Wednesday, May 25, 2016

Can employers cut employees' hours to avoid Obamacare's employer mandate?

The Obamacare (aka Affordable Care Act) "employer mandate" generally requires large employers to provide full-time employees (30+ hours per week) with affordable health insurance. Can employers cut their employees' hours below that 30 threshold to avoid their obligations under Obamacare?

This sounds like an easy question. Employers have a right to set their employees' schedules and hours, and the employees have no vested, accrued, forward-looking right to health insurance. So, the answer must be "Yes!" of course the employer can cut their hours... right?

Not so fast. In Marin v. Dave & Buster's the Southern District of New York addressed this issue with a surprising (to me) outcome. The employee claimed that her hours were cut so that D&B could avoid the Obamacare employer mandate. She relied on ERISA Section 510, which provides:
Not official use.
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter, or the Welfare and Pension Plans Disclosure Act. 29 U.S.C. § 1140.
The Court provided very little analysis, but concluded:
The critical element is intent of the employer -- proving that the employer specifically intended to interfere with benefits . . . see also Berube v. Great Atl. & Pac. Tea Co., 348 F. App'x 684, 687 (2d Cir. 2009) ("To succeed on a Section 510 claim, a plaintiff must demonstrate the employer specifically intended to interfere with benefits.") . . . .  "Discharging an employee for the purpose of depriving him of continued participation in a company-provided group health plan is a violation of section 510" . . . . Plaintiff has sufficiently and plausibly alleged this element of intent . . . . 
Accordingly, accepting as I must that these factual allegations will be proved, the complaint states a plausible and legally sufficient claim for relief, including, at this stage, Plaintiff's claim for lost wages and salary incidental to the reinstatement of benefits.
(internal citations omitted). Frankly, I'm still skeptical. This is only one district court opinion so this issue is far from resolved; but employers seeking to utilize this strategy should be aware of the risk.

Tuesday, May 24, 2016

New whitepaper: New Department of Labor Overtime Regulations Limiting Exemptions

No, I never get tired of it. This rule really is important; especially in places like here in central Pennsylvania where we have a lot of people who fall in the gap between the old salary limit and the new. Here's my whitepaper on the new DOL regs: New Department of Labor Overtime Regulations Limiting Exemptions.

Monday, May 23, 2016

Quick take: SCOTUS holds that constructive discharge claim accrues upon notice of resignation

A few minutes ago, the Supreme Court issued its opinion (7-1) in Green v. Brennan.

Federal servants who want to sue their employer for discrimination under Title VII must contact the EEOC "“within 45 days of the date of the matter alleged to be discriminatory.” 29 CFR §1614.105(a)(1)." A constructive discharge claim is one in which the employee technically quits - but only because (s)he faced intolerable discrimination in the workplace. Courts generally treat a constructive discharge like a firing.

When does a claim like that accrue (triggering the 45-day period)? You have a few choices... the date of the last discriminatory act; the effective date of the resignation; or the date of notice of resignation. We have an answer (bragging time: I totally called it!):
[W]e hold that a constructive-discharge claim accrues—and the limitations period begins to run— when the employee gives notice of his resignation.
Off the top of my head, I can't think of any reason why this analysis would not hold for analyzing the running of the statute of limitations in similar discrimination claims against private employers (but candidly admit that I have not had occasion to fully research that issue).

DOL Overtime Final Rule: How do the bonus and commission provisions work?

I did it! I waded through all 508 pages of the new overtime rule! Was it worth it? Meh, probably not. I did come across one helpful section though. It explains in "plain terms" how the new bonus and commission rules work:
Not official use.
In plain terms, each pay period an employer must pay the exempt executive, administrative, or professional employee on a salary basis at least 90 percent of the standard salary level required ($913/week for now) . . . and, if at the end of the quarter the sum of the salary paid plus the nondiscretionary bonuses and incentive payments (including commissions) paid does not equal the standard salary level for 13 weeks, the employer has one pay period to make up for the shortfall (up to 10 percent of the standard salary level). Any such catch-up payment will count only toward the prior quarter's salary amount and not toward the salary amount in the quarter in which it was paid.
Cool. Can I get an example?
For example, assume Employee A is an exempt professional employee who is paid on a weekly basis, and that the standard salary level test is $913 per week. In January, February, and March, Employee A must receive $821.70 per week in salary (90 percent of $913), and the remaining $91.30 in nondiscretionary bonuses and incentive payments (including commissions) must be paid at least quarterly. If at the end of the quarter the employee has not received the equivalent of $91.30 per week in such bonuses, the employer has one additional pay period to pay the employee a lump sum (no greater than 10 percent of the salary level) to raise the employee's earnings for the quarter equal to the standard salary level.
This may help some employees eek across the new salary threshold, but sounds a little complicated for employers to track. Also, it lessens the incentive for employees to attain the bonuses and commissions because they're (effectively) assured that the employer will bump them up to $913/week to avoid losing the exemption.

Thursday, May 19, 2016

SCOTUS: Defendant may prevail and collect attorney's fees without favorable ruling on the merits

This morning, the Supreme Court issued a unanimous opinion (Justice Thomas writing a separate concurrence) in CRST Van Expedited, Inv. v. EEOC.

In Title VII discrimination cases, the prevailing party may collect attorney's fees from the loser in some circumstances. Today's decision describes the established law regarding when defendants are entitled to attorney's fees as:
When a defendant is the prevailing party on a civil rights claim, the Court has held, district courts may award attorney’s fees if the plaintiff ’s “claim was frivolous, unreasonable, or groundless,” or if “the plaintiff continued to litigate after it clearly became so.” Christiansburg Garment Co. v. EEOC, 434 U. S. 412, 422 (1978).
The "central issue" in today's case was whether the defendant was the "prevailing party" if it did not obtain a "favorable ruling on the merits."

This case has a long and convoluted history, which makes up most of the Court's opinion today. The short (and probably oversimplified) version is: The EEOC tried to add a bunch of new plaintiffs to a patter-or-practice harassment claim *after* it had already filed its lawsuit. The EEOC failed to satisfy its pre-suit obligations - specifically, it failed to investigate and attempt to conciliate the individual claims for the women that were added after the EEOC filed the lawsuit. The Court dismissed those claims, and the employer now seeks a ton of attorney's fees.

So, the claims were dismissed but not "on the merits." In other words, there was no determination that these women had not been harassed - their claims were dismissed because the EEOC did not investigate and attempt to conciliate them. The question for the Supreme Court was whether the employer could still be the "prevailing party" and collect attorney's fees even without a ruling on the merits. Bottom line? The Supreme Court held that the employer-defendant was the "prevailing party" and could collect those attorney's fees (assuming the other requirements were met).

The Court refused to address some other issues raised by the EEOC, including whether the claims were actually "frivolous, unreasonable, or groundless" and whether a defendant must obtain a "preclusive judgment" to receive attorