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Domestic Violence Leave Now Required In Massachusetts

[September 26, 2014]  As of August 8, 2014, Massachusetts employers with 50 or more employees must provide up to 15 days of unpaid leave in any 12-month period for employees’ activities related to being a victim of domestic violence, including seeking medical attention or legal services, securing housing, or attending court proceedings. Massachusetts thus joins more than 20 other states and municipalities requiring such leave. Employees of covered Massachusetts employers may take leave related to their own abuse or the abuse of a covered family member, including a spouse, child, parent, grandparent, grandchild, or sibling.

Employees must give advance notice of their need to use the leave, unless there is a threat of imminent danger to the health or safety of the employee or a member of the employee’s family. Employees must also first exhaust all personal, sick, annual, and vacation leave before receiving unpaid leave, unless the employer’s policy provides otherwise.

The law requires confidentiality for leave-related information. Employers must keep such information confidential and not disclose such information unless disclosure is requested in writing by the employee, ordered by a court, otherwise required by law or in the course of a law enforcement investigation, or necessary to protect the safety of the employee or others employed at the workplace.

Covered employers must notify employees of their rights and responsibilities under the law, including those related to notification requirements and confidentiality.

Similar to other types of job-protected leave, employees who take domestic violence leave are entitled to restoration to their original jobs, or equivalent positions, and are protected from retaliation after taking leave.

We recommend that employers familiarize themselves with the requirements of the law, including its confidentiality provisions, and consult with counsel to prepare a domestic violence leave policy and update their handbooks accordingly.

Some Closely Held For-Profits Exempt From ACA Contraceptive Mandate

[July 23, 2014]  On June 30, 2014, the Supreme Court held, 5-4, that closely held for-profit corporations whose owners have sincerely held religious beliefs opposing contraception need not comply with the contraception mandate of the Patient Protection and Affordable Care Act (“ACA”), which requires employers to provide coverage for all FDA-approved contraceptive methods.  Specifically, the Court ruled that the Religious Freedom Restoration Act of 1993 (“RFRA”) shields such for-profits from providing coverage for contraception methods they find objectionable.

The case was brought by family-owned Hobby Lobby Stores Inc. and another closely held corporation.  Hobby Lobby is controlled exclusively by a married couple and their adult children; each family member has signed a pledge to run the businesses in accordance with the family’s religious beliefs and to use the family assets to support Christian ministries.

Hobby Lobby filed suit under RFRA, which prohibits the federal government from taking any action that substantially burdens the exercise of religion unless that action constitutes the least restrictive means of serving a compelling government interest.  Hobby Lobby sought to enjoin application of the ACA’s contraceptive mandate with respect to four contraceptives:  two forms of “morning after” pills and two types of intrauterine devices.  (Hobby Lobby did not object to the other sixteen contraceptives required by the ACA’s contraceptive mandate, including birth control pills.)

The Supreme Court held that for-profit corporations are “persons” within the meaning of RFRA’s free exercise protections and that the challenged regulations substantially burden Hobby Lobby’s exercise of religion. (In support of finding substantial burden, the Court noted that the penalty on Hobby Lobby for providing a non-compliant health plan would equal about $475 million per year, and the penalty for failing to provide health coverage would equal about $26 million per year.)

The Court further concluded that the ACA contraceptive mandate was not the “least restrictive means” of furthering a compelling governmental interest.  The Court explained that the most straightforward way of ensuring coverage for all women “would be for the Government to assume the cost of providing the four contraceptives at issue to any women who are unable to obtain them under their health-insurance policies due to their employers’ religious objections.”  Concurring with the majority opinion, Justice Kennedy noted that the government is already doing this for nonprofit religious organizations.  (However, that system has also been challenged in a separate pending litigation.)

The Court indicated that its decision should be read narrowly:  the ruling only extends to closely held companies whose owners have sincerely held religious beliefs opposing contraception, and does not apply to vaccinations, blood transfusions, etc.  However, Justice Ginsburg, dissenting, argued that corporations will inevitably use the decision to opt out of other laws with which they disagree.

In light of this decision, closely-held employers may wish to consider whether to object to the ACA’s contraception mandate, if their owners have sincerely held religious beliefs opposing contraception.  Publicly-traded companies could seek to expand the Supreme Court’s decision.

Updated COBRA Notices Provide Information About Obamacare Options

[June 9, 2014]  On May 2, 2014, the Department of Labor (“DOL”) released proposed regulations containing new model notices pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).  The new notices inform workers that they may purchase coverage through the health insurance exchanges established pursuant to the Affordable Care Act (“ACA”) and that such coverage may be less expensive than COBRA continuation coverage.

In general, administrators for group health plans must issue two types of notices pursuant to COBRA:  1) a “general” notice when a participant initially becomes covered under the plan; and 2) an “election” notice when a participant experiences a COBRA qualifying event.  The new regulations revise both the model general notice and the model election notice by including information about the ACA.

The model general notice instructs employees that health coverage may be more affordable when purchased through an ACA exchange, and it directs them to the ACA health exchange website.  The model election notice contains detailed information, through a question and answer format, about the ACA, including where and when to enroll in coverage, whether an employee can switch between COBRA and ACA coverage, and factors to consider when choosing coverage, including severance provisions, access to current providers, and prescription coverage.

Even though the open enrollment period for ACA coverage has closed, people with COBRA insurance have a special enrollment period to obtain coverage through the federal ACA exchange:  they may enroll by July 1, 2014.  The Department of Health and Human Services established the special enrollment period because the former model COBRA notices did not sufficiently address ACA options.

Although plan administrators are not required to use the model notices, such use is considered good faith compliance with the notice requirements of COBRA.  Thus, we advise using the updated models immediately.

NLRB Is Emphatic: Employers Can’t Ban Negativity!

[April 14, 2014] Employers often think, quite reasonably, that they may lawfully require employees to be positive at work.  Indeed, why shouldn’t employees be required to be positive with colleagues and represent the company in a professional manner?  Unfortunately, the National Labor Relations Board (“NLRB”) disagrees.  Repeatedly, the NLRB has concluded that such “no negativity” policies violate workers’ rights, whether union or non-union.

For example, on April 1, 2014, the NLRB held that a Michigan hospital’s work rules banning negativity and gossip violated the National Labor Relations Act (“NLRA”).  (This was not an April fool’s joke.)  The work rules contained in the hospital’s Values and Standards of Behavior Policy required employees to:

  • avoid “negative comments about … fellow team members,” including managers;
  • “represent [the hospital] in the community in a positive and professional manner in every opportunity”; and
  • “not engage in or listen to negativity or gossip.”

The NLRB concluded that the rules were too broad and could be interpreted by employees as prohibiting activity protected by Section 7 of the NLRA, which gives employees the right to engage in concerted activity.  The NLRB also rejected the hospital’s argument that the rules were lawful because employees participated in drafting them.  As a remedy, the NLRB ordered the hospital to immediately cease and desist from maintaining the challenged rules, give all current employees policy inserts reflecting the revisions, and post and distribute a notice to all employees about the ruling.

The next day, on April 2, 2014, the NLRB struck down similar rules in the employee handbook of a nationwide transportation management company.  That company’s rules prohibited employees from:

  • “discourteous or inappropriate attitudes or behaviors to passengers, other employees, or members of the public;”
  • participating in “outside activities that are detrimental to the Company’s image or reputation”; and
  • “conducting oneself during nonworking hours in such a manner that the conduct would be detrimental to the interest or reputation of the Company.”

The NLRB explained that employees could reasonably construe the rules as limiting their communications concerning employment, despite the presence of another provision in the handbook that notified employees of their union rights.  Unfortunately, the NLRB noted that the “savings” clause was not sufficiently “prominent” in the employee handbook or located in close proximity to the challenged rules.  As with the hospital case above, the NLRB ordered the employer to rescind the policies, provide handbook inserts to current employees to replace the policies, and distribute a notice about the ruling to all employees.

Many employers maintain social media and other policies similar to the policies at issue in these cases.  In light of the NLRB’s continuing focus on such policies, employers (whether unionized or not) should consult with experienced counsel to review their policies and consider whether any changes may be appropriate.

EEOC Continues Assault On Severance Agreements

[March 28, 2014] Continuing its crusade against common provisions in severance agreements, the Equal Employment Opportunity Commission (“EEOC”) filed a suit in February against CVS Pharmacy, Inc. (“CVS”) in an Illinois federal district court.  The EEOC claims that a severance agreement used by CVS violates Title VII because it is “overly broad, misleading and unenforceable.”

Specifically, the EEOC claims that CVS’s severance agreement interferes with employees’ rights to file charges with the EEOC and other agencies or to cooperate with an investigation.  The EEOC seeks, among other relief, reformation of the agreement and additional time for employees who signed the agreement to file administrative charges.

The challenged provisions of CVS’s agreement include:  a notification clause (requiring the employee to notify CVS of any investigation by a state or federal agency); a non-disparagement clause (prohibiting the employee from disparaging CVS); a covenant not to sue clause (prohibiting the employee from filing any charge); and a confidentiality clause (prohibiting the employee from disclosing confidential information without CVS’s consent).

The EEOC is challenging the agreement despite language in the covenant not to sue paragraph stating that nothing in the provision shall interfere with an employee’s right to participate in a proceeding with any agency or to cooperate in any investigation.   Noting that the agreement is five pages long and that the reservation of employee rights is only one sentence, the EEOC contends that this language is not sufficient.

This action follows the EEOC’s filing of a lawsuit in May 2013 challenging severance agreements obtained by Baker & Taylor, Inc.  That suit was resolved by a consent decree in which the company agreed to specify, in future release agreements, that the release did not limit the employee’s right to file a charge with the EEOC or state agency, to participate in any such action, or notably, to recover any appropriate relief.  While the consent decree is not binding on other parties, it reveals the broad language the EEOC favors.

In light of the EEOC’s recent litigation activity, we recommend that employers review their severance agreements and consider whether to strengthen language concerning the employee’s right to file administrative charges and participate in agency investigations.  For example, employers may wish to clearly state, in a separate provision of the agreement, perhaps highlighted in bold, that nothing in the agreement interferes with the employee’s right to participate in or cooperate with any proceeding or investigation.

Obamacare Delayed Again: Medium-Sized Employers Not Required To Provide Health Coverage Until 2016

[February 14, 2014]  Employers with 50 to 99 full-time workers now have an additional year to “play or pay” under the Patient Protection and Affordable Care Act (“ACA”), i.e., to offer health insurance to full-time workers or pay a fee.  Newly issued final rules require these mid-size employers to offer coverage by 2016, instead of 2015.  To be eligible, an employer must certify to the U.S. Treasury Department that it has not laid off employees in order to fall below the 100-employee threshold.  Although not required to provide coverage in 2015, mid-sized employers must still comply with reporting requirements in 2015.

Employers with 100 or more full-time equivalent employees are still required to provide coverage no later than January 1, 2015, or the start of their plan year in 2015 (for non-calendar year plans).  However, to avoid paying a penalty, such larger employers must offer coverage only to 70% of their full-time workers in 2015.  Beginning in 2016, employers must offer coverage to at least 95% of full-time workers.

In order to prepare for 2015, larger employers may use a look-back period during 2014 to determine whether an employee is a full-time employee under the ACA, i.e., works 30 hours or more per week.  (While there are bills pending in Congress that would change the ACA’s definition of full-time employee from the current 30-hour per week rule to a 40-hour rule, the bills have little Democratic support.)  Although it may be tempting to wait and see what further delays or changes may come, larger employers should begin now to prepare for 2015.

E-Cigarettes Reignite Questions About “Smoking” At Work

[January 30, 2014] In light of the increasing popularity of electronic cigarettes (“e-cigarettes”), employers must consider whether to allow employees to use e-cigarettes at work.

E-cigarettes contain liquid nicotine and are battery-powered.  When a user inhales on an e-cigarette, the nicotine is converted into a vapor that the user then breathes out, i.e., “vapes.”  While e-cigarettes are marketed as a healthier tobacco alternative, the potential harms are still unknown.  The Food and Drug Administration (FDA) has not yet regulated e-cigarettes, but is expected to issue rules on marketing, online sales, and minimum age for use soon.

Most states and cities have not addressed the use of e-cigarettes.  Only three states – New Jersey, Utah, and North Dakota – have banned the use of e-cigarettes in the workplace.  More than 100 cities, including New York City and Chicago, have banned the use of e-cigarettes indoors.  Massachusetts has a pending House bill, which has been referred to committee, that would classify e-cigarettes as nicotine products and ban their use in the workplace.

In the absence of statutory and other legal requirements, employers are free to decide whether to allow employees to use e-cigarettes at work.  Employers who permit use point to the positive effect on productivity (because employees can “vape” without taking breaks), the fact that using e-cigarettes may help employees quit smoking traditional cigarettes, and the absence of definitive research showing negative health effects of secondhand exposure to vapor.

On the other hand, some employers are prohibiting vaping at work, likely because some public health officials and health advocacy groups contend that secondhand vapor can cause negative health effects.  In this regard, the FDA’s much anticipated rules may provide important information about whether e-cigarettes are considered to be harmful or not.

While keeping an eye out for new laws regulating e-cigarette use at work, employers should determine whether to prohibit e-cigarettes in their workplace and revise existing smoking policies appropriately. Whether or not an employer decides to ban e-cigarettes from the workplace, any applicable policy should be clear, consistently applied, and communicated effectively to employees.

Senator Warren Introduces Bill Banning Credit Checks Of Job Applicants

[January 8, 2014]  At this time of year when visions of credit card bills dance in our heads, Senator Elizabeth Warren (D-Mass.) has introduced a bill that would ban employers from checking the credit of applicants during the hiring process.  The Equal Employment for All Act would prohibit employers from using credit reports for employment purposes, unless for a national security position or otherwise required by law.

In her floor speech supporting the bill, Senator Warren explained that a bad credit rating is often the result of a personal crisis, and she pointed to research demonstrating that a person’s credit rating has little to no correlation to his or her ability to succeed at work or likelihood to commit fraud.  Other supporters of the bill have argued that credit checks are discriminatory, pointing out that African Americans and Hispanics have considerably lower credit scores than non-Hispanic Whites.

Is this a solution without a problem?  A 2012 survey by the Society for Human Resource Management found that less than half of employers (47 %) conduct employment credit checks.  Only 13% of employers conduct credit checks on all job candidates.  The remaining 34% of employers conduct credit checks only on those candidates applying for sensitive positions, including positions with financial responsibilities, senior executive positions, and positions with access to highly confidential employee information.  For employers who conduct credit checks, most do so only after making a contingent job offer.

If you are in the minority of employers conducting credit checks, we recommend that you stay tuned to this bill, which appears to coincide with the Obama Administration’s renewed focus on income inequality.  We also recommend that you take this opportunity to review your credit-check policy and other background-check practices.

Debate Over Federal Minimum Wage Intensifies, But States Don’t Wait

[December 11, 2013]  On December 5, 2013, fast-food workers in more than 100 U.S. cities protested their low hourly wages in a one-day strike, seeking $15 per hour and the right to form a union.  Restaurant representatives called the protests publicity stunts by outside interests, including union groups.

The protest followed President Obama’s speech last week, in which he addressed income inequality and called on the Senate to pass a pending bill that would increase the federal minimum wage to $10.10 per hour.  (The current minimum wage of $7.25 per hour, about $15,000 per year, has been in effect since 2009.)  Even if the Senate passes the bill, the bill appears unlikely to receive a vote in the Republican-controlled House.

Some states are not waiting for the federal government to act.  For example, California, Connecticut, New Jersey, New York, and Rhode Island passed measures in 2013 to raise their minimum wages.

Just last week, the Council of the District of Columbia unanimously voted to advance a bill raising the minimum wage for the nation’s capital to $11.50 per hour in 2016.  While the bill still must get through a final vote and a possible mayoral veto, its passage appears likely.

In an apparent first, the D.C. wage increase was part of a coordinated effort with D.C.’s neighboring Maryland counties, who have already approved increases of their minimum wage to $11.50 in 2017.

In Massachusetts, the Senate recently passed a minimum wage bill that would raise the minimum wage from the current $8 per hour to $11 per hour.  The bill now moves to the Massachusetts House of Representatives.

Separately, a Massachusetts ballot initiative would raise the minimum wage to $9.25 per hour in January 2015, and to $10.50 per hour in January 2016, with later increases based on inflation.  The ballot initiative recently submitted the required number of certified signatures to the Secretary of the State, and, thus, the question appears likely to be on the 2014 ballot.

Given the current gridlock in D.C., Congress seems unlikely to pass a federal minimum wage increase in the next year.  However, Massachusetts and other states and localities may increase their minimum wages.  Thus, multi-state employers should keep their eyes on the headlines and keep track of the patchwork of state and local minimum wage laws.

Massachusetts Employers Not Required To Offer Section 125 Plans

[November 25, 2013]  The Massachusetts Health Connector has announced that it will no longer enforce several of Massachusetts’ health reform requirements, including the law requiring employers to provide a Section 125 Cafeteria Plan or pay a surcharge.

According to the Connector, the Section 125 requirement is incompatible with recent guidance from the Department of Labor (“DOL”) about the Affordable Care Act.  Governor Deval Patrick will pursue legislation to repeal the state’s Section 125 requirement, the Employer Health Insurance Responsibility Disclosure (Employer HIRD) form, the Free Rider Surcharge, and the recently created Section 125 Notification Requirement.  In the interim, the Connector will not enforce these requirements.

Pursuant to the DOL’s guidance, Massachusetts employers may no longer offer Section 125 plans that allow non-benefits eligible employees to purchase their own non-group health insurance using pre-tax income.  Employers may, however, leave such plans in place until the expiration of the employees’ health plans in 2014.  Employers should discuss with benefits counsel any necessary amendments to their Section 125 plan documents.

This change does not affect Section 125 plans for benefits-eligible employees:  employers may continue to offer such plans and may continue to allow employees to pay their group health insurance premiums on a pre-tax basis.

Mass Emails From The EEOC: Abuse Of Power?

[November 20, 2013]  Should the EEOC be allowed to send an e-mail to 1,000 employees of a company, at their work e-mail accounts, to hunt for evidence against the company?  One New York employer has sued the EEOC in federal court challenging the EEOC’s use of this tactic.

The EEOC’s e-mail told employees that the EEOC was investigating claims of discrimination by the employer, and contained a link to an internet survey about the employer.  The employer apparently did not receive advance notice of the email, and the email did not specify that the EEOC’s inquiry was limited to age discrimination claims and that no finding of discrimination had been made.

The employer sued the EEOC pursuant to the Administrative Procedures Act and the U.S. Constitution, claiming that the e-mail was an abuse of power, an unreasonable search in violation of the Fourth Amendment, and an infringement on the employer’s constitutional right to due process.  The lawsuit seeks an injunction that would prohibit the EEOC from using any information it gathered through the mass email.

