2011 Labor & Employment Hot Issues

1. 2011 Labor & Employment Hot Issues Tina Syring-Petrocchi Barnes & Thornburg LLP 225 South Sixth Street, Suite 2800 Minneapolis, MN 55402 (612) 333-2111 www.btlaw.com

2. Hot Issue #1: So Many Changes

3. Hot Issue #1: So Many Changes • Changes to the Laws: • Americans with Disabilities Act Amendments of 2008 (ADA) • Genetic Information Non- discrimination Act (GINA) • Family and Medical Leave Act (FMLA) • American Recovery and Reinvestment Act of 2009 • Lilly Ledbetter Fair Pay Act of 2007

4. Hot Issue #1: So Many Changes. . . • Changes in Regulations: • ADA Regulations released this week • FMLA Regulations • GINA Regulations • Workers with Caregiver Responsibilities • E-Verification • Proposed regulations • Age Discrimination in Employment Act (“ADEA”)

5. Hot Issue #1: So Many Changes. . . • Expansion of Whistleblower Protections: • OSHA • Food Safety Modernization Act • Healthcare Reform

6. Hot Issue #1: So Many Changes. . . • Expansion of Government Agencies • More investigators and attorneys • EEOC • DOL • DOJ • Defending a charge involves more time and money • More on-site inspections and interviews • OFCCP audits increasing

7. Hot Issue #2: The U.S. Supreme Court

8. Hot Issue #2: U.S. Supreme Court • Changes in the Court: • Appointment of Sonia Sotomayar • Considered to be judicially active • Wrote majority opinion in controversial white firefighters’ racial discrimination case • Supporter of Unions • Appointment of Elena Kagan • No prior judicial experience • Considered liberal • Refused to allow military recruiters on Harvard’s campus because of “Don’t Ask, Don’t Tell” policy

9. Hot Issue #2: U.S. Supreme Court • 2011 Decisions and Cases: • FLSA Retaliation Expansion • Kasten v. Saint-Gobin Performance Plastics • 3rd Party Retaliation • Thompson v. Northern American Stainless • Class Action • Dukes v. Wal-Mart Stores • 500,000 female employees in the proposed class • Gender discrimination

10. Hot Issue #3: Unions and National Labor Relations Board

11. Hot Issue #3: Unions & NLRB • Employee Free Choice Act is not gone • Through the NLRB decisions, most of the provisions of EFCA are being implemented. • Radical changes to Railway Labor Act • Elections now based on the majority who actually vote. • Previously had been based on the majority of employees eligible to vote. • Change makes it easier to organize.

12. Hot Issue #3: Unions & NLRB • Technology is seen as a tool for unions • Facebook • Blogs • “Cyber organizing” • Emails • Text messages • Challenging for employers on the extent they can monitor employer-issued computers.

13. Hot Issue #3: Unions & NLRB • Focusing on non-union employers • Currently only 7.2% of private sector employers are unionized. • But . . . changes to public sector unions are forcing unions to look to the private sector. • Challenging independent contractor classifications • “Salting” • Filing charges on behalf of non-union employees

14. Hot Issue #3: Unions & NLRB • NLRB Activism: • Current make-up of the Board • 3 of the 4 members are strongly connected to unions • Facebook Case • Mandatory language in settlement agreements

15. Hot Issue #3: Unions & NLRB • Recommendations: • Adopt and enforce electronic-media use and social networking policies to limit unions’ increased reliance on technology • Conduct union-avoidance training • Managers • Employees • Conduct “labor audit” to determine vulnerability • Create a code of conduct • Evaluate independent contractor relationships

16. Hot Issue #4: Independent Contractors

17. Hot Issue #4: Independent Contractors • Issues for . . . . • Unions (as a mechanism for organizing) • Department of Labor (as an overtime issue) • Internal Revenue Service (as a tax and benefits issue)

18. Hot Issue #4: Independent Contractors • Comprehensive Report Done In August 2009 • Found Misclassification of Workers To Be A Significant and Increasing Problem. • 1984: IRS estimated 3.4 million workers were misclassified as independent contractors (IC). • 2000: DOL found up to 30% of the companies audited in 9 states had misclassified workers. • 2007: IRS estimated 15% of U.S. workers were misclassified as IC.

19. Hot Issue #4: Independent Contractors • Independent Contractor (“IC”): • Not an employee. • Company is not responsible for the IC’s SSI, Workers’ Compensation, retirement benefits, ADA, FMLA, Title VII, Whistleblower, FLSA • Cannot sue Company as an employee for wrongful act or injury on jobsite • The best candidates for IC status are workers who: • Have special skills • Can work without close supervision

20. Hot Issue #4: Independent Contractors • Potential Legal Issues: • A contract does not necessarily make an individual an IC. • Courts look to the “reality” of the relationship • If there is a discrepancy between contract and actual relationship, look to relationship • Law varies as to the “test” to determine if an individual is an IC. • “Right to Control” test • The IRS 20 Factor Test • DOL “Economic Realities Test”

21. Hot Issue #4: Independent Contractors • Each Test Focuses On: • Behavioral Controls • How do the parties act? • Financial Controls • Risk • How are services paid? • Type of Relationship • What can each do?

