Your Employee Matters

Employers offering limited health benefit plans (“mini-med” plans) can do so without modifying them to comply with the Affordable Care Act, provided they obtain a waiver from the Department of Health and Human Services (HHS).

Many of the companies who offer mini-med plans are applying for these exemptions on behalf of their customers.

The mini-med plan market, which by some estimates covers more than 3 million Americans, has been rocked by the requirements of the Affordable Care Act. Mini-med plans, which offer limited benefits but low deductibles and co-pays, have become a cost-effective way for employers with high turnover and low wage earners to provide their employees with basic Health insurance. If mini-meds were forced to comply with the Affordable Care Act’s rules, including those that impose “minimum essential coverage” requirements or eliminate lifetime or annual caps on benefits, the entire market would dissolve, leaving 3 million Americans without even the most basic coverage.

As a result, mini-med plans have prevailed on HHS to grant them an exemption from the Affordable Care Act in order to protect basic coverage for their insureds. Employers must submit waiver applications at least 30 days before the beginning of the plan year for plans starting between September 23, 2010 and September 23, 2011. For calendar year plans, the deadline to apply for a waiver is December 1. Plans receiving a waiver must re-apply each year until the waiver program ends in 2014.

Any plan – not just mini-med plans — can apply for a waiver from the Affordable Care Act, provided they can show that:

• The plan covers both full-time and part-time workers.
• Without a waiver, premiums would rise so much that employers would drop the plan or workers would refuse to buy into them.

If you offer a min-med plan, contact your plan’s insurance carrier or your benefits broker to see if the plan has applied for or obtained an exemption. Note, however, that the exemptions are only a short-term fix. HHS will have some tough decisions to make about these plans when the exemption period ends in 2014. Ultimately, mini-meds might be the type of Health insurance coverage that dooms the Affordable Care Act’s requirement that all American citizens carry “minimum essential coverage” by 2014.

Article courtesy of Worklaw® Network firm Lehr Middlebrooks Vreeland.

The case of EEOC v. Con-way Express, Inc. (8th Cir. September 26, 2010) involved an employer’s use of conviction records as a practice, but not a written policy. The EEOC sued on behalf of the charging party, Roberta Hollins, who claimed she was not hired based on her race. Hollins applied for a part-time position at the company’s Poplar Bluff, MO, office. The company’s service center manager, Kenneth Gaffney, interviewed her and recommended to his boss that the company hire her.

However, Gaffney’s boss expressed reservations about hiring her due to race. Gaffney told Hollins that if the company were to hire her, it would “open a can of worms” and “my boss told me not to hire you because if I hired you that was just asking for the NAACP.” This looks like a clear-cut case of racial discrimination, but that’s not how it turned out.

Answering a question on the employment application about prior convictions, Hollins wrote that she twice was convicted for shoplifting. Gaffney offered to employ Hollins, but failed to follow the company’s protocol, which involved obtaining approval from Human Resources before extending an offer. Gaffney was terminated and when Hollins told Gaffney’s supervisor about the employment offer, the supervisor said that he knew nothing about it and he would not hire her. The company hired a white male for the position, and stated that Hollins would not have been offered employment based on her prior convictions.

The EEOC argued that a jury should decide the question of whether Hollins was not hired based on her race because the employer’s background check policy was unwritten. The court ruled that it was irrelevant that the policy was unwritten. The company provided evidence that during the 18 months before Hollins applied, the company disqualified 28 applicants based on their criminal conviction history and no current employee had a criminal conviction. Said the court: “the [EEOC] argues that a reasonable jury could conclude that the policy did not exist because it was not in writing, but they do not cite any legal authority for the proposition that a policy must be in writing to be effective.”

The court got it right: An employer’s practice need not be in writing to be a bona fide, nondiscriminatory reason for an action taken. Furthermore, although the manager’s supervisor expressed reservations about hiring Hollins because of her race, she would not have been hired anyway due to her conviction record – a factor that the employer applied consistently to applicants.

Article courtesy of Worklaw® Network firm Lehr Middlebrooks Vreeland.

The U.S. Department of Labor’s Wage and Hour Division is holding a series of discussions with the National People’s Action Network (NPA). The goal is to explain worker rights and how to file a complaint against rights violations with the Labor Department. At a recent discussion in Rhode Island with the Fuerza Laboral organization, more than 100 workers and stakeholders spoke with Wage and Hour officials and garnered information on finding help when denied the wages they deserve.