The EEOC has moved to dismiss the suit, arguing that other methods of communication would have had the same impact, and that the e-mail was within the EEOC’s investigative power.  The court has not yet ruled on the motion.

Keeping Score: Court Approved Settlement Of Wage Class Action

[November 15, 2013]  The “scorecard” in a recent, relatively small class action settlement in Massachusetts seems to offer insight in such questions as: Why do class actions get litigated – and almost always settled?  Who are the real winners and losers?

A federal district court judge in Massachusetts recently approved a $2.2 million settlement of claims that a Massachusetts hospital violated the Fair Labor Standards Act (“FLSA”) and the Employee Retirement Income Security Act (“ERISA”).  The more than 5,000 class members alleged that they were not paid for hours worked over 40 hours per week, including: (1) work during uncompensated meal breaks; (2) work before and after their shifts; and (3) training after regular work hours.

The parties arrived at the settlement after extensive mediation.  The $2.2 million settlement was based on an analysis of payroll data, including the actual hours and pay rates for each employee, the employees’ statements about their uncompensated hours, and their claim for attorneys’ fees.

With that background, here is the “scorecard” in this settlement:

Plaintiffs’ Attorneys:  + $733,000
Each Plaintiff (average):  + $250 (approx.)
Defendant Hospital:  – $2,200,000

The plaintiffs’ attorneys will walk away with one-third of the settlement, an enormous pay day for them of more than $733,000.  In contrast, some individual class members will receive as little as $25!

A more detailed discussion of this case will be published soon as an E-Alert.  Stay tuned!

Mass. Fur Company Agrees To Pay Almost One Million Dollars In Damages And Penalties For Wage Violations

[October 18, 2013]  Pursuant to a consent judgment announced by the U.S. Department of Labor (“DOL”) last month, a Boston fur company and its owner will pay almost One Million Dollars to 14 employees to settle wage and hour claims brought by the DOL in the federal court in Massachusetts.

While the employer has not admitted any liability, the DOL alleged that the workers:  (1) were required to work 10 hours per day, six days per week at the animal hide business; (2) were paid a daily wage that was far below the minimum wage; and (3) were not paid overtime.

The DOL further alleged that the employer retaliated against several workers for cooperating with the DOL’s investigation.

The federal Fair Labor Standards Act (“FLSA”) authorizes the DOL to gather data concerning wages, hours, and other employment practices; enter an employer’s premises and inspect its records; and question employees to determine whether any person has violated any provision of the FLSA.

We recommend that any employer facing a DOL investigation work closely with legal counsel to properly narrow the scope of the investigation and to comply appropriately with the DOL’s requests.

NLRB Judge Enforces Right To Union Representation

[September 26, 2013]  A National Labor Relations Board administrative law judge recently ruled that DuPont Co. violated the National Labor Relations Act by failing to provide a union representative when a worker asked for one during an interview that led to his termination.  The case serves as a reminder of union employees’ so-called “Weingarten rights” to have a union representative present during any interview that may result in discipline.

DuPont conducted the interview as part of an investigation into the circumstances surrounding a workplace accident.  When the employee requested representation, the company told him he didn’t need it.

However, DuPont later terminated that employee’s employment because it believed he was dishonest during the interview.

The administrative law judge concluded that DuPont violated the employee’s Weingarten rights when it continued the interview after the employee’s request for representation.  The judge explained that DuPont should have given the employee a choice between continuing the interview unrepresented or having no interview, and ordered the company to cease and desist from violating any employee’s Weingarten rights.

We recommend that unionized employers remind all managers and other employees conducting internal investigations about the rights of union employees, upon request, to have a union representative present during any interview that may result in discipline.

Reminder: Obamacare Exchange Notices Due To Employees October 1

[September 16, 2013]  Employers must provide Obamacare “exchange notices” to current employees by October 1, 2013, and to new employees at the time of hire.  (For 2014, this means within 14 days of the start date.)  The DOL has made available on its website two versions of model notices:  one for employers who offer health coverage and one for employers who do not.

Although the employer mandate of the Affordable Care Act (“ACA”) has been postponed until 2015, the requirement to notify employees of health care coverage available on insurance exchanges by October 1, 2013, remains in effect.  The requirement applies to all employers who are covered by the Fair Labor Standards Act.

The exchanges are scheduled to begin accepting applications on October 1, 2013, for coverage that will begin on January 1, 2014.  However, recent polls have found that many Americans, including those who are currently uninsured and, thus, will face a penalty under the ACA as of January 1, 2014, do not understand the law’s requirements.

Thus, the Obama Administration has increased its efforts to promote the law, including enlisting former President Bill Clinton for a recent speech detailing the intricacies of the ACA.  The White House has also recruited athletes and entertainers to help spread the word about the upcoming enrollment period.

The required notice to employees must be provided in writing and in a manner calculated to be understood by the average employee.  It may be provided electronically if the DOL’s electronic disclosure safe harbor requirements are met.

