Jobless Rate Down? Good News for the Economy?

Bloomberg News has reported that the unemployment rate decreased in 36 states in the month of November. The states with the biggest decline in unemployment were Kentucky (from 11.3% down to 10.6%) and Connecticut (from 8.8% to 8.2%).

However, some states have bucked the trend, such as Georgia, where the U.S. DOL reports the jobless rate increased in November to 10.2%,, up one-tenth of a percent.

The overall U.S. unemployment rate is close to a 26-year high, with economists forecasting that the rate will exceed 10% through June 2010 (in November it fell from 10.2% to 10% nationwide). Ten states currently have an unemployment rate of 10% or more, which experts say will continue to stagnate consumer spending.

With 7.2 million jobs lost during this current economic downturn, the market for labor should be strong for employers who take the time to carefully screen and scrutinize candidates for jobs. In addition, the vast labor pool might serve as an incentive for employees to perform their very best, knowing that many qualified individuals are available for work as replacements.

EEOC To Get More Resources

Employers beware: the EEOC is getting more ammunition to process and move along backlogged cases - $23 million worth.

The 2010 version of the omnibus appropriations bill, first passed in the House on December 10th and then the Senate on December 13th, would provide $23 million in funding to help the EEOC resolve more than 70,000 backlogged employment discrimination charges. The EEOC has reported that it experienced a 35% increase in the volume of backlogged cases, from 54,970 in 2007 to 73,951 in 2008. Combined with a record number of new discrimination complaints (95,402 - a 20% increase), the EEOC, with its current financing, is ill-equipped to meet the current volume of current and backlogged charges. At the same time, EEOC staffing has fallen 25% over the past decade.

So, while the EEOC may have taken several years to address and resolve complaints, expect a more expedited process in the future.

Federal Minimum Wage Increased

The Federal minimum wage increased on July 23rd from $6.55 per hour to $7.25 per hour. This wage increase is proscribed by 2007 amendments to the Fair Labor Standards Act. While the increase brings good news to workers making minimum wage, it also creates an added burden on business owners who must now pay higher wages in a struggling economy. Some small business asked Congress to defer the wage increase to some time after the U.S. recovers from the recession.

As a reminder, employers must update their labor law posters to reflect the new wage increase.

Interestingly, even with the increase to $7.25 per hour, a full-time employee making minimum wage only earns about $15,080 per year, hardly enough to live on.

Thirty states, including Georgia, have had to raise their minimum wage as well (states can have a higher minimum wage than the Federal, but not less). Nineteen states already have minimum wages laws that mandate a higher minimum wage than the Federal.

Some economists are predicting that the increase in minimum wage will have a negative effect on the consumer, as many businesses are expected to raise prices to offset increased labor costs.

Respect Employees in the Military

We have grown to better appreciate our military and the men and women who serve in the armed forces. It is not uncommon to witness uniformed servicemen getting applause in an airport or being honored and recognized at a sporting event. However, the same level of respect is not always given in the workplace. Employers need to understand that the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) protects employees who are called to service. USERRA is intended to provide military service members the ability to return to their jobs with credited seniority following absence due to service. The rights provided under USERRA include:

• non-discrimination based on military status;
• reinstatement rights to the position and pay that the employee would have held had the employee remained continuously employed;
• continuation of medical benefits for service under 30 days;
• optional continuation of medical benefits;
• all seniority, rights and benefits upon return to work as if the employee had remained continuously employed; and
• protection from discharge upon return to work, except for cause, for a period of time.

The US Department labor has jurisdiction over USERRA claims and can investigate any violations of that law. If the DOL cannot resolve a complaint directly with the employer, the matter is referred to the Department of Justice (DOJ). The DOJ has the ability to file a lawsuit in the appropriate federal district court on behalf of the aggrieved employee.

All employers should review their policies and procedures to make sure that they are in compliance with USERRA, including having the required posted notice apprising employees of their rights under USERRA. An employee returning from military service should be reinstated as dictated under law and must not be discharged subsequent to his/her return per USERRA.

In addition, recent changes to the Family and Medical Leave Act (FMLA) set forth military leave rights under that law.

Pregnancy Discrimination Claims Increase

It is not a surprise that the EEOC is receiving a greater volume of discrimination charges given that the U.S. unemployment rate is now over 10%. Naturally, many people who have lost their jobs have claimed a discriminatory basis for their separation. But, it is surprising that a large number of pregnancy discrimination claims have come into the EEOC. Pregnancy discrimination is covered under Title VII via the Pregnancy Discrimination Act (PDA). The EEOC reported that it received 6,285 claims in FY 2008, up from 5,587 in FY 2007.

The 7th Circuit Court of Appeals recently held that the PDA covers a "potential pregnancy" after an employee claimed she lost her job because she had taken time off for fertility treatment. This ruling certainly expanded the scope of covered claims (at least in that Circuit).

In addition, on January 1, 2009, the Americans with Disabilities Act (ADA) Amendments Act of 2008 went into effect. The ADA was amended because "the holdings of the Supreme Court in Sutton v. United Air Lines, Inc., 527 U.S. 471 (1999) and its companion cases have narrowed the broad scope of protection intended to be afforded by the ADA, thus eliminating protection for many individuals whom Congress intended to protect." Pregnancy can be covered under the ADA if it effects a major life activity (such a major complications requiring bed rest).

Further, the Family and Medical Leave Act (FMLA) allows employees with serious health conditions, including conditions related to pregnancy, to take leave on a reduced work schedule if it is “medically necessary.” A reduced work schedule is “medically necessary” if an employee has a serious health condition that requires a treatment regimen which is best accommodated by this type of leave. Thus, if a health care provider certifies a pregnant employee’s need for part-time work, an employer may have to modify the employee's work schedule.

As always, employers should make sure that they are in compliance with all laws and should consult with counsel if any questions arise.

Right Staffing and Preserving Exemption

Yesterday I discussed supervisors and need to meet certain criteria in order to maintain an exemption from overtime. One reader aptly pointed out that paying on a "salary basis" means that an employee regularly receives each pay period a fixed, predetermined amount of money (of at least $455 per week) for every workweek in which the person performs any work. The U.S. Labor Department rules provide that, with some exceptions, the salary amount cannot be reduced based on the number of hours or days the employee works. And, the employee's salary may not be docked for absences during a workweek caused by the employer or by the organization's operating needs.

More and more, companies are looking to save money on labor costs while at the same time retaining valuable employees. Some companies have elected to reduce employee hours, work days or workweeks. Other companies have resorted to furloughs.

An employer can reduce an exempt employee's salary (temporarily or otherwise) on a going-forward basis, which can be made a part of a shortened work schedule. To meet the exemption rules, the employee's salary must be at least $455 per week and must still be paid per the "salary basis" rules, meaning that the lower salary could only be docked per those rules, which would not include days off in a workweek due to shutdowns.

Also, a salary does not need be paid for any workweek in which the exempt employee performs no work. If the employee is furloughed for one or more entire workweeks, then the "salary basis" rules do not require that she be paid any of the salary.

Be mindful that in order to preserve the exemption under these scenarios, the company should not allow an employee to take work home, handle matters remotely, by telephone, to perform duties from outside the office, etc. The relevant time period is the seven-day workweek the employer has established and documented for the employees as is required under the FLSA; this does not necessarily have to be a standard calendar week.

Wage & Hour and Multiple Locations

If your company maintains more than one location, such as multiple retail store locations, chances are you maintain a manager or store supervisor that oversees each location's operations. In tough times like now, many retailers staff very conservatively. A supervisor may be one of two employees staffing a retail store. While the supervisor may direct and control 1 or 2 other employees, she may also perform the same/similar duties as her subordinates, such as ringing up customers at a cash register.

The federal Fair Labor Standards Act (FLSA) determines whether a supervisor is exempt from overtime and is not based on what title the company uses or if the person is salaried. Whether or not an employee is exempt from overtime depends on that individual's job duties and the proper application of FLSA regulations.

A store manager at one location may be exempt from overtime, while a manager at another may not. The difference is sometimes subtle and difficult to understand under the FLSA. The question arises when when managers perform many non-managerial tasks: can they be exempt from overtime?

Store managers generally are not exempt from overtime where they do not customarily and regularly direct the work of two or more other full-time employees or the equivalent. Whether a manager's primary duty is "management" under the FLSA is based on all the particular facts and circumstances. Recent cases under the latest FLSA regulations, define "primary duty" as the principal, main, major or most important duty that the employee performs. The determination must be made with a view toward the character of the employee's job as a whole. So, an employee performing some nonexempt work can still be exempt if her primary duty is managerial in nature.

With the increase in wage and hour class-action suits, you should be very careful when making a determination on the exempt status of management personnel. Your policies and procedures will help define the scope of duties and managerial responsibilities, but remember, the FLSA governs.

Obama Administration Committed to I-9 Compliance

The Obama administration just announced that it was launching an investigation of hundreds of businesses as part of its strategy to focus immigration enforcement on the employers who hire illegal workers. The administration will be auditing I-9s and compliance with same.

An I-9 is a federally-mandated document that all employers are supposed complete with the cooperation of employees within 3 days of hire. It is intended verify that a person is authorized to work in the U.S.

Employers who do not properly retain, complete and verify I-9 information are subject to fines by the Immigration and Customs Enforcement (ICE). Reportedly, ICE served "Notices of Inspection" to 652 businesses, which is an increase from last year.

The biggest challenge facing employers subject to an audit may be their inability to confirm whether documents presented to them by workers were authentic (such as a Social Security Card) or that the worker's identity is genuine.

Now is the time to consult with counsel and to conduct a self-audit!

Federal Min. Wage to Increase Soon

The federal minimum wage is currently $6.55 per hour. It will increase to $7.25 per hour effective July 24, 2009. Many states have also raised their minimum wage rates.

Employers in these 17 states will see their minimum wage increase the same as above:

Alabama
Georgia
Idaho
Indiana
Kansas
Louisiana
Mississippi
Nebraska (State law is not tied to federal law, so employers covered by state but not federal law will not be required to pay federal minimum wage.)
North Dakota
Oklahoma
South Carolina
South Dakota
Tennessee
Texas
Utah (The state's minimum wage does not apply to anyone entitled to the federal minimum wage.)
Virginia
Wyoming (Like Nebraska, Wyoming’s law is not tied to federal law, so employers covered by state but not federal law will not be required to pay federal minimum wage.)

Demystifying the COBRA subsidy

The federal stimulus package is called the American Recovery and Reinvestment Act. The Act allows qualified beneficiaries who are eligible for COBRA due to an involuntary termination to pay 35% of the cost of the COBRA coverage. The remaining 65% of the plan cost will be paid by the U.S. government. An employer gets reimbursed for the 65% of the plan cost when it files its 941 for payroll taxes. The subsidy eligibility ends on December 31, 2009.

The Act is retroactive in that the coverage applies to all employees involuntarily terminated from September 1, 2008, to February 16, 2009, and to their qualified beneficiaries, even if they did not elect COBRA coverage when it was offered to them. So, that means employers have to contact employees and beneficiaries terminated during that time frame by April 18, 2009 (60 days after the February 17, 2009 enactment date).

In addition to the regular COBRA notice, an employer should send a supplemental notice to affected individuals with additional information including, for example, information about the individual’s right to the subsidy and the conditions on the subsidy, a description of the obligation of the individual to notify the employer of eligibility under another group health plan or Medicare, and the penalty for failure to provide this notification. The DOL is required to provide a sample notification form by March 19, 2009.

Unfortunately, the Act does not define the term “involuntary termination”, so any involuntary termination is covered. Accordingly, employees who are terminated for poor performance, attendance problems, and other reasons appear to be eligible for the subsidy. Employees who are terminated for gross misconduct, however, are not covered, since a termination for gross misconduct is not a qualifying event under COBRA.

The subsidy is equal to 65% of the monthly COBRA premium for the qualified beneficiary for up to 9 months. The subsidy applies to medical, dental, and vision benefits. It does not apply to medical flexible reimbursement accounts. Employees and other qualified beneficiaries are required to pay the other 35% of the premium.

What's the Ledbetter Fair Pay Act?

A female employee is hired by an employer in 2009 and receives 24 paychecks, each reflecting a discriminatory pay practice by the employer because of his disability. How long of a period does the she have to file a complaint with the EEOC alleging pay discrimination under the Americans with Disabilities Act?

The answer is governed by Lilly Ledbetter Fair Pay Act of 2009, Public Law No. 111-2, 123 Stat. 5. The Ledbetter Act was drafted to overturn the Supreme Court's May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co.

The new law adds a provision to Title VII, which provides:

"unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."

So, the law treats each and every discriminatory paycheck as a new discrimination, thus re-starting the 180-day clock (300 days if the charge is also covered by state or local fair employment laws).

Don't Text and Drive!

The press has widely reported the perils of using a cell phone while driving. Certainly, every company whose employees travel by car in the scope of their employment should have a policy that prohibits the use of a cell phone while driving. There have been recent cases where employers have been held liable for injuries suffered by persons involved in accidents caused by the employee's cell phone use.

Some states prohibit cell phone use while driving unless a driver is using a hands free device. Unfortunately, Georgia has yet to regulate cell phone use. Studies have shown that it is a distraction and can cut down on reaction times while driving. Since employers have a duty to keep their employees safe, they should implement policies to prevent needless cell phone related accidents.

Of course, cell phone use goes beyond being on the phone. With the increase use of smart phones, persons are just as likely to be text messaging as they are to be on the phone with someone. Text messaging while driving can be more dangerous than talking on a cell phone because it usually requires both hands to type, as well as looking down at the smart phone (and not at the road). In response to "texting while driving", several states have completely banned the practice by drivers. These states are: Alaska, California, Connecticut, District of Columbia, Louisiana, Minnesota, New Jersey and Washington. Unlike many seat belt laws, most of the states that have banned text messaging while driving make it a primary offense, meaning law enforcement can stop a driver for the offense (as opposed to secondary, where the police can pull a driver over for something like a broken tail light and then can add an offense such as texting or not wearing a seat belt).

So, companies should amend their policies and procedures to address "texting while driving", particularly where state law addresses the subject.

Do you give notice when you layoff employees?

The obligation to give notice of a layoff depends upon whether the company is engaging in a mass or group layoff or a single layoff situation. If the WARN Act applies to the layoff in a group layoff situation (or more typically, where a plant or location completely closes down), that can require a 60-day notification to all effected employees.

State law may address this issue as well, but this typically falls into a question of an employer's comfort level with the employees and how they will react to the layoff. Assuming that it is one person effected by the layoff, would giving advance notice to that person result in possible sabotage? Would it cause the person to lack productivity until his/her last day of work? Does it create a security risk because that person has access to sensitive information?

In some case, an employer might consider some giving as a courtesy to the employee to allow him/her a jump on finding other employment (which could also cut down on the length of an unemployment claim).

Finally, an employer can offer a severance package which would typically be under the condition that the employee have at least 21 days to consider the offer (assuming it would be in compliance with the ADEA and the OWPBA). The last date of employment can be a future date or be in the past. In this sense, a severance package can be used to provide advance notice of a layoff.