By Meg Alli, Michelle LeBeau, and Richard Hurford
Feb. 18, 2010
Managers should expect new challenges in terms of legal considerations in workforce management. To explain and help turn challenges into opportunities, here are 10 things managers should know and consider in 2010:
Reefer Madness - Although the possession and use of marijuana clearly violates the Federal Controlled Substances Act (even if it’s medically prescribed), in the 14 states where medical marijuana use has been legalized, employers must now grapple with issues involving the use of marijuana and the application of “zero tolerance” drug policies, the duty to accommodate and confidentiality laws.
Trade Secret Protection - The intelligent and cost effective protection of an employer’s trade secrets is critically important to a company’s vitality and competitive advantage. Intellectual property is an engine of growth. In 2005 the overall value of “intellectual capital” of U.S. businesses was estimated at $5 trillion. Every employer should establish strategies and enter into agreements that reasonably protect the company’s critically important trade secrets and confidential information.
Retaliation - Count the Ways - Say an employee files a bogus claim of discrimination, a worker’s compensation claim without merit, makes a baseless complaint of fraudulent financial practices, and the employer prevails on the merits of each claim. The employer is now free to celebrate, claim victory, and have no further worries or concerns - wrong. If an employee can establish an “adverse employment action” was taken in retaliation for raising the complaint, the employer will be exposed to significant liability even if the underlying claim was without merit. Managers beware!
The Bermuda Triangle - The interplay between state and federal disability statutes (the ADA), state Worker Compensations statutes, and state and federal Family Medical Leave Acts (the “FMLA”) has often been described as the “Bermuda Triangle” of employment law. Wending one’s way through the requirements of these statutes requires a reliable compass and the assistance of trained professionals.
The three “C’s” of federal wage/hour compliance - Employers should expect wage and overtime claims to continue to proliferate. To avoid or minimize legal risk, remember the three “C’s” - properly classifying employees as exempt or non-exempt, accurately counting all hours worked and fully including all payments before calculating overtime pay. Short-changing employees the overtime owed under federal law will spawn claims, including collective or “class” actions seeking more damages.
E-verify and immigration reform - Immigration reform will continue to be a political hot potato. More private and public employers will voluntarily use E-Verify, the free, online employment verification system, to determine whether applicants or employees are lawfully working in the United States. Right now, employers that have a prime contract of more than $100,000 to supply goods or services to the federal government and some subcontractors must register and use the E-Verify system for their workforce. The process is not without risk - an overzealous or incorrect use of E-Verify for only certain employees will foster national origin discrimination claims.
Action and reaction - legislative initiatives in 2010 - The whirlwind of employment and labor initiatives from 2009 will spin into 2010. Several are legislative responses to Supreme Court or other judicial opinions impacting employment. These include, for example, the Protecting Older Workers against Discrimination Act and the Arbitration Fairness Act. Likewise, the Emergency Influenza Containment Act with the Healthy Families Act would require employers to guarantee paid sick time to needy employees.
Mandatory Reporting Requirements under the Medicare, Medicaid and SCHIP Extension Act Can Apply to Settlements of Claims - Effective Jan. 1, 2010, it will become doubly important when entering into settlement agreements which include a waiver of medical expenses (including emotional distress) to ascertain whether the plaintiff is a recipient of or eligible for Medicare. Under Section 111 of the MMSEA, “responsible Reporting Entities” (which can include employers) who fail to properly report such payments could be liable for up to $1,000 per day.
Managing Independent Contractors - Misclassification of workers as independent contractors not only carries heavy penalties, but is also an area where companies often lack the internal procedural controls necessary to ensure adequate risk mitigation. In addition to the increased scrutiny state agencies have placed on identifying these cases as a source of revenue generation, companies should also beware of increased federal scrutiny. In this respect, the FY2011 Department of Labor budget proposal, which includes a request for $25M and 100 additional enforcement personnel to identify and penalize employers who improperly misclassify employees as independent contractors. As part of this initiative, the Budget funds competitive grants to boost states’ incentives and capacity to address misclassification issues.
Extension of Employer-Funded COBRA Subsidies - On Dec. 19, 2010, the President signed into law an extension and expansion of a COBRA premium subsidy law under the American Recovery and Reinvestment Act (ARRA) that was due to expire. The extension brings new compliance obligations for employers as the program now runs through Feb. 28, 2010, the subsidy period is expanded by six months, new obligations exist in the form of a “transition period,” and new notice requirements must be met within a tight timeframe.
The bottom line: Employers are well-advised to stay alert as 2010 will likely provide an array of legislative, judicial and regulatory rules directly impacting the workplace.
Meg Alli, Michelle LeBeau, and Richard Hurford are Shareholders with the law firm of Ogletree Deakins and work out of the Bloomfield Hills, MI office. Alli has focused her practice on the representation and counseling of management concerning the umbrella of employment laws and regulations affecting corporate clients, not-for-profit organizations and educational institutions. Hurford has focused his practice on employment matters and the representation of corporate clients in litigation and claims in state and federal courts and administrative agencies. LeBeau focuses her practice on litigation defense and counseling in the employment arena.