Employers must provide a notice to every employee regardless of plan enrollment status or part-time or full-time status.  Employers need not provide a separate notice to the employees’ dependents.

NLRB Launches App: Why?

[September 4, 2013]  Last week, the National Labor Relations Board (NLRB) announced the launch of a new mobile app that purportedly informs employers, employees, and unions about their rights and obligations under the National Labor Relations Act (NLRA).

However, the app provides only a minimal description of the NLRB election process and the rights enforced by the NLRB.  It contains far less content than the NLRB’s website.

The app also provides contact information for NLRB regional offices across the country.  Perhaps that is the point – to help employees get in touch with the NLRB, and promote union organizing through greater NLRA-awareness?

The app is free for iPhone and Android users, and is currently available at the Apple App Store and on Google Play.

DOL Formally Extends FMLA Protection To Same-Sex Spouses

[August 19, 2013]  On August 9, 2013, newly-minted Labor Secretary Tom Perez announced that the Department of Labor has begun the process of implementing the Supreme Court’s DOMA decision (United States v. Windsor) by updating several DOL guidance documents.  The updates included removing references to DOMA and affirming the availability of spousal leave to care for a same-sex husband or wife under the FMLA.

The DOL further announced that it would extend unemployment compensation, health insurance and other benefits to federal employees and their same-sex spouses.

However, the DOL did not (yet) address a question that has been looming since the Windsor decision:  what happens to same-sex couples who (1) were married in a state that recognizes same-sex marriage but (2) currently live in a state that does not? Are they entitled to federal benefits including FMLA?  This is a complicated issue because FMLA eligibility is determined by the state in which the employee lives (i.e., it depends on whether the employee is legally married in that state). For now, perhaps the best we can say is, stay tuned.

Many employers are choosing to allow employees to use FMLA leave to care for same-sex spouses, including employees who reside in states that do not recognize same-sex marriage.

We recommend that employers determine whether to offer FMLA protection to all employees with same-sex spouses, regardless of applicable state law, and communicate that decision to employees.

Rhode Island Joins “Ban the Box” Trend: Prohibits Criminal History Inquiries On Employment Applications

[August 7, 2013]  Effective January 1, 2014, Rhode Island will join Massachusetts and other state and local governments in restricting pre-employment inquiries about job applicants’ criminal histories.  In all, ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Mexico, and Rhode Island) and 52 municipalities (including New York, New York, Austin, Texas, and Detroit, Michigan) have passed similar laws and ordinances.

Rhode Island employers will be prohibited from asking in employment applications whether an applicant has ever been arrested, charged with, or convicted of any crime.  Employers also will be prohibited from orally asking job applicants for this information prior to the first interview.

The law applies to public and private Rhode Island employers with four or more workers, with certain exceptions.  For example, pre-interview criminal history questions are permissible for law enforcement agencies.  Other employers may make such inquiries where federal or state law prevents them from hiring persons convicted of a specified crime or where a bond is a job requirement and a prior offense would disqualify an applicant from obtaining such a bond.

Even when employers comply with these “ban the box” laws and request criminal history information only after an initial interview, use of such information poses risks.  The EEOC recently revealed its focus on this issue by filing lawsuits against two large employers, alleging that their use of criminal background checks disproportionately affected African-Americans.  The EEOC issued guidance on the use of criminal checks in 2012, and employers would be wise to review the guidance in light of the EEOC’s recent activity.

We recommend that employers review the EEOC’s 2012 guidance, determine whether the municipalities and states in which they operate have “ban the box” laws, review and revise their job applications and policies for compliance with the laws, and train hiring and recruiting managers on the change.

Massachusetts Employer Health Care Mandate Has Been Repealed

[July 19, 2013]  Massachusetts employers are no longer required to provide health insurance to their workers or pay a penalty under state law.  The 2014 budget, which was signed by Governor Deval Patrick on July 12, 2013, and was effective immediately, repealed the so-called “Fair Share Contribution.”

The repeal was proposed by Governor Patrick in January 2013 in order to avoid duplicative requirements and penalties under state and federal law.  However, because the Obama administration delayed the employer mandate under the Affordable Care Act (Obamacare) until January 1, 2015, from now until January 2015 Massachusetts employers will not be required to provide health insurance under either law.

Governor Patrick explained that he signed the repeal, despite the federal delay, because Massachusetts employers are likely to maintain their health insurance offerings until the federal mandate kicks in.

Massachusetts employers are still required to file their reports of Fair Share Contributions through June 30, 2013.

The repeal does not affect the Massachusetts individual mandate or market reforms, including the non-discrimination requirement.

Telling Stories

[July 18, 2013]  In a recent CLE panel with other attorneys and federal and state judges, we all agreed upon a critically important part of an attorney’s job — something that is written about less frequently perhaps than it should be, because it is just beneath the surface of conversations we have with clients every day:  We tell stories.

