Legal Briefs for HR

Welcome to Legal Briefs for HR, an update on employment issues sent to over 4700 HR professionals, in-house counsel and business owners all over the U.S. to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in!  Back issues are posted on my firm’s NEWLY UPDATED WEBSITE at www.munckcarter.com under Media Center/Legal Briefs.   I look forward to speaking at the Physician Insurers Association of America annual conference in Austin, TX on Sept. 16!

Here’s the latest:

1. ReHIRE– The proposed Americans Want to Work Act (S. 3706) would, if passed, extend the HIRE Act tax credit (for hiring certain unemployed workers) for an additional year, through 2011.  Also, the FAQs on the HIRE Act have been updated on the IRS website (www.irs.gov, then click on Businesses, then on HIRE Act: Questions and Answers for Employers) to address questions such as whether independent contractors who have worked more than 40 hours in the 60 days prior to hire are “qualified employees” who trigger a payroll tax exemption for their new employer, if hired.  The IRS says  the self-employed individual is not “employed” so their prior work won’t make them ineligible, but be careful that the classification of independent contractor is correct.  If they really were employees and did more than 40 hours of work in the 60 days prior to hire, there is no tax break.
2. Donning and Doffing– In the ongoing saga of whether the donning and doffing of certain clothing or equipment is compensable “hours worked,” some employers have availed themselves of the sec. 203(o) exception in the FLSA which allows such time be without pay, if agreed to in a collective bargaining agreement (“CBA”).  But what one employer didn’t see coming is that a state’s wage and hour laws may require payment for those activities regardless of what the CBA says, as it does not have a similar exception.  Further, sec. 218(a) of the FLSA makes clear that the federal law does not preempt a state law which is more generous to workers.  The 7^th Circuit agreed that the workers should be paid for time spent putting on “safety gear, such as steel-toed boots and hard hats, plus a smock that keeps other garments clean . . . [and] hair nets and beard nets to protect the food from dandruff and other contaminants.”  Spoerle v. Kraft Foods Global (7^th Cir. Aug. 2010).  Lesson?  Always check the interplay of federal and state law, especially when it comes to wage and hour issues.
3. Freeze! – As evidence relevant to court proceedings is increasingly in electronic form, this case is a good reminder about employers’ duty to preserve evidence from destruction.  An employee filed an EEOC charge in 10-07 and a lawsuit in 6-08.  The employer did tell managers to cull out emails and other documents they deemed relevant, but waited until 10-08 to put a “litigation hold” on their records systems’ periodic destruction of old emails.  The plaintiff moved for sanctions on her former employer and the court found the employer grossly negligent because [1] the duty to preserve attached with the filing of the charge, not the filing of the lawsuit; and [2] the plaintiff was harmed when employees with an interest in the litigation (e.g., plaintiff’s manager) were not given instruction as to what info was relevant.  Further, the person(s) charged with culling of emails may have been motivated to allow destruction of certain info. Jones v. Bremen High School (N.D. Ill. 5-10).
4. Whistle While You Work?– In response to the Gulf oil spill, the Offshore Oil and Gas Worker Whistleblower Protection Act of 2010 (H.R. 5851) has been tacked onto related spill-response legislation.  The bill, if passed, will give whistleblower protection to employees in the offshore oil and gas industries who support or carry out exploration, development, production, processing or transportation of oil or gas, or oil spill cleanup, emergency response, environmental surveillance, protection or restoration, or other oil spill activities related to workplace safety and health.
5. More Fun with FMLA– Once again, a bill has been introduced to expand the scope of the Family and Medical Leave Act and require job-protected leave for qualified employees to care for a same-sex spouse, domestic partner, parent-in-law, adult child, sibling or grandparent who has a serious health condition.  Some folks think their pets are “like family” so maybe they should add veterinarian appointments to the mix.  See full text and status of S.B. 3680 and H.R. 2132 at http://thomas.loc.gov.
6. More Reach to Data Breach– For the sixth time, a bill has been introduced in Congress to try to stem the  rising tide of identity theft victims, by forcing companies to add data security measures and provide notice to affected individuals, when personal identifiers (e.g., name, address, phone #, SSN, PIN #, account #) fall into the wrong hands due to an intentional or accidental breach of the company’s stored data.  Another purpose of the bill is to preempt similar laws in 46 states and harmonize the crazy quilt-like procedures put in place by those states.  The Data Security Act of 2010 (S. 3579) was introduced in July and can be found and followed at http://thomas.loc.gov.
7. More Savings– If passed, S. 3760 would require employers of 10 or more employees that offer no retirement plan(s) to have a benefit where employees are automatically enrolled  in individual retirement accounts and could opt to divert a portion of their pay to save for retirement.  Check it out at http://thomas.loc.gov.
