• Generally, an employer must accommodate an employee’s religious practices unless doing so would create an undue


hardship on the operation of the business.• In addition, an employer cannot act based on the

discriminatory religious preferences of others, including customers, clients, or co‐workers.

Page 5



• Telecommuting on the decline?

• Increased remote location workforce

Mixed Signals on Working at Home

• Increased remote location workforce

• More working from home, with less reduction in work and leaves


Massive World Productivity Slump Coming!


Page 6



• Soccer competition starts today & goes a month– 80% of world’s population

will watch

For Companies ‐ Not a Game, Not a Joke

will watch

– 3x Olympic viewership

– In 2010, $121M decrease in US economic output; £7.3B in UK

– This time in US time zones

– 43,600 broadcasts in world’s key nations; ESPN

Ad t $600M d 2 5 ti


– Ads at $600M and 2.5 times Stanley Cup rates

– 26% of workers will take time off

Don’t Email Me (in French)


Happy People in France

Page 7



Topic 2:Wouldn’t Want to Be “U”

Alarming Employment Law Issues in Higher Education ‐ That Will Spread

• A very tough time to be a University

• Universities again battleground over cutting edge legal

Universities – Legal Ground Zero

• Universities again battleground over cutting edge legal issues:

– Reporting

– Student Athlete Unions

– Affirmative Action

– Law school apps drop again


Law school apps drop again

Page 8



• Colleges faced with tough decisions on reporting rape sexual assault

College Reporting

reporting rape, sexual assault, molestation and suicides

• At center of storm – conflicts of Interest and role of law enforcement


• E.D. Pa. Court in Harris v. St. Joseph’s University found a student may proceed with claims

Changing Landscape of Universities

found a student may proceed with claims against the University that the school tribunal wrongly found he committed sexual assault


Page 9



• Harris v. St. Joseph’s University: St. Joseph’s University could be liable for tribunal findings of sexual assault

Changing Landscape of Universities and Potential Impact on Employers

could be liable for tribunal findings of sexual assault

• NLRB Ruling: Northwestern University football players can unionize


• NLRB Northwestern Decision:

– On March 26 2014 the NLRB in Chicago issued a decision

Changing Landscape of Universities

– On March 26, 2014, the NLRB in Chicago issued a decision finding that the football players on Northwestern’s team receiving scholarships are “employees” within the meaning of the NLRA and can therefore unionize

– The decision has been appealed


Page 10



• Schuette v. Coalition to Defend Affirmative Action:

University at Center of Affirmative Action

Defend Affirmative Action: Permitting voters to decide the applicability of affirmative action policies


• Supreme Court of the United States held that an amendment to Michigan’s constitution, Proposal 2, that prohibits state universities from considering race as part of its admissions process does not violate the Constitution’s Equal

l h f ’ h h ff l

Schuette v. Coalition to Defend Affirmative Action

Protection Clause. Therefore, state’s voters have the power to stop officials from using race to shape government programs.– The Court therefore cleared the way for voters elsewhere in the nation to opt to put an

end to so‐called “affirmative action” policies — as seven states now do.

• The U.S. Court of Appeals for the Sixth Circuit, had struck down Michigan’s ballot measure, relying primarily upon the concept that it is unconstitutional for voters to change the way public policies are developed to make it more difficult to adopt or keep policies that protect racial minorities from discrimination.


• According to a concurring opinion by Justice Scalia, and joined by Justice Thomas, the majority opinion left open the power of government to adopt race‐based policies to cure “disparate impact” on racial minorities.

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Topic 3:Show Me the Money

A Wave of New Headaches Over Pay

• Minimum wage fights gaining ground

• Significant traction in the fast food industry

Minimum Wage Hike Fights Growing

• Significant traction in the fast food industry

• Local activism


Page 12



• Tech Giants Apple, Google, Intel and Adobe reach $324

Wage Fixing

$million accord to settle a lawsuit alleging the companies conspired to suppress salaries by not recruiting one another’s workers


• The suit covered over 64,000 employees

• Growing use of analytics to staff retail establishments timed to the hour based on projected customer flow

Micro Staffing

timed to the hour based on projected customer flow

• Computer projected models such as these create new challenges for employers

• The resultant fall out on workers who cannot schedule with predictability is being increasingly scrutinized


Page 13



• DOL cracks down on internships that are “really work.”

• In April, NYC Mayor De Blasio signed into law an

Role of the Intern

amendment prohibiting discrimination against paid and unpaid interns


DOL Guidance on Internships

Interns receiving training

for their own educational

benefit may work at for

profits without compensation


Page 14



• On March 26, 2014, the New York City Council unanimously passed the amendment to the New York City Human Rights Law applying the law to paid and unpaid interns.

• The amendment defines intern as an “individual who performs work for an employer

Changing Role of the Intern in NYC

p p yon a temporary basis whose work: provides training or supplements training given in an educational environment such that the employability of the individual performing the work may be enhanced; provides experience for the benefit of the individual performing the work; and is performed under the close supervision of existing staff.”

• This definition of intern tracks somewhat, though not precisely, all of the factors historically used to determine intern status for wage and hour purposes. Nevertheless, the amendment expressly states that interns are protected under the New York City Human Rights Law “without regard to whether the employer pays them a salary or wage.” The legislation comes on the heels of a federal court decision late last year, which dismissed a discrimination claim under the New York City Human Rights Law on


the basis that the plaintiff intern was not a covered employee under the law.

• It is critical that employers with operations in New York City consider:– Proper classification of workers as employees or unpaid interns under the appropriate analysis for

wage and hour purposes.

– Update policies, practices and training to include interns when it comes to issues addressing discrimination, harassment, retaliation and disability/religious accommodation

• Sandifer v. United States Steel Corporation: Parties to a CBA can negotiate whether time spent changing into protective clothing is compensable

Fair Labor Standards Act

protective clothing is compensable

• Executive Order mandates revisions to overtime regulations under the FLSA


Page 15



• Sandifer v. United States Steel Corporation: Section 203(o) of the Fair Labor Standards Act (FLSA) —which allows parties to a collective bargaining agreement to decide for themselves through negotiations whether “time spent in changing clothes … at the beginning or end of each workday” is compensable —applies to articles of protective clothing such as flame‐retardant jackets, pants, hoods, snoods, wristlets, leggings, hardhats, work gloves and steel‐toed boots.

“Th t t t ti i t t hi h § 203( ) id ti b th

Fair Labor Standards Act

• “The statutory compensation requirement to which § 203(o) provides an exception embraces the changing of clothes only when that conduct constitutes ‘an integral and indispensable part of the principle activities for which covered workmen are employed,’” the Court explained. And protective clothing is the only type of clothing that is integral and indispensable to the work of members of many occupations, such as factory workers, butchers, and longshoremen.