According to the NPA Web site affiliates entered into a partnership with the US Department of Labor. DOL representatives in NPA affiliate states will attend field meetings to help local organizations expand their campaigns on Wage Theft, misclassification, and other labor violations.

Conclusion: These types of partnerships make business owners nervous. The Bush Administration was one of the most pro-employer on the books. Employers recognize that the pendulum has swung 180° in the opposite direction. The Department of Labor, EEOC, OSHA, and NLRB are in business to help employees – not employers. Whining about this won’t do any good. Engaging in sound HR risk management practices is the only thing that can or will work.

The Secretary of Labor has issued “The Strategic Plan” for fiscal years through 2016. As you can see in the diagram, the essence of this plan consists of work-life balance, health care, income security, and advocacy – all noble goals. The challenge: Defining a context or meaning for these terms.

Here’s what The Plan states:

Strategies for Reforming Worker Protection

• Target the most egregious and persistent violators.
• Protect the most vulnerable populations while assuring broad-based compliance.
• Regulate to eliminate or reduce the hazards with the broadest and most serious consequences based on sound science.

Evaluation. Establish regular processes for evaluating the success of enforcement and regulatory strategies in helping achieve desired outcomes.

Innovation

• Foster a culture that emphasizes continuous improvement in regulatory and enforcement programs.
• Shift the burden of compliance to the employer or other regulated entity, rather than relying exclusively on enforcement interventions to eliminate “catch me if you can” regulation and enforcement.
• Emphasize organization-wide enforcement and other strategies for leveraging limited resources to accomplish the broadcast possible compliance.
• Use openness, transparency, and effective press and communications strategies to help ensure broad-based and continuing compliance.

Improved Implementation

• Implement collaborative enforcement strategies with other DOL, federal, state, and local agencies to leverage limited resources and ensure broad compliance in the entire workplace.
• Establish and maintain an effective partnership among worker protection agencies, the Solicitor’s Office, and the Policy Office in all aspects of regulation and enforcement.
• Impose penalties and other remedies which are consistent with the seriousness of the violation and act as effective deterrents, including identifying and aggressively pursuing appropriate cases for criminal prosecution.
• Partner with worker and community-based organizations to identify likely violations and educate workers, small businesses, and others about the law’s requirements.
• Involve workers and worker organizations in the workplace to prevent, identify, and remedy violations.
• Provide meaningful compliance assistance and engage the regulated community in designing and implementing compliance assistance.

Learn more on the DOL website

The changing demographics of the workforce have gathered much attention. The AARP has done an excellent job of providing insight and tools for employers to help manage the older-than-50 workforce. Click here to view this information. The older workforce will be with us for some time. The proper “retirement age” has been a source of intense debate, due to its impact on the ability to fund pensions and Social Security. The combination of low birth rates and rising life expectancy will transform the demographics of the workplace.

Many employers misunderstand the standard unemployment claims. The bottom line: Even a claimant who has performed horribly on the job is eligible for unemployment benefits, unless they leave under these circumstances:

• Voluntary departure without good cause.
• Discharge for misconduct connected with their work.
• An irresistible compulsion to use or consume drugs, including alcoholic beverages.
• Return to school (for students employed temporarily).
• Joining a spouse or domestic partner at a place from which it’s impractical to commute to employment, to which a transfer of the claimant by the employer is not available.
• Protection of the employee or their family from domestic violence abuse.

If you decide to oppose an unemployment claim, it makes sense to get help from an expert in this area.

I read an interesting but disturbing article in Business Week magazine that talked about Foxconn, the world’s largest manufacturer of electronic components. What was startling was the picture of suicide nets hung outside its company dormitories. Apparently, 12 workers have leapt to their deaths within the past year.

When we see pictures of assembly factories and hear stories about suicide nets, it’s easy for us to point fingers at the Chinese and their inhumanity toward the working masses. However, the U.S. underwent a similar revolution 100 years ago. I can show you pictures of injured children who worked in factories 12 hours a day, six days a week. If they were injured, they were fired. There was no medical coverage or Workers Comp. We also went through an incredible labor/management struggle, which continues to this day. You can bet that China will go through its labor struggles as well. Fortunately, and perhaps in part due to global pressure, Foxconn has raised salaries and benefits.