8. Fit to be Tried?– Although the Americans With Disabilities Act (“ADA”) limits circumstances under which employers can make medical inquiries and demand medical exams of employees, one appeals court held that a required fitness-for-duty exam (“FFDE”) is OK, even absent poor job performance, under the right circumstances.  In this case, a police officer had suffered a head injury and generally performed well but demonstrated “emotionally volatile behavior.”  After the officer’s failure to appear at a FFDE follow-up, he was fired for insubordination and found unfit for duty.  He sued under the ADA, arguing his employer had not shown the FFDE was a business necessity.  The court sided with the employer and explained that an employer does not have to wait until an employee does real harm or injury before acting by ordering an FFDE, for to do so might expose it to liability for negligent  hiring or retention.  The officer’s swearing at a superior, abruptly leaving a meeting, engaging in loud arguments and exhibiting anger to the degree that his legs were shaking were sufficient to support the employer’s doubts about his fitness to, among other things, tote a gun.  Brownfield v. Yakima WA (9^th Cir.  7-10).
9. Get on Top of SOX Update– Last month’s Legal Briefs for HR summarized changes to Sarbanes Oxley wrought by the Dodd-Frank Reform and Consumer Protection Act.  One of those changes was to increase the amount of reward available to certain whistleblowers.  On July 23, the SEC announced that it had awarded its largest bounty ever of $1 million, to an employee who spoke out. This was under the “old” rules which allowed a bounty of up to 10% of the $10 million penalty it had collected in settling an insider trading action.  Under the “new” rules, that percentage can now go as high as 30%.  With the increase in payoffs and publication of penalties, expect finger-pointing to become a national sport.
10. Woo Hoo! – My hat’s off to Texas-based companies recently recognized in Fortune magazine as the 100 Fastest Growing Companies in the world, several of which are LB4HR subscribers!  They include: DG Fastchannel (Irving, #16), Life Partners Holdings (Waco, #20), Luminex (Austin, #42), Atwood Oceanics (Houston, #72), Fluor (Irving, #80), Community Health Systems (Franklin, #81), EZCorp (Austin, #87), Southside Bancshares (Tyler, #90) and MetroPCS Communications (Richardson, #100).
11. Stated Differently– Here are some morsels for you multi-state employers:
    1. California – Employee in CA is hired by Employer A and signs a confidentiality and noncompete agreement (even though a CA statute broadly prohibits noncompetes).  After being fired, she goes to work for Employer B in the same industry.  Employer A calls Employer B and asks for its help in enforcing the noncompete.  Employer B acknowledges that the noncompete is not enforceable, but fires employee anyway citing “respect and understanding” with industry colleagues.  Employee sues Employer B for wrongful termination and Employer A for interference with contract.  The lower court sided with Employer B, but the appeals court found the termination wrongful, equating the employers actions to an unenforceable “no hire” agreement between employers.  Silguero v. Creteguard (Cal. Ct. App. 7-10)
    2. Connecticut – When counting noses to see if you have the requisite 75+ employees to be considered an employer subject to the CT FMLA, count those who are employed in-state and outside of CT.  Velez v. Mayfield (Conn. Super. Ct. 5-10).
    3. Illinois – Effective 1-1-11, it will be illegal for employers to use personal credit history as a factor in recruitment, hiring, pay or discharge from employment.  Employers may not inquire about an applicant’s credit history or obtain a credit report, unless an exception applies.
    4. Kansas – KS is the 26^th state to ban the reading, writing or sending of written communications while using a cell phone, laptop or other device that provides voice or data communication, while driving a vehicle.
    5. Massachusetts – Effective 11-4-10, employers may not ask questions on an initial written application form about applicants’ “criminal offender record information” to include info on criminal charges, arrests and being jailed or imprisoned.  This is on top of the existing statute which bans employers from asking about arrests that did not result in convictions and certain low-level misdemeanor convictions, while allowing questions about felony convictions and more serious misdemeanors.  Employers can still get a criminal background check, but under the revised law such record will not include felony convictions that have been closed for more than 10 years or misdemeanor convictions that have been closed for more than five years.  And if you run more than five criminal background checks per year, you must have a written criminal offender record information policy.
    6. Texas – As of 7-29-10, employees performing construction work on a construction site in Austin must be provided a rest break of at least 10 minutes for every four hours worked. 
12. For the Birds – If you like being tweeted and want breaking news on employment law changes, follow me on Twitter.  I’m at @amross.

Until next time,
Audrey E. Mross
Labor & Employment Attorney
Munck Carter LLP
600 Banner Place
12770 Coit Road
Dallas, TX  75251

972.628.3661 (direct)
972.628.3616 (fax)
214.868.3033 (iPhone)
amross@munckcarter.com
www.munckcarter.com

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