• Although the Supreme Court affirmed the decisions below, it did take issue with the de minimis rule —under which courts can declare short periods of time noncompensable under the rationale that the law does not take account of trifles — as applied to the FLSA. “We doubt that the de minimis doctrine can properly be applied to the present case,” the Court noted. “A de minimis doctrine does not fit comfortably within the statute at issue here, which, it can fairly be said, is all about trifles — the relatively insignificant periods of time in which employees wash up and put on various items of clothing needed for their jobs” (emphasis in original). Thus, the Court appears to have opened to door to considering the broader question of whether the long established de minimis rule will continue to apply


considering the broader question of whether the long‐established de minimis rule will continue to apply to cases brought under the FLSA.

• The Court’s unanimous decision provides clarity for employers with unionized workforces on the issue of compensation for changing time. It also demonstrates the Court’s preference that issues such as compensation for clothes changing time be handled through the give‐and‐take of collective bargaining. On the other hand, the Court’s decision may weaken even further employers’ ability to use the de minimis defense in wage and hour litigation.

• On March 13, 2014, President Obama issued a memorandum directing the Secretary of Labor to propose

Fair Labor Standards Act –Changing Landscape

memorandum directing the Secretary of Labor to propose revisions to the Department of Labor’s existing overtime regulations under the Fair Labor Standards Act (“FLSA”)– The memorandum stated the President’s view that the regulations

regarding the FLSA’s overtime exemptions for executive, administrative, and professional employees (also known as the “white collar” employee exemptions) are “outdated” and “have not kept up with our modern economy”


kept up with our modern economy.

– Commentators expect that the Secretary of Labor will propose to increase the minimum salary requirement for employees covered by the “white collar” exemptions. The minimum salary, currently $455 per week, was last increased in 2004.

Page 16



Equal Pay Issues

• In April, President Obama signed two executive actions to address pay di i i i d h hdiscrimination and strengthen the enforcement of equal pay laws among federal contractors

• The EEOC has prioritized sex discrimination and equal pay issues, pushing employers to consider flexible


pushing employers to consider flexible schedules and telecommuting

• In April, President Obama signed two executive actions designed to address pay discrimination and strengthen the enforcement of equal pay laws among federal contractors.

Equal Pay Issues

– One Executive Order prohibits federal contractors from retaliating against employees or applicants who choose to discuss their compensation. This Order does not apply to situations where an employee with access to others’ compensation information as part of his/her essential job functions discloses that information to persons without such access. The Department of Labor (“DOL”) is expected to issue proposed regulations implementing the Executive Order.

– The second Presidential Memorandum instructs the Secretary of Labor to propose new regulations requiring federal contractors and subcontractors to b it t DOL “ d t th ti id t th i l


submit to DOL “summary data on the compensation paid to their employees, including data by sex and race.” The President further instructed the Secretary to consider approaches that would (1) enable DOL to direct its enforcement resources toward entities whose data suggests potential compensation discrepancies , (2) minimize the reporting burden on federal contractors, and (3) encourage voluntary compliance with federal pay laws.

Page 17



• United States v. Quality Stores Inc : Severance payments are

Supreme Court Spotlight: Severance Payments

Inc.: Severance payments are taxable wages for purposes of the Federal Insurance Contributions Act (FICA)


• Issue: whether a particular form of severance payments constituted “wages” under FICA, the federal payroll tax imposed by FICA on both employers and employees to fund the Social Security and Medicare programs

H ldi S C t f th U it d St t i l h ld (8 0 ith 1

United States v. Quality Stores Inc.

• Holding: Supreme Court of the United States unanimously held (8‐0, with 1 recusal) held that given the statutory definition of wages, “and as a matter of plain meaning” severance payments constitute “remuneration for employment.”– This decision overruled the Sixth Circuit which – affirming the judgments of the

bankruptcy court and the district court – had held that the payments were not wages, creating a split among the circuits.

• Rationale: In reaching this conclusion the Supreme Court noted that the payments are made to employees (or former employees), and they are typically based on such factors as the employee’s function and tenure with the


typically based on such factors as the employee s function and tenure with the employer. In this way, they are “like many other benefits employers offer employees above and beyond salary payments,” such as “health and retirement benefits, stock options, or merit‐based bonuses,” all of which plainly constitute “remuneration for employment.”

Page 18



Topic 4:Whistling a Tune (Up)

Whistleblower Laws Continue Expanding Into New Areas

• Lawson v. FMR LLC: – Whistleblower protection applies to

Focus on Whistleblower Issues

employees of a public company's private contractors and subcontractors

• Wiest v. Lynch:– Application of Lawson, finding a non‐publicly

traded employer acted as an agent of publicly traded parent company

• Department of Homeland Security v


• Department of Homeland Security v. MacLean:– Upcoming S. Ct.: Does whistleblower

protection extend to disclosing protected information

Page 19



• Jackie Hosang Lawson and Jonathan M. Zang v. FMR LLC et al. (Supreme Court)– Lawson and Zang were employees of private company under

contract with a public company to provide advisory services.

L ll d h h d d lti t l f d t it

Whistleblower Issues – Changing Dynamics

– Lawson alleged she was harassed and ultimately forced to quit because she provided Fidelity managers with information on inappropriate expense reporting, retention of investment company fees, and methodologies for reporting or accounting for mutual fund expenses and operations. Zang contended he was fired for informing Fidelity management that disclosures that were being prepared for submission to the Securities and Exchange Commission did not accurately reflect the details of some fund managers' compensation.

– First Circuit Held: only people who work for public companies are protected by the Sarbanes Oxley Act, which protects


p y y , pwhistleblower activity.

– Supreme Court Held: The anti‐retaliation protection that the Sarbanes‐Oxley Act provides to whistleblowers applies to employees of a public company's private contractors and subcontractors.

• Wiest v. Lynch, E.D. Pa.– Issue: First federal ruling to examine the scope of

an agency relationship between a publicly traded company and a non‐publicly traded company

Whistleblower Issues – Changing Dynamics

company and a non publicly traded company necessary to trigger coverage under the whistleblower protection provision of the Sarbanes‐Oxley Act.

– Held: Plaintiff Jeffrey Wiest sufficiently showed that his former employer, the non‐publicly traded Tyco Electronics Corp. acted as an agent of its publicly traded parent company, Tyco Electronics Ltd. Plaintiff also sufficiently stated a claim against the President of the Tyco business


against the President of the Tyco business.

– Rationale: The Court relied heavily on the U.S. Supreme Court's 2014 ruling in Lawson v. FMR LLC, which held that Section 806 covers "any officer, employee, contractor, subcontractor or agent of" a publicly held company.

Page 20



• Department of Homeland Security v. MacLean– Issue: Whether certain statutory protections

Looking Ahead in the Supreme Court: More Whistleblower Issues

codified at 5 U.S.C. § 2302(b)(8)(A), which are inapplicable when an employee makes a disclosure “specifically prohibited by law,” can bar an agency from taking an enforcement action against an employee who intentionally discloses sensitive security information.

– Facts: Air marshal protested a decision to cut down on air marshals aboard flights out of Las Vegas.


After dissatisfaction with the TSA response the employee went public and told a news reporter about the cut back and lost his job

– Cert granted in May 2014 case will be heard during October 2014 term

Topic 5:Super Size My Gov

Increasing Regulation of “Health Issues” in the Workplace

Page 21



• Governments are increasingly regulating health issues

– NYC attempted soda ban paid sick time off

Employee Wellness

NYC attempted soda ban, paid sick time off

– In April, Mayor Nutter signed an Executive Order banning smoking in city parks in Philadelphia

– E‐cigs too


• Under the Earned Sick Time Act:

– Coverage: New York City employers with 20 or more employees must provide paid sick time in accordance with the law as of April 1, 2014. Beginning on October 1, 2015, the coverage threshold is lowered to employers with 15 or more employees. Employees who workat companies that do not meet the threshold requirements are nevertheless entitled to job protection for up to 40 hours of unpaid sick time each year.

– Earning and Accrual: Employers must provide at least one hour of sick time for every 30 hours worked by the employee, up to a maximumof 40 hours of sick time in a calendar year Sick time begins to accrue as soon as the employee is hired (so long as on or after

NYC: Earned Sick Time Act

maximum of 40 hours of sick time in a calendar year. Sick time begins to accrue as soon as the employee is hired (so long as on or after April 1), however an employee can only start using accrued sick time upon the later of 120 days after the commencement of theemployee’s employment, or 120 days after the April 1 effective date of the new law.

– Use of Sick Time: Employees get to determine how much accrued sick time they need to use, although employers can “set a reasonable minimum increment for the use of sick time not to exceed four hours per day.” Sick time may be used only for the following reasons: (i) the employee’s mental or physical illness, injury or health condition, or need for medical diagnosis, care or treatment of such an illness, injury or health condition; (ii) the employee’s need for preventative medical care; (ii) the care of an employee’s family member who needs medical diagnosis, care or treatment of a mental or physical illness, injury or health condition; (iii) the care of an employee’s family member who needs preventative medical care; (iv) closure of the employee’s place of business by a public official due to a public health emergency; or (v) the employee’s need to care for a child whose school or childcare provider has been closed by a public official due to a public health emergency. Employers may require an employee to provide written confirmation that the employee used sick time in accordance with the new law.

– Carry‐Over of Unused Sick Time: Unused accrued sick time must be carried over to the following calendar year. However, at no time is an employer required to allow the use of more than 40 hours of sick time in any calendar year, and an employer may choose not toallow unused paid sick time to carry over if the employee is paid for such unused paid sick time by the end of the applicable calendar year. In addition, employers are not required under the law to pay for unused sick time upon “termination, resignation, retirement, or other separation from employment ”


other separation from employment.”

– Notice of Need for Sick Time: Employers are permitted to require reasonable notice of the need to use sick time. When the need is foreseeable, employers may require no more than 7 days’ notice, and, when not foreseeable, employers may require notice to be given as soon as practicable.

– No Retaliation: Employers may not retaliate or threaten to retaliate against an employee for exercising or attempting to exercise rights under the new law.

– Notice to Employees: Employers are required to provide employees at the commencement of their employment with written notice of the employee’s rights to sick time under the new law.

Page 22



• The American Psychiatric Association released a new edition of the DSM (“DSM‐5”) making it more likely

Americans with Disabilities Act – New Interpretations

edition of the DSM ( DSM 5 ), making it more likely for employees to claim ADA protection


• Last summer the American Psychiatric Association released a new edition of Diagnostic and Statistical

Americans with Disabilities Act – New Interpretations

released a new edition of Diagnostic and Statistical Manual of Mental Disorders (“DSM‐5”)

– Includes new diagnoses for mental illnesses such as communication disorder (persistent difficulties in the social uses of verbal and nonverbal communication), new depressive disorders (including recognition of a premenstrual dysphoric disorder) and certain impulse related disorders (such as


disorder), and certain impulse related disorders (such as hoarding and skin‐picking).

• These changes are likely to make it easier for employees to claim they qualify for ADA protection

Page 23



• Changes to Pennsylvania law expands child abuse mandatory reporting requirements to include

Changes in Pennsylvania Law: Reporting Child Abuse

y p g qprofessionals with “licenses”

– This may include attorneys


Topic 6:Family Matters

Laws Keep Up with More Family at Work Issues

Page 24



Legal Watch: Evolution of Gay Marriage*

• In May, a Middle District of Pennsylvania CourtPennsylvania Court nullified Pennsylvania's marriage laws holding they violate the due process and equal protection clauses of the U.S. Constitution,


following similar decisions in 12 federal courts including recently in Idaho, Arkansas and Oregon

• NJ and NY have both passed laws this year providing further protections for pregnant women

Legislative Watch: Broader Protections for Pregnancy

further protections for pregnant women


Page 25



• Pregnancy added to NJLAD and requires employers to offer reasonable accommodations to pregnant employees who request accommodation.

– The new law defines pregnancy as “pregnancy, childbirth, or medical conditions related to pregnancy

NJLAD

p g y p g y, , p g yor childbirth, including recovery from childbirth.” This definition is significant because it is likely broad enough to cover a range of conditions and ailments and specifically includes recovery from childbirth as being within its parameters. The new law prohibits an employer from treating any female employee that the employer knows or should know is pregnant less favorably from other non‐pregnant employees who are similarly situated in their ability or inability to work.

– The law also imposes a requirement that employers offer pregnant employees a reasonable accommodation unless it would cause the employer an undue hardship. The law includes examples of some reasonable accommodations: “bathroom breaks, breaks for increased water intake, periodic rest, assistance with manual labor, job restructuring or modified work schedules, and temporary transfers to less strenuous or hazardous work.”

– The law specifically declares that it “shall not be construed as otherwise increasing or decreasing” any existing statutory rights to paid or unpaid leave in connection with pregnancy


any existing statutory rights to paid or unpaid leave in connection with pregnancy.

– With the enactment of these new protections for pregnant employees, New Jersey joins a number of other states — including Texas, California, Illinois and Connecticut — that have recently adopted laws addressing pregnancy discrimination.

• A new amendment to the New York City Human Rights Law imposes new obligations on employers with 4or more employees. The Human Rights Law has existing prohibitions against gender, pregnancy and disability discrimination. The amendment expands

ti d d ti bli ti f d l t d

NYC: Pregnancy Notice and Accommodation

notice and accommodation obligations for pregnancy and pregnancy‐related conditions, even if they do not qualify as a “disability” under the law. Therefore, New York City employers:

– Must provide a written notice of rights under the new law at the time of hire to all individuals hired on or after January 30, 2014.

– Must provide a written notice of rights under the new law to all existing employees, regardless of date of hire, on or before May 30, 2014.