As the judges in this CLE panel talked through the relevant legal analysis, they kept coming back to the same simple point: Tell a story.  The judges wanted to hear a story. Something that makes sense and puts all of the facts and law in a coherent context.

We have been telling ourselves the same thing in the office every day, as we write memoranda of law, position statements, and outlines of an oral presentation (in court or otherwise).

Whether we are writing a summary judgment brief, a letter to opposing counsel, or are preparing an opening statement, we distill the facts of every case into a coherent, persuasive story in order to obtain the best results for our clients.

At Schwartz Hannum, telling stories is an important part of what we do.

Out of Sight, Not Out of Mind: Wage Age Protection Extends to Salesperson Living and Operating Outside Massachusetts

[July 16, 2013]  In light of a recent Massachusetts Appeals Court decision, Massachusetts employers should be mindful of potential liability under the Wage Act for unpaid wages, including sales commissions, to employees who reside outside the Commonwealth and who perform their day-to-day sales activities by traveling and telecommuting from other states.  Failing to recognize that Wage Act protection could extend to these remote employees could prove costly for employers and their officers (who may be individually liable):  the Appeals Court affirmed a judgment for a Florida-based sales director against the CEO of a Massachusetts-based company for more than $300,000.00, plus attorneys’ fees.

In the decision, Dow v. Casale, the Appeals Court applied the choice-of-law doctrine and determined that Massachusetts had the most significant relationship to the parties and their employment relationship, irrespective of where the plaintiff lived and was physically located from day to day.  As a result, the court concluded it was appropriate and reasonable to apply Massachusetts law to plaintiff’s claims and to afford him the remedies provided under the Wage Act.

As a result of the Dow ruling, Massachusetts employers should recognize that the scope of the Wage Act extends beyond the physical boundaries of the Commonwealth.  In today’s telecommuting world where so many employees work from locations other than a company’s Massachusetts headquarters or local offices, it is easy for employers to forget the potential costly ramifications of failing to timely pay these employees wages they are owed.  In light of the Wage Act’s mandatory treble damages and attorneys’ fees provisions, an employer’s “out of sight, out of mind” attitude could prove costly.

Employers should therefore audit their practices concerning out-of-state employees and, if possible, take steps to reduce the employees’ relationships with Massachusetts (e.g., by generating paperwork for out-of-state customers from the remote employee’s location and by instructing the employee to use his or her local contact information on his or her business cards).  Employers may wish to consult employment counsel concerning compliance with the Massachusetts Wage Act for any out-of-state employees.

Supreme Court Strikes Down DOMA

[July 8, 2013]  In a pair of highly anticipated decisions, a divided Supreme Court struck down the federal Defense of Marriage Act (“DOMA”), which denied federal benefits to same-sex married couples.  Separately, by declining to decide a case, the court effectively allowed same-sex marriage in California.  Neither decision declares a broad constitutional right to same-sex marriage for all American citizens.

The ruling in the DOMA case extends many benefits to same-sex married couples living in states that allow same-sex marriage.  Employers in those states must review their employee-benefit packages to comply with the change, including their health and retirement plans.  For example, same-sex married couples are now entitled to the same tax treatment of health-insurance premiums as opposite-sex couples.  They are also entitled to the protections of the Family and Medical Leave Act (FMLA), social security, and COBRA.  Same-sex spouses are further entitled to automatic beneficiary rights for pension plans and 401ks.

The issue is more complex for large, multistate employers.  The Supreme Court did not address the effect of its decision on same-sex couples who marry in a state that permits such unions and then move to a state that does not.  Federal benefits for such couples will vary by agency, and guidance from federal regulators may take time to develop.

Thus, employers in Massachusetts and other states that recognize same-sex marriage must identify any gaps between benefits they currently offer to same-sex married couples and benefits they are now required to offer.  For example, such employers must review their plans and policies and remove provisions concerning taxation of health benefits for same-sex married couples.  Employers must also be prepared to deal with issues concerning same-sex beneficiaries of pension plans and 401ks.  As employers may face some of these changes without much advance notice (for example, a spouse’s automatic beneficiary rights upon death), employers may wish to move this issue to the top of their “to do” lists.

“Play or Pay” Postponed: Employer Penalties For Violating Obamacare Put Off Until 2015

[July 3, 2013]  The Obama administration has delayed for one year the provision in the Affordable Care Act (“Obamacare”) that requires companies with 50 or more employees to pay a penalty if they fail to provide affordable health insurance to most of their full-time employees.  Employers now have until January 1, 2015, to comply with the so-called “play or pay” provision.

