Employment Law E-Newsletter—Volume 6
EMPLOYMENT IMPACT OF AMERICAN RECOVERY AND REINVESTMENT ACT
New COBRA Forms Required
Buried in the American Recovery and Reinvestment Act of 2009 (“ARRA”) was a significant change to COBRA coverage. Employees (earning less than $125,000 or $250,000 for married couples) who were laid-off between September 1, 2008 and December 31, 2009 and who make/made a COBRA election are eligible for an employer-paid subsidy equal to 65% of the employee (and dependent) premiums for up to nine months. (The employer is then permitted to reimburse itself for the subsidy amounts through payroll tax withholding.) Forms will need to be revised to give a new notice, by April 17, 2009, to those who became COBRA-eligible on or after September 1, 2008 and prior to the new law, as well as providing information about the subsidy to newly laid-off employees. There are Q&A’s for employers on the IRS website, www.irs.gov/newsroom/article/0,,id=204708,00.html, and the Department of Labor has committed to having a model COBRA Notice posted at www.dol.gov/ebsa/COBRAmodelnotice.html.
Payroll Taxes
Since the ARRA also provides for a 6.2% earned income tax credit, in 2009 and 2010, for employees earning up to $75,000 ($150,000 for couples filing jointly) you should consult with your payroll processor about both the appropriate withholding and the credit for the COBRA subsidy.
HIPAA
ARRA makes extensive changes to HIPAA’s privacy and security rules. While they do not take effect immediately, entities which have a Business Associate relationship with a covered entity will become directly subject to these rules, as well as being subject to new civil and criminal penalties for violations. Additionally, an organization that provides data transmission services to a covered entity will be deemed to be a business associate. Finally, ARRA creates new rights for individual patients regarding their medical records, including copies and an accounting. Regulations on the new provisions should begin coming out no later than August 16, 2009.
LABOR’S LEGISLATIVE AGENDA
Fair Pay Act of 2009
The first piece of legislation on President Obama’s desk makes a significant change in the statute of limitations for discrimination actions. The Fair Pay Act of 2009 provides that an unlawful employment practice occurs when a “compensation decision or other practice” affects an employee, including with every paycheck. Essentially this means that, if a practice affects compensation, the period to file a Charge begins to run anew with every paycheck (which raises numerous questions about your current record retention policies). And how many employment decisions do NOT impact compensation? It would appear that the long-discredited “present effects of past discrimination” doctrine has been reborn.
Executive Orders
Three days after signing the Fair Pay Act, President Obama revoked Executive Orders (1) requiring the posting of Beck notices – advising employees of their right to object to a union spending dues money on non-cba matters; and (2) prohibit federal agencies from entering into construction contracts with companies that require subs, suppliers, etc. to adopt union contracts; and signed an Executive Order requiring that successor contractors providing maintenance on government buildings offer employees covered by the prior contract a right of first refusal to employment under the new contract.
Employee Free Choice Act
At the AFL-CIO convention in Miami this month, the President assured the union delegates that the Employee Free Choice Act would be passed. Organized labor’s top priority, this legislation should be of concern to workers and employers alike. As introduced by the Democrats on March 10 in both houses of Congress, it will require an employer to recognize a labor union as the representative of its employees if the union has cards signed by 50% plus 1 person of its employees. This “Card Check” recognition will be in lieu of a secret ballot; thus union recognition can be achieved before an employer is even aware a campaign is underway and may have no chance to express its views. This “Gotcha’!” approach to recognition is coupled with a 90-day period to achieve a first collective bargaining agreement. After 90 days the parties move on to mediation for a further 30 days and then to binding arbitration which will establish the terms of a 2-year agreement.
More Bills
Other items on the President’s labor agenda include: the Employment Non-Discrimination Act (add sexual orientation, transgender and bisexual status to existing protected characteristics); Healthy Families Act (require employers to provide 7 paid sick days each year, with 1 year carry-over); Re-Empowerment of Skilled and Professional Employees and Construction Trade Workers (change the NLRA definition of “supervisor” to move first-line supervisors into bargaining units); Forewarn (amend the WARN Act to cover employers with 50 or more employees, increase notice period to 90 days and double the backpay owed for a violation); Equal Remedies Act (amend the Civil Rights Act to remove the damage caps); the Equal Pay Act to restore another long-discredited concept – comparable worth; amend the FLSA to add compensatory and punitive damages and increase the minimum wage to $9.25; and the Federal Arbitration Act to prohibit arbitration clauses in employment contracts except in a collective bargaining agreement. Finally, there will be legislation requiring state and local governments to allow firefighters, police officers, and emergency medical service employees to form unions, bargain over working conditions, sign legally enforceable labor contracts, and use an impasse resolution procedure. These are simply the leaders in a long line of changes to existing employment laws which will significantly ease a plaintiff’s path to the court room.
MISCELLANEOUS
Increased OSHA Penalties
OSHA has issued a new rule which, by altering the definition of a “violation,” significantly increased penalties for violation of the Personal Protective Equipment (“PPE”) and Training standards. Each employee affected will now constitute a separate violation for penalty purposes and “grouping” of violations is not permitted. For instance, if the penalty for failing to provide a piece of PPE was $1,000 and an employer failed to issue them to a group of 50 employees, historically the penalty would have been $1,000. Under the new rule, the penalty will be $50,000.
I-9 Changes
The U. S. Citizenship and Immigration Service has narrowed the documents which will be valid to prove identity and right to work in the U.S. and specifically provided that expired documents will not be acceptable. It also requires a new form I-9 which was to be effective February 2, 2009. The form has been put on hold until April 3, 2009. For the interim, the 2007 I-9 has an expiration date of June 30, 2009.
For help sorting through the new laws . . . . Call Kathy Mills at (610) 797-9000 x 308.
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