– Must reasonably accommodate an employee’s “pregnancy, childbirth, or related medical condition that will allow the employee to perform the essential requisites of the job,” provided that (i) the pregnancy, childbirth or related medical condition “is known or should have been known” by the employer, and (ii) such accommodation does “not cause undue hardship in the conduct of the


p y pcovered entity’s business.” Potential accommodations could include, depending on the circumstances, assistance with manual tasks, breaks, leave/time off or work station changes. As with disability accommodations, it is the employer’s burden to prove that an accommodation would pose an “undue hardship.”

– May – but are not required to – post written notice of rights under the new law at an accessible location in the workplace.

Page 26



Topic 7:Potpourri

A Few Biggies to Close, Which Just Don’t Fit Anywhere Else!

• Socko v. Mid‐Atlantic Systems of CPA, Inc., No. 1223 MDA 2013 (Pa Super May 13 2014): rejected an

Changes in Pennsylvania Law: Trade Secrets*

MDA 2013 (Pa. Super. May 13, 2014): rejected an exception to consideration for non‐compete agreements


Page 27



• Employers continued to be faced with issues of whether to monitor

l ’ i l di

Continuing Social Media Issues

employees’ social media

• WSJ reports: 39% of employers dig into job candidates on social sites

• 43% said they had found something that made them deep‐six a candidate

• 19% said they found information that sold them on a candidate such as


sold them on a candidate, such as communication skills or a professional image

• Terminations due to social media posting are on the rise

Pulling It All Together With a Bang

Page 28



• Big Events – world, economy and social changes – will affect

Conclusion

social changes will affect employment issues

• But another year of incremental changes through cases and regulations

• Higher focus on wages


• Higher focus on wages

• More accountability –whistleblowing and government regulation

THANK YOU for attending!


Page 29



Questions?


Page 30



Agencies Filling the Vacuum in AbsenceAgencies Filling the Vacuum in Absence of Congressional Action:

EEOC, NLRB, and Executive Orders

Presented by

Mark Blondman Blank Rome LLP


Mark Blondman, Blank Rome LLP

Philip M. Kovnat, Equal Employment Opportunity Commission*

Scott A. Mayer, Aramark

Dennis P. Walsh, National Labor Relations Board **Mr. Kovnat’s and Mr. Walsh’s views are their own and not those of their respective agencies

• Divided government exists when President’s political party does not also control both chambers of Congress

Government Activity and Divided Party Control

party does not also control both chambers of Congress

• Greater levels of policy gridlock noted during periods of divided government


Page 31



History of Executive OrdersNumber of executive orders for the first five years of a two‐term

president or four years for a single term president. Kennedy and Ford served less than four years.

300

400

500

600

700 Truman

Eisenhower

Kennedy

Johnson

Nixon

Ford

C t


0

100

200

300 Carter

Reagan

Bush (GHW)

Clinton

Bush (GW)

Obama

“America does not stand still – and neither will I. So wherever and whenever I can take steps without

Barack Obama: State of the Union Address 2014

wherever and whenever I can take steps without legislation to expand opportunity for more American

families, that’s what I’m going to do.”


Page 32



• Signed on February 12, 2014

• Increases minimum wage for federal contractors to

Executive Order:Minimum Wage for Contractors

Increases minimum wage for federal contractors to $10.10 per hour

• Increases minimum wage for tipped workers to $4.90 per hour• When wages paid by employer combined with tips do not

amount to minimum wage of $10.10 per hour, employer is required to supplement wages so wages equal the minimum


required to supplement wages so wages equal the minimum wage

• Goes into effect January 1, 2015

• Increases to minimum wage every year thereafter

• Amendments to NLRB Election Procedures

• Handbooks Social Media Policies and Private Use of

National Labor Relations Board Activity

• Handbooks, Social Media Policies and Private Use of Employers’ Email Systems

• Changes to Successorship Standard

• Joint Employment Standard


Page 33



• Employers’ Separation Agreements

Equal Employment Opportunity Commission Activity

• Employers’ Use of Background Checks

• Pregnancy‐Related Impairments


• New rules announced by NLRB in February 2014 regarding union election procedures

Amendments to NLRB Election Procedures

regarding union election procedures

• Largely a revival of the NLRB’s proposed rules from June 2011, that were met with much criticism


Page 34



• Substantial reduction in time from Petition to Election

• Delays most legal challenges until after election has

NLRB Amendments to Union Election Procedures

Delays most legal challenges until after election has taken place

• Rule allows for electronic filing and transmission of election petitions and other documents and allows inclusion of telephone numbers and email addresses in voter lists


•Modernizing processes

NLRB’s Aim in New Union Election Procedures

• Enhancing transparency

• Eliminating unnecessary


Eliminating unnecessary litigation and delay

Page 35



• Potentially higher union success rate

NLRB Amendments to Union Election Procedures: Impact on Employers

• Potential increase to litigation on back end


• February 2014 – EEOC brought a suit against CVS in Illinois federal court, alleging that the pharmacy

EEOC Activity: Targeting Employers’ Separation Agreements – CVS and CollegeAmerica

, g g p yimproperly conditioned certain employees’ severance pay on an “overly broad, misleading and unenforceable” separation agreement

• May 2014: EEOC brings suit against CollegeAmerica for placing conditions on severance pay and other


placing conditions on severance pay and other separation benefits that effectively interfere with employee’s rights to file discrimination charges or cooperate with the EEOC

Page 36



• NLRB is taking a hard look at companies’ social media policies and Employee Handbook provisions

NLRB: Handbooks and Social Media Policies

p p y p

• Reminder that NLRA applies to all employers –unionized or not

• Provisions drawing scrutiny from the NLRB:– Policies forbidding workers from discussing compensation (NLRB GC)

Social media policies (Costco)


– Social media policies (Costco)

– Confidentiality policies applying to personnel information (Flex‐Frac)

– Policies regarding solicitation on company property (Target)

• Register Guard (2007) – Employees do not have a statutory right to use employer e‐mail systems

NLRB: Private Use of Employers’ Email Systems:Register Guard and Purple Communications

y g p y yfor non‐business purposes, including union organizing activity protected under Section 7 of the NLRA

• Purple Communications – NLRB invited interested parties to file briefs on whether that position should be reexamined and what impact i ld h l B i f b fil d


it would have on employers. Briefs are to be filed by June 16, 2014

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Will employee access to corporate email systems for Section 7 protected purposes facilitate

NLRB: Overturning Register Guard?

for Section 7 protected purposes facilitate unionizing campaigns?