22. Hot Issue #4: Independent Contractors • Consequences If You Get It Wrong . . . • Payment of payroll taxes • Employers incorrectly classifying workers may be held liable by the IRS for all or part of the uncollected payroll and income taxes, even if the contractor has already been paid. • Lost management time • Legal fees • Back “taxes” of many kinds • Minimum wage and overtime pay • Interest and penalties • Jail time

23. Hot Issue #5: Social Media And Privacy

24. Hot Issue #5: Social Media and Privacy • Email (not so new) • “Blogs” • Social networking sites • Facebook (Feb. 2004) • MySpace (Aug. 2003) • Twitter (Mar. 2006) • Professional networking sites • Linkedin (May 2003) • Text Messages

25. Hot Issue #5: Social Media and Privacy • 83% of employers are likely to use social networking sites for hiring. • Potential Discrimination Issues: • US Working Population: • 13% African-American, 15% Hispanic • Linkedin Users: 5% African-American, 4% Hispanic • Fortune (Mar. 2, 2011) • Pictures on Facebook • Involvement in groups related to protected categories • Disclosure of family and medical issues

26. Hot Issue #5: Social Media and Privacy • Lawful Conduct Outside of Work: 33 States Provide Protection • Political activity (All states but AL, AR, GA, HI, IA, ID, IL, KS, ME, MT, NC, ND, NH, OK, VT, WI) • Consumption of lawful products (IL, MN, MT, NC, NV, NY, WI) • Smoking/tobacco use (CT, DC, IN, KY, LA, ME, MS, NH, NJ, NM, OK, OR, RI, SC,SD, TN, WV, WY) • Lawful off-duty conduct (CA, CO, ND, NY) • First amendment (CT)

27. Hot Issue #5: Social Media and Privacy • Monitoring Issues: • Accessing Protected Sites • Invasion of privacy • Violation of website terms and conditions • Violation of Stored Communications Act (Hacking) • Violation of Electronic Communications Privacy Act • Violation of Fair Credit Reporting Act

28. Hot Issue #5: Social Media and Privacy • Recommendations: • “No expectation of privacy” language in handbook • Written consent • Ordinary course of business • Access is by the entity providing the communication service • Internet monitoring policy • Provide specifics • Apply uniformly

29. Hot Issue #5: Social Media and Privacy • Recommendations (cont.): • Social Media Policy • Written policy, disseminated, acknowledged • Disclaimer: my views, not my employer’s • No confidential or trade secret information • Don’t defame or disparage (with Section 7 disclaimer language) • Offensive behavior policy applies on-line • Caution in issuing discipline • Treat everyone the same • Beware of protected activity

30. Hot Issue #6:Who Hired This Person?

31. Hot Issue #6: Who Hired This Person? • Hiring the Wrong Person: • Right skills, wrong personality • Right personality, wrong skills (if any) • Wrong skills, wrong personality • How does this happen? • Rush to hire • No assessment of needs • No pre-screening • Bad interview questions/bad interviewers

32. Hot Issue #6: Who Hired This Person? • “Need to hire right now!” BUT for what? • New or Existing Position? • Job Description Updated and Accurate? • Recruitment Sources? • Employment Application Helpful or Hurtful?

33. Hot Issue #6: Who Hired This Person? • Getting in the Door Without Any Screening! - Need to pre-screen all candidates! - Telephone interviews - Verify information before in-person interview • 34% of job applicants lie about educational and work experience. • 11% of job applicants misrepresent the reason for leaving their prior employer. • 30% of job applicants exaggerate their accomplishments.

34. Hot Issue #6: Who Hired This Person? • Bad Interviews • Deciding Who Will Conduct The Interview • Training • Preparing Interview Questions • Consistency • Do the questions relate to the position? • Writing on the application or résumé • Bad Questions Will Create Problems! • Illegal Questions • EEOC “Tester” Applicants

35. Hot Issue #6: Who Hired This Person? • Testing of Candidates • Be Careful! • Measures the applicant’s abilities and skills needed to do the job. • Measures the applicant’s general knowledge of the subject matter of the job (i.e., accounting, legal, business, etc.) • Must be required of all applicants for the same position!