Experts attribute the high suicide rate to repetitive stressful work environments and detachment from the familiar — whether it’s friends, family, or countryside. There’s a deep sense of isolation despite the sea of humanity – a disconnect, if you will.

Let me ask you a question: Isn’t that the condition here as well? Many of us remain equally chained to our desks or cubicles, even if they’re larger or have a better view. Americans work insane hours. In a study we did of HR That Works members, most respondents take fewer than two weeks of vacation per year. At least China mandates two weeks of vacation a year. In France, it’s eight weeks, and in England six weeks.

Where are the safety nets at your company? Is it the EAP? Is it a wellness program? Is it incredible support and flexibility? How do we keep ourselves and the people we work with sane when we’re all running 75 mph? That’s the question, whether you’re in the U.S., Russia, China, Pakistan, or Brazil. How do you make sense of this thing we label as “work” in a way that nurtures us instead of tearing us down?

As with the immigrants who came to the U.S. and continue to do so, the Chinese who immigrate to their cities will reconnect and form associations, special interest groups, sporting teams, non-profit organizations, and find other ways to build their community.

Perhaps our greatest export will be helping emerging economies accelerate through struggles that took us dozens of years to resolve. Workplace struggles surrounding access to work, pay, safety, and the sharing of power will continue to affect today’s workplace, both here and abroad.

Every year, I read the Jury Award, Trends, and Statistics report on employment law published by Jury Verdict Research. I used this report during my litigation career to help position cases for settlement purposes.

Because it takes a long time to gather these statistics, the report doesn’t appear until October of the following year. The good news: JVR reported that the median compensatory award in employment practices cases dropped from $285,000 in 2008 to $253,000 in 2009 (the second highest level ever recorded). There has been an upward trend in EPL verdicts since 2003. Although the median award was $253,000, the mean award came $753,332. Here are some other statistics from the report:

• The highest average EPL award between 2003 and 2009 was for retaliation, coming in at $245,500. The second highest average verdict was for wrongful termination at $232,500.
• Approximately 37% of the cases result in a verdict between $100,000 and $500,000.
• In 2009, 24% of the cases had a jury verdict of $1 million or more.
• The highest average compensatory verdicts came against government entities, with manufacturing/industrial companies coming in second place. Transportation firms had the lowest average verdict.
• Between 2003 and 2009, the most common claims for discrimination involved sex (35%), race (25%), disability (15%), age (13%), and other (12%). Age and disability cases had the highest median awards, both more than $250,000. Sex and race cases averaged approximately $200,000.
• As has been the case every year, state court verdicts are dramatically higher than those in federal courts. This is one reason why plaintiffs’ attorneys prefer to try their cases in state court.
• When it comes to the recovery probability for employment practices liability, employers received a break: Employees won 58% of their cases, down from 60% in 2008.

You can order a copy of this report from Jury Verdict Research for approximately $40 by going to www.lrp.com or calling (800) 341-7874.

The DFEH has released a summary of the cases filed in 2008-2009. The breakout of claims is similar to those filed nationwide. As you can see, disability and retaliation claims are the two biggest areas of concern. The second tier of exposures includes age, race, and sexual harassment claims. Here’s the question: No matter where you are, are you using HR That Works proactively to help avoid these claims?

Employers often believe that they need a certain type of person to do a certain job because of physical requirements, client demands, privacy reasons, and tradition. Understand this: Any such discrimination will come under judicial scrutiny unless there’s a high level of correlation between gender, race, or nationality and the ability to perform job functions. For example, a 9th Circuit opinion held that a women’s correctional facility could not limit its correctional employees to females in an effort to reduce sexual abuse in the environment. On the other hand, it’s hard to argue that an employer doesn’t have the right to hire whom they want to as their next bikini model.

Bottom Line:

Be prepared to prove your BFOQ, as well as any efforts you’ve made to mitigate the situation. For example, if employees have to lift a 200-pound box once a day, and this imposes a disparate impact on women, a reasonable alternative would be to not have anybody without the ability to lift those boxes. Our members continue to be plagued with questions such as, “Can I only hire Chinese waiters for my Chinese restaurant?” (Answer: No. As another article in this newsletter stated, customer preference cannot override discrimination laws.) “Can I hire only English-speaking employees at my hotel, even if they have limited customer interaction?” (Answer: Probably not.)

If you’re not sure, contact the HR That Works Hotline.