EEOC v. Kaplan Higher Education Corp. (6th Cir. 2014)

– EEOC challenged Kaplan’s use of background checks in hiring

EEOC: Employers’ Use of Background Checks

– EEOC challenged Kaplan s use of background checks in hiring process as causing disparate impact on African American applicants

– EEOC argued that even though credit check process was “racially blind” – it caused a disparate impact


– Sixth Circuit Court of Appeals affirmed district court ruling rejecting the EEOC’s challenge

Page 38



• Existing standard: successor employer free to establish the initial terms and conditions of employment under

NLRB: Successorship Standard

p ywhich it may hire employees of the predecessor without first bargaining with the incumbent union. – But: where it is clear that the new employer plans to retain all of the employees in a bargaining unit, a successor employer must first negotiate with the union that represents the seller’s employees before establishing terms and conditions of

l


employment.

• February 2014: NLRB General Counsel, Richard Griffin, issues Memo calling for a change in successorshipstandard.

• Who is a “perfectly clear successor”?

• Obligation to hire all of the incumbent employees?

NLRB: Possible Changes To Successorship Standard

• Obligation to hire all of the incumbent employees?

• Obligation to abide by terms of a collective bargaining agreement?

• Impact of terms especially toxic pension funds?


Page 39



• EEOC is developing guidance on pregnancy and pregnancy‐related impairments

EEOC Activity: Taking A Closer Look at Pregnancy‐Related Impairments

p g y p

• While pregnancy itself is not a disability, some pregnant women develop impairments (ex: gestational diabetes) that have the potential of being covered disabilities


• Courts are now dealing with the question of whether the Pregnancy Discrimination Act and the ADA require employers to offer reasonable accommodation during pregnancy

• Applied by NLRB to determine whether employers that are legally separate should be considered joint employers under th NLRA

NLRB: Joint Employer Standard

the NLRA

• For two separate business entities to be held to be joint employers, they both must exercise a significant degree of control over the same employee’s essential terms and conditions of employment


• To establish joint employer status there must be a showing that the employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction

Page 40



Where joint employment status is found

NLRB: Effect of Finding Joint Employment Status

Where joint employment status is found, the employees are entitled to the protections

provided under the National Labor Relations Act with respect to both employers


• May 12, 2014 – NLRB invited parties to submit briefs in Browning –Ferris Industries on several issues including:

NLRB’s Invitation to File Briefs on Joint Employer Standard

Browning Ferris Industries on several issues including:

– Whether the Board should adhere to its existing joint‐employer standard or adopt a new standard; and

– If the Board adopts a new standard, what should the standard be, and what factors should be examined


Page 41



• It is anticipated that the NLRB is likely to expand the standard for qualifying as a joint employer

NLRB: Expanding the Joint Employer Standard?

standard for qualifying as a joint employer

• An expanded joint employer standard could potentially have a detrimental effect on employers


Questions?


Page 42



Don’t Hate Tolerate:Don t Hate, Tolerate:Sexual Orientation, Bullying, and Tolerance

in the Workplace

Presented by

Brooke T Iley Blank Rome LLP


Brooke T. Iley, Blank Rome LLP

Stephen E. Tisman, Blank Rome LLP

Julie E. Reid, Blank Rome LLP

Lewis I. Gantman, The Honickman Group

Gray area between inappropriate bullying and unlawful di i i ti d h t

Focusing on the Evolving Workplace

discrimination and harassment

New and changing state/local laws

Updating policies and practices to reduce potential liability

Added exposure resulting from social media


Promote tolerance to improve morale and productivity

Page 43



The Slippery Slope of Workplace Intolerance

BULLYINGBULLYING

DISCRIMINATION

HARASSMENT


VIOLENCE

Extra, Extra, Read All About It!!


Page 44



Hot TopicBullying


• Examples of conduct that causes problems

– Losing temper; shouting

Bullying:Identifying it in the Workplace

– Losing temper; shouting

– Pointing in someone’s face

– Picking on colleagues

– Inappropriate jokes

– Cursing and insults

– Demeaning comments


Demeaning comments

Can occur face‐to‐face, or indirectly by e‐mail,texting, or social media

Page 45



• If it’s not illegal, why emphasize a respectful, bully‐free workplace?

Bullying: Approaching the “Danger Zone”

workplace?

– Right thing to do

– Fewer complaints

– Increases productivity

– Better work environment

– Reduce opportunity for conflict/violence


Reduce opportunity for conflict/violence

• Identify when bullying becomes harassment

WATCH FOR: Physical or verbal conduct that could quickly escalate into full‐blown harassment


Page 46



• Amendment to California’s Fair Employment and Housing Act (“FEHA”) broadens definition of harassment

Laws that Cast a Wider Net

Housing Act ( FEHA ) broadens definition of harassment– No longer requires that plaintiff prove harassment is motivated by sexual interest or desire

– Encompasses bullying behavior in zone of “unlawful behavior”

• Application Taylor v. Nabors Drilling USA


• Plaintiff (heterosexual male) called homophobic epithets while working on oil rig. No proof of sexual motivation or desire.

• Jury awards $160,000 on hostile environment claim

• The Healthy Workplace Bill

State Anti‐Bullying Laws

– Introduced in 26 states; active bills in 15

– Offers avenue for redress for “health‐harming cruelty” at work

– Defines “abusive work


environment” with high standard for misconduct

– Plaintiff can sue bully in his/her individual capacity

Page 47



• Traditional workplace does not always end at the company doors

The “New Water Cooler”Responsibility in the Extended Workplace

– Work‐related travel and events– After‐hours– The virtual workplace

• Misconduct directed at employees by customers or vendors


How does social media complicate matters?

Identify , avoid, and prevent inappropriate conduct

Monitor changing local and state laws

Train your workforce

Update / develop policies on bullying

IF YOU CAN SEE IT HANDLE IT


IF YOU CAN SEE IT, HANDLE IT

Page 48



Hot TopicWorkplace Violence


• Any violence, physical assault, or significant threatening behavior in the work setting

• Know how to identify warning signs and indicators

Workplace Violence

Know how to identify warning signs and indicators

• Need for standards of conduct and reporting policies

• Using background checks – EEOC guidance

– State and local laws

• Remember: Harboring a workplace bully could lead to li bilit if th b h i b h i i l t


liability if the behavior becomes harassing or violent

Does your company have a standard of conduct?

Would your employees know what to do?

Page 49



An example of how unresolved bullying leads to violence

Are you Headed Toward the Bottom of the Slippery Slope?

p y g

– Ronaldo Negrin was a TSA screener in Miami, Florida.

– During a “body scan training exercise,” it was revealed that Negrin had a small penis.

– For months afterward, Negrin was teased and ridiculed by his colleagues. Co‐workers laughed off his pleas for compassion.

di li i d h “ ld k h


– According to a police report, Negrin stated he “could not take the jokes anymore and lost [his] mind.” He violently assaulted an employee.