36. Hot Issue #6: Who Hired This Person? • Final Steps Before Hiring: • Background Checks: • Verify employment skills/experience • Verify what you learned in the interview • Verify right person for your business culture • Compliance with Fair Credit Reporting Act • Non-Compete Obligations • Any restrictions on joining your organization? • Steps to ensure compliance? • Potential litigation/litigation costly

37. Hot Issue #7: Time Is Money andOther Wage and Hour Challenges

38. Hot Issue #7: Time Is Money • Misclassification of Employees: • Salaried Does Not Mean Exempt! • Title Does Not Mean Exempt! • Education or Experience Does Not Mean Exempt! • Exemptions are based on duties – not title, education or “salary” • Executive, administrative and professional exemption tests must be strictly adhered to. • If the employee’s duties do not meet each element of the test, he or she must be classified as non-exempt and paid overtime for any hours worked over 40

39. Hot Issue #7: Time Is Money • It’s Okay to Interrupt Lunch . . . WRONG! • Break periods under the FLSA may or may not be compensable for non-exempt employees, depending on whether the employee is relieved from duty and the amount of time given for such activity • Meal periods must be counted as hours worked unless: • The meal period is at least 30 minutes • The employee is completely relieved from all duties during the period • The employee is free to leave the duty post

40. Hot Issue #7: Time Is Money • “I Didn’t Authorize Overtime So I’m Not Paying It” . . . WRONG! • Employees who work after their shift are engaged in compensable time and whether they had authority is immaterial. • As long as the employer “suffers or permits” employees to work on its behalf, proper compensation must be paid. • Mere promulgation of a rule prohibiting overtime or unauthorized work is not sufficient to avoid compensation for additional hours worked under the DOL regulations—management must make sure that no work is performed!

41. Hot Issue #7: Time Is Money • Docking Exempt Employees: • An exempt employee’s salary cannot be reduced based on variations in the quality or quantity of the work performed. • An exempt employee must receive his or her full salary for any week in which he or she performs work, without regard to the number of hours worked. • The DOL regulations provide that an employer that makes improper deductions may lose the exemption status.

42. Hot Issue #7: Time Is Money • Permissible Deductions for Exempt Employees: • The employee is absent from work for one or more full days for personal reasons, other than sickness or disability. • The employee is absent for one or more full days because of sickness or disability and the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary. • The employer imposes penalties in good faith for infractions of safety rules of major significance

43. Hot Issue #7: Time Is Money • Permissible Deductions of Exempt Employees (Cont.): • The employee takes leave under the FMLA (including deductions for partial day absences occasioned by the FMLA). • The employee is absent the entire workweek or performs no work during an entire workweek. • The employer suspends the employee for one or more full days imposed in good faith for infractions of workplace conduct rules.

44. Hot Issue #8: When An Employee Asks To Take “Some Time Off” – What Does This Mean Under the ADAAA and FMLA?

45. Hot Issue #8: ADAAA and FMLA • ADAAA – Why Did This Happen? • Purpose of ADAAA is to “restore the intent and protections” of the ADA. • Amendments specifically reject U.S. Supreme Court decisions limiting the definition of “disability.” • Congress believed Supreme Court eliminated protection under ADA for individuals that Congress intended to protect.

46. Hot Issue #8: ADAAA and FMLA • What Do The Amendments Mean? • Congress specifically disavowed a narrow interpretation of the ADA and directs that ADA should provide “a broad scope of protection.” • Requires broader interpretation of the term “disability” and may expand employers’ obligations to more employees. • Still applies to employers with 15 or more employees.

47. Hot Issue #8: ADAAA and FMLA • Things To Be Mindful Under The ADAA: • EEOC Regulations: Directed to revise definition of “substantially limits.” • Major Life Activity: New language that specifically states that operation of “major bodily functions” is a major life activity • Term includes functions of immune system, normal cell growth, digestive, bowel, bladder, brain, respiratory, circulatory, endocrine, etc. • Most significant change in the statute for extending scope of ADA

48. Hot Issue #8: ADAAA and FMLA • Things To Be Mindful Under The ADAA (Cont.): • Inactive Impairments: Impairments or conditions that are episodic or in remission still constitute disability if would substantially limit a major life activity when active. • Mitigating Measures: Reversed Supreme Court’s finding that determination of whether an impairment is “substantially limiting” to major life activity must consider mitigating measures. • Perceived Disabilities: Person qualifies as being “regarded” as disabled if person establishes that he or she was subjected to a prohibited action because of an actual or perceived mental or physical impairment; individual does not have to show that employer perceived the condition to limit a major life activity.

49. Hot Issue #8: ADAAA and FMLA • The ADAAA’s Impact On Requests For Accommodations, Including Time Off? • Must consider how they currently analyze requests for accommodation of employees with medical conditions. • But probably will not change your day to day life that dramatically!! • Some conditions that were outside ADA are now considered disabilities under the ADAAA (including multiple sclerosis and diabetes). • Increased litigation likely with increased risk because of the unavailability of key legal arguments. • Increased scrutiny of HR decisions affecting employees with medical conditions.

50. Hot Issue #8: ADAAA and FMLA • What About The FMLA? • Still applies to employers with 50 or more employees. • Eligibility for FMLA Leave remains the same: • Employed at least 12 months • Worked at least 1250 hours over previous 12 months (USERRA exception).