Citing the complexity of corresponding reporting requirements, a representative of the Department of Treasury explained in a statement on July 2, 2013, that the delay is designed to meet two goals:  1) allow the Department of Treasury to consider ways to simplify the new reporting requirements, and 2) provide time “to adapt healthcare coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

The deadlines for other provisions of Obamacare, including the individual mandate and the requirement for states to establish health insurance exchanges, remain as scheduled.  Individuals must obtain coverage by January 1, 2014, or pay a tax.  Enrollment in the health exchanges is still scheduled to begin on October 1, 2013.  Employers must provide exchange notices to current employees by that date, as we earlier described here.

While this reprieve is much-needed good news for employers wrestling with Obamacare, employers would be wise to continue planning for the now-delayed requirement.  In fact, the Obama administration “strongly encourages” employers to voluntarily comply with the reporting requirements in 2014 in order to facilitate a smoother transition in 2015.

Are Employers Penalizing Employees For Using Workplace Flexibility Policies?

[June 20, 2013]  A recent New York Times article provides some food for thought concerning whether workplace flexibility policies actually hurt employees instead of helping them.  The article reviews recent research studies examining negative effects on employees’ careers after they take parental leave, work reduced hours, or participate in other programs aimed at providing flexibility.

Is this happening in your workplace?  If so, how should your company handle this phenomenon?  Change the policy?  Change the culture?  Training?  … Or do nothing?

Of course, treating male employees differently as a result of their participation in such flex schedule programs, could result in a whole host of legal claims and employee relation problems, too.

If the attached article gets you thinking about your leave policies, please feel free to call us to discuss.

Employers: Proceed With Caution When Using Background Checks

[June 3, 2013]  The New York Times recently reported on a risky practice involving background checks:  many U.S. retailers are obtaining and using information about applicants’ past admissions of stealing on the job.

The Federal Trade Commission (“FTC”) is cracking down on this practice, examining whether the databases that contain this information comply with the Fair Credit Reporting Act (“FCRA”).  Key concerns include whether the workers are coerced into confessing, and whether they understand what they are signing or how it will be used.

Employers receiving such information as part of a background check should be cautious about using it as the basis for an employment decision.  The risks may greatly outweigh the benefits.

FCRA is being applied to new technology in other ways.  For example, on May 1, 2013, the FTC approved a settlement order in its first FCRA case involving mobile applications (“apps”).  Companies were selling apps that allowed users to access criminal records, without complying with FCRA.  The settlement order requires compliance in the future.

When considering using new hiring tools, employers should always consider whether such use complies with FCRA as well as any applicable state law (see our article about the Massachusetts CORI law here).

Obamacare Exchange Notices Due October 1 Per IRS Guidance

[May 22, 2013]  Employers must provide Obamacare “exchange notices” to current employees by October 1, 2013, and to new employees “at the time of hiring.”  (For 2014, this means within 14 days of the start date.)

Specifically, the IRS has finally provided temporary guidance to employers about their obligation, pursuant to the Affordable Care Act (“ACA”), to notify employees of health care coverage available on insurance exchanges.  The requirement applies to all employers who are covered by the Fair Labor Standards Act.

The DOL has made available two versions of model notices: one for employers who offer health coverage, and one for employers who do not.

The notice must be provided in writing and in a manner calculated to be understood by the average employee.  It may be provided electronically if the DOL’s electronic disclosure safe harbor requirements are met.
Employers must provide a notice to every employee regardless of plan enrollment status or part-time or full-time status.

Employers need not provide a separate notice to the employees’ dependents.

Will Hannum Quoted In SHRM Article On HR Implications Of Freeh Report Re: Penn State

[August 9, 2012]  A recent SHRM article, Penn State’s Organizational Flaws Make for Perfect Storm, by Pamela Babcock, focuses on the HR implications of the Freeh Report regarding the Penn State scandal and the role that HR might have been able to play in preventing some of Jerry Sandusky’s crimes, if the workplace culture had included HR in compliance efforts.

The article quoted William Hannum, including: “The overall organization of Penn State was flawed—a kind of perfect storm of poor organizational structures, where lots of problems could fall through the cracks, and a few powerful leaders could steer the organization in the wrong direction without any checks or balances.”  The article includes additional quotes from Will Hannum, as well, addressing the Freeh Report’s recommendations for improving leadership and accountability with respect to HR leadership in all organizations.

To view the article in its entirety, please click here.

Will Hannum Comments On Penn State’s Organizational Flaws

[August 8, 2012] “The overall organization of Penn State was flawed—a kind of perfect storm of poor organizational structures, where lots of problems could fall through the cracks, and a few powerful leaders could steer the organization in the wrong direction without any checks or balances,” stated William Hannum in a recent SHRM article by Pamela Babcock entitled Penn State’s Organizational Flaws Make for Perfect Storm.

The article, focusing on the officials implicated in the Penn State scandal who never spoke with Human Resources before dealing with Jerry Sandusky’s crimes, discusses the workplace culture at the institution and offers recommendations for improving leadership and accountability with respect to HR leadership in all organizations.

To view the article in its entirety, please click here.