Recognize the potential for workplace violence

Identify and defuse behavior that could lead to violence

Determine whether your reporting policy is adequate

Update / develop policies on violence

C t ti i l ti itt


Create anti‐violence action committee

Create and train on emergency response protocols

TAKE ALL COMPLAINTS SERIOUSLY

Page 50



Hot TopicSexual Orientation/Gender Identity


Achieving a workplace where employees are treated fairly and are judged on their work

Prevalence of Harassment and Discrimination

Any Form of Discrimination

Harassment Lost a Job

All LGB Respondents 27.1% 27.1% 7.1%

Out of Work LGBRespondents

37.7% 38.2% 9.2%

Not out of work LGBRespondents

10.4% 10.4% 0%

BUT: Those who express transgender identity or gender non‐conformity experience disproportionately higher rates of


conformity experience disproportionately higher rates of discrimination:

78% report at least one form of harassment/mistreatment47% report discrimination in hiring/firing/job retention

Page 51



• Limited protections under federal law– Sexual orientation and gender identity are not protected classes under

Title VII

Limited Protections for Sexual Orientation and Gender Identity

Title VII

– Attempts to bootstrap protection through same‐sex harassment and gender‐nonconformity claims are limited

• State Laws– Pennsylvania – No state law

– New Jersey – Protects both

– New York – Only protects sexual orientation


New York Only protects sexual orientation

• Local Laws– Philadelphia – protects both

– New York City – protects both

• Federal Employee Nondiscrimination Act (“ENDA”)

– Would prohibit private employers with more than 15

Changing Legal Landscape Likely to Provide Greater Protections

– Would prohibit private employers with more than 15 employees from discriminating on the basis of both sexual orientation and gender identity

– Passed the Senate on November 7, 2013 (64‐32)

– Currently stalled in House

• Possible new state protections


• Marriage Equality

– Implications for employees with same‐sex spouses

– FMLA issues

Page 52



Update harassment/discrimination policies to include sexual orientation and gender identity

Promote tolerance and train your workforce

Identify and defuse bullying behavior targeted at sexual orientation and gender identity


orientation and gender identity

Monitor and prepare for new legal protections

STAY AHEAD OF THE GAME

• Continued focus on religious accommodation– New EEOC Guidelines on Religious Garb and Grooming

Other Emerging Issues in the Evolving Workplace

e OC Gu de es o e g ous Ga b a d G oo g

• Pregnancy Accommodation Laws – NYC (Jan. 2014)

– NJ Pregnant Worker’s Fairness Act (Jan. 30, 2014)

f b f l / l


• Leaves of Absence for Domestic Violence / Sexual Assault Issues– NJ Security and Financial Empowerment Act (Oct. 2013)

Page 53



Evaluate your workplace

Identify gaps in corporate policies

Determine whether to take a stricter approach to bullying

Consider if your policies and practices will be in line with the changing legal landscape


the changing legal landscape

“BUY IN” TO TOLERANCE IN THE WORKPLACE

Questions?


Page 54



Drinks Drugs and Drags:Drinks, Drugs and Drags:Alcohol, Marijuana, and E‐cigarette

Emerging Issues

Presented by

Frederick G “Gus” Sandstrom Blank Rome LLP


Frederick G. Gus Sandstrom, Blank Rome LLP

Anthony A. Mingione, Blank Rome LLP

Richard W. Diaz, Blank Rome LLP

Sean V. Burke, University of Pennsylvania


Page 55



Up in Smoke? Recent Developments in E‐cigarette and

Marijuana Laws



Page 56



• Battery‐powered devices that are designed to mimic cigarettes by vaporizing nicotine‐laced liquid

E‐cigarettes: What are they?

g y p g qthat is inhaled by the user


• FDA proposed regulations: no sale to minors; no vending machine sales; no free samples; required health

E‐cigarettes: Current and Proposed Laws

vending machine sales; no free samples; required health warnings

• State laws restricting e‐cig use:

– in 100% smoke‐free venues: 3

i th 10


– in other venues: 10

• Local laws restricting e‐cig use in 100% smoke‐free venues: 172

Page 57



• Workplace bans are on the rise

– Wal‐Mart Target Starbucks Home Depot GE

E‐cigarettes: In the Workplace

– Wal‐Mart, Target, Starbucks, Home Depot, GE

– Most lump e‐cigarettes in with tobacco rather than drug policies


• Considerations– Benefits: no smoke breaks; higher productivity;

E‐cigarettes: In the Workplace

Benefits: no smoke breaks; higher productivity; employee morale; may help reduce employee tobacco use overall

– Costs: secondhand “smoke” concerns; limited research; potentially just as harmful as tobacco to co‐workers, customers and others that come in contact with the vapors makes co workers and


contact with the vapors; makes co‐workers and customers uncomfortable

– Ensure consistency with other policies (cigarettes and other nicotine products)

Page 58



Marijuana



Page 59



Marijuana: State Laws


Marijuana: Proposed Bills/Initiatives


Page 60



• State laws authorize individuals who suffer

Marijuana: State Laws

individuals who suffer from a “debilitating medical condition” to use marijuana upon receipt of a “registry identification card”


• Majority of state laws do not prohibit employment discrimination based on marijuana use nor require employers to allow marijuana use in their policies

• AZ and DE law include a specific employment‐based anti‐discrimination

Marijuana: State Law Exceptions

employment based anti discrimination section that protects medical marijuana cardholders

• Employers are prohibited from taking adverse actions based on an employee’s or applicant’s status as a cardholder, or a qualifying patient’s positive drug test, unless the qualifying patient used, possessed or was


q y g p , pimpaired by marijuana while at work or during work hours

– Laws do not define “impaired”

Page 61



• Private employers have the right to set their own policies (AZ/DE exception)

Marijuana: Employer Policies

policies (AZ/DE exception)

– Employers can enforce their drug policies regardless of state or local laws permitting the medical and/or recreational use of marijuana

– Outstanding issues:

• Can employees terminated pursuant to an employers’ l b l l


policy banning marijuana use claim unemployment compensation?

• ADA implications?

Drowning in Gin? Alcohol and the Workplace


Page 62



• Common Pitfalls– Holiday party

Alcohol

y p y

• Best practices to reduce exposure

– Work happy hours

• On duty or off duty?

– Applicability of policies

–Worker’s compensation

Liabilit for improper/illegal cond ct


– Liability for improper/illegal conduct

• Recovery – ADA implications during and following

How to Handle Employee Drug and Alcohol Use


Page 63



• Have a clear drug and alcohol policy – Lay out expectations:

Drug and Alcohol Policy

• Covered substances;

– Test for each substance?

– Prescription, OTC drugs?

• Impairment;

• Work and non‐work use;

• Possession;


• Testing; and

• Discipline.

– Ensure policies are applied consistently and in a nondiscriminatory manner

• Pre‐employment

Testing

• Post‐employment

– Reasonable suspicion

– Safety sensitive position

– Accidents

– Screening for prescription drugs


Screening for prescription drugs

– Re‐testing

Page 64



• Issues to consider:

Discipline

• Flexibility vs. no tolerance

• Rehab/assistance programs

• Refusal to test


Refusal to test


Page 65



Questions?


Page 66



Trade Secrets Protection in the Age of Cybersecurity

Presented by

Anthony B. Haller, Blank Rome LLP


Anthony B. Haller, Blank Rome LLP

Larry R. “Buzz” Wood, Jr., Blank Rome LLP

Joseph G. Poluka, Blank Rome LLP

Michael Levy, U.S. Attorney’s Office ‐ Eastern District of PA

Jack Clark, Siemens

The Growing Threat of Cybercrime


Page 67




• Importance of Trade Secrets

Discussion Topics

• The Legal Landscape

• Report on Recent Trends in Cybercrime


• Practical Advice for the Protection of Trade Secrets in the 21st Century

Page 68



• Protect investment in research and development marketing efforts and

Why are trade secrets important?

development, marketing efforts, and strategic planning

• Protect information that may not beprotected by patents, trademarks, or copyrights


copyrights

• Provide powerful litigation tools and strategies

• State Trade Secret Laws

– All states have adopted some form of the

Laws Related to Trade Secrets

– All states have adopted some form of the model Uniform Trade Secrets Act except NY, NC, and MA

• Federal Trade Secret Laws

– Federal Computer Fraud and Abuse Act


p

– Economic Espionage Act

– Proposed Federal Trade Secret Legislation

Page 69



• Information, including a formula, drawing, pattern, compilation including a customer list, program, device,

State Trade Secret Laws:What is a Trade Secret?

compilation including a customer list, program, device, method, technique, or process that:

1. Derives independent economic value, actual or potential, from not being generally known to the public; and


2. Is the subject of reasonable efforts to maintain secrecy.

• Prohibits unauthorized access to a protected computer

Computer Fraud and Abuse Act

• Prohibits transmission of a virus to a protected computer

• Trafficking in passwords or other access credentials

• Criminal & Civil Enforcement


• Criminal & Civil Enforcement

• Penalties include up to 20 yearsin prison

Page 70



• Criminalizes misappropriation of trade secrets with intent to benefit foreign power or injure owner of the trade secret

Economic Espionage Act

• Expanded scope after Aleynikov decision and passage of Theft of Trade Secrets Clarification Act

• Bipartisan “Defend Trade Secrets Act” introduced in April 2014 would provide private right of action


Recent Trends in Cybercrime

• FBI’s Internet Crime Complaint Center (IC3) established in 2000

– Complaints have grown from under 20,000 per year to approximately 300,000 per year


• $100 billion lost to cybercrime each year (McAfee)

• Types of schemes to steal information

Page 71



Top Ten States Ranked by the Total Number of Complaints Received by IC3 in 2013


Establishing Reasonable Protections of Confidential Information

• Company must take “reasonable measures” to protect trade secrets


• What are best practices in the 21st Century?

Page 72



• Preserve evidence – do not power down

S lf H l ?

Steps to Take Upon Discovery of a Breach Comprehensive Incident Response Plans

• Self‐Help?

• Decide whether to engage outside counsel to run internal investigation

• Decide whether to contact law enforcement

• Disclosing the breach (affected individuals, insurer, SEC)


Disclosing the breach (affected individuals, insurer, SEC)

• Manage media

• Efforts that companies should take to ensure that they are not receivingmisappropriated information:

Avoiding Allegations of Misappropriation

are not receiving misappropriated information:

‐ Hiring Protocols – ask about the individual’s post‐employment obligations, including non‐disclosure agreements

‐ Clear advice to candidates for employment who are presently working for a competitor about their obligations


‐ Signed acknowledgements that employee has not and will not download/misappropriate confidential information from prior employer

Page 73



Questions?


Page 74



Benefits in Focus:A Closer Look at Recent Developments

Presented by

Barry L Klein Blank Rome LLP


Barry L. Klein, Blank Rome LLP

Nancy Oliphant Ryan, Blank Rome LLP

Amy R. Webb, RHU, CBC, Saratoga Benefit Services, LLC

• Affordable Care Act: Select Issues for Employer

Recent Developments

• The Downfall of the Defense of Marriage Act (DOMA): Implications for Employee Benefit Plans


Page 75



• Government sponsored programs

All Individuals Must Have “Minimum Essential Coverage”

• Employer‐sponsored plan

• Plans in the individual market


• Grandfathered health plan

• Coverage under a “grandfathered health plan”

• Ambulatory patient services

• Emergency services

• Hospitalization

The 10 “Essential Health Benefits”

• Hospitalization

• Maternity and newborn care

• Mental health and substance use disorder services

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services


y

• Preventive and wellness services and chronic disease management

• Pediatric services, including oral and vision care

Page 76



• Plans in effect on March 23, 2010

Grandfathered Status

• No subject to all Health Care Reform mandates

• Events trigger loss of grandfathered status

• Special rules for collectively bargained plans


Special rules for collectively bargained plans

• Not practical to maintain grandfathered status indefinitely

• No discrimination in favor of higher‐wage employees

Select PPACA “Market Reform”Mandates

• No lifetime benefit limits (G & NG)g g p y

in insured plans (NG)

• Extension of child coverage to age 26 (G & NG)

( )

• Waiting periods not to exceed 90 days (G & NG)


• G=Grandfathered

• NG=Non‐Grandfathered

Page 77



• Availability of more meaningful wellness

Select PPACA Mandates

• Mandatory internal and external appeals process g

program incentives (G & NG)

• Summary of Benefits and Coverage (G & NG)

pp p(NG)

• No Pre‐existing condition exclusions age 19 and under (current), all ages (2014) (G & NG)


( ) ( )

• Restricted to Eliminated Annual Dollar Limits


• 100% Coverage of Preventive Care Services

(G & NG)

• Health FSA Cap (G & NG)

(NG)

• No OTC medication reimbursement w/o prescription (G & NG)


Page 78



• Reporting plan value on Form W‐2 (G & NG)


• Automatic enrollment (G & NG)( )

• Limited coverage revocations (G & NG)

( )

• Increased Medicare Taxes for High Earners (1.45% to 2.35%)


Employer Excise Tax –“Shared Responsibility Payment”“Applicable Large Employer” (50 or More Full Time Employees or FT Equivalents in Previous CY)?

Offers Opportunity to Enroll in Group Health Plan for All Employees and Dependents?

“Affordable” and Provides “Minimum

Value”?

NoN

Y Y

N

YN


Employer Subject to TaxExempt

Has At Least 1 FTE Been Certified to Employer as Enrolling in Coverage Purchased out of Exchange and Received “Premium Tax Credit” or “Cost Sharing Reduction”?

Y

N

Page 79



Determining Amount of Excise Tax

Sponsor GHP For All FTEs and Dependents?p

Lesser of

YN


(#FTEs ‐ 30)x $2000

• (# Certified FTEs) x $3000• (#FTEs ‐ 30) x $2000

Eligibility For Premium Tax Credit

Is Household Income 100% ‐ 400% of Federal Poverty Line For Applicable Family?

Y

N

If Married, Does Individual File a Joint Return?

Does Individual, Spouse or Dependent Purchase Coverage on a State Exchange?

Does Individual Pay Premium For h ?

Y

Y

YN

N

N


The Coverage?

Is Individual Eligible Under Governmental Plan, Grandfathered

Plan or Affordable Employer Plan That Provides Minimum Value?

YFor Employer Plan, Employee Pmt Less

Than 9.5% Household Income (W‐2) and Employee’s Cost

Share Less Than 60%?

Y

N

Page 80



Eligibility For Premium Tax Credit

Is Individual Covered By AnEmployer Plan?

Is Individual A Dependent onAnother Tax Return?

Y

N

N

Y


Not EligibleEligible

• Applicable Large Employer

– Any Employer with 50 or more full‐time or full‐time equivalent

Key Terms

– Any Employer with 50 or more full‐time or full‐time equivalent employees during the preceding calendar year

• Full‐Time Employee (FTE)

– An employee who works, on average, at least 30 hours per week or 130 hours per month

– Use Common Law Test


• Full‐Time Equivalent Employees

– Aggregate number of hours of service for all employees that are not full‐time/120

Page 81



Employer Options

2014 Individual & Small Group2017 + Large EmployerPublic

E change

Employer‐Selected Benefit Plans (insured or self funded) withCost‐sharing

TraditionalModel

PrivateMulti-ProviderExchange for

Group

Exchange

Employee Health Care


Defined ContributionPlan Offerings Decided by Exchange

Defined ContributionPlan Offerings Decided by Employer

Private Single ProviderExchange for

Group

Skinny Plans

Employer Considerations

Should we pay the tax?

Lots of Low Wage Employees

Can we minimize penaltiesthrough new workforce strategies?

Should our employees

be at risk for the tax?

Private exchanges?

How can we


Underwriting Requires Minimum Number of Employees or All Employees

communicate and engage

with our employees?

Page 82



• June 26, 2013

The Supreme Court’s Windsor Decision

• The Court invalidated § 3 of the Defense of Marriage Act

– Section 3 excluded a same‐sex married partner from the definition of “spouse” for federal law purposes

• The ruling essentially means that the federal


• The ruling essentially means that the federal government must recognize same‐sex marriages in the same way that it recognizes heterosexual marriages

• Married same‐sex couples are to be treated as married for all federal tax purposes

The IRS Reacts:Revenue Ruling 2013‐17

for all federal tax purposes

• Look to State of Celebration:

– If the marriage is validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage, then the marriage is recognized for federal tax purposes


g g p p

– State of residence is irrelevant for this purpose

Page 83



• Terminology for federal tax purposes:– The words “spouse,” “husband,” “wife” and “husband and

More from Revenue Ruling 2013‐17

p , ,wife” all include individuals married to a person of the same sex

– The word “marriage” includes a marriage between two people of the same sex lawfully married in a state or country whose laws authorize same‐sex marriage


– These terms do not apply to registered Domestic Partnerships or Civil Unions, even if the state law creating or recognizing those relationships extend all benefits of “marriage” to them

• DOL Technical Release No. 2013‐04

– The words “spouse ” “husband ” “wife” and “husband and

The DOL Follows Suit – Sort of

– The words spouse, husband, wife and husband and wife” all include individuals married to a person of the same sex

– The word “marriage” includes a marriage between two people of the same sex lawfully married in a state or country whose laws authorize same‐sex marriage


• Covers everything under ERISA – but FMLA says “spouse” is defined by state law

Page 84



• Must follow “State of Celebration” rule even if the Employer operates in a state that does not recognize

Implications forQualified Retirement Plans

Employer operates in a state that does not recognize same‐sex marriage

• Must treat a same‐sex spouse as a spouse for all purposes including:

– QJSA , QPSA and all other annuity provisions

– Beneficiary designations


Beneficiary designations

– Required Minimum Distribution rules

– QDROs

– Key employee attribution and similar attribution rules

• Timing for Operational Compliance:– Plan operations must reflect the outcome of Windsor as of

Implications for Qualified Retirement Plans –IRS Notice 2014‐19

p6/26/13

– However, a plan that before 9/16/13 recognized a same‐sex spouse of a participant only if the participant was domiciled in a state that recognized same‐sex marriage is okay

– Plans may implement amendments to reflect Windsor for some or all purposes as of a date before 6/26/13


• So long as doing so complies with all applicable qualification requirements (e.g., nondiscrimination rules).

• Must specify the effective date and the purposes for which the rules are applied

Page 85



• Documentary Compliance:– If a plan is inconsistent with Windsor, then the plan must be

Implications for Qualified Retirement Plans –IRS Notice 2014‐19

p , p usamended

– No amendment is required if the plan’s terms are consistent with Windsor. However, the IRS suggests a “clarifying amendment” to note when operations changed to reflect Windsor


– If an Employer wants to apply Windsor rules to a period before 6/26/13, the plan must be amended to specify the date as of which and purposes for which the rules are applied

• Plan amendments must be adopted by the latest of:

– Last day of plan year in which the change is effective

Implications for Qualified Retirement Plans –Timing for Documentary Compliance

– Last day of plan year in which the change is effective

– Due date for the Employer’s tax return for the tax year in which the change is effective

– December 31, 2014


• Safe Harbor plans may be amended mid‐year for this purpose. (IRS Notice 2014‐37)

Page 86



• Federal tax: same‐sex spousal benefits treated the same as opposite‐sex spousal benefits

Tax Implications forHealth and Welfare Benefits

as opposite sex spousal benefits

– No more imputed income for health benefits

– Cafeteria plan change‐in‐status rules

– COBRA eligibility


g y

• State tax: follows state law.– States that recognize same‐sex marriage treat benefits to all

Tax Implications forHealth and Welfare Benefits

g gmarriages the same. PA is the latest to join that group.

– Some states that prohibit same‐sex marriage still provide the same tax benefits to same‐sex spouses as opposite‐sex spouses because they follow federal tax law for most purposes.


– Some states that otherwise follow federal tax law, have adopted special rules providing that same‐sex spouses will not be treated as spouses under their tax laws.

Page 87



• Insured plans: state insurance law generally dictates who must be covered

Coverage Implications forHealth and Welfare Benefits

who must be covered

– Generally, in states that recognize same‐sex marriage, same‐sex spouses must be eligible for spousal benefits

• Self‐funded plans: not generally governed by state insurance law


– Must such plans provided benefits to same‐sex spouses if provided to opposite‐sex spouses?

• District Court in New York says: not when the plan specifically excludes them

Questions?


Page 88

5th annual labor and employment law briefing · 2014-06-11 · 5th annual labor and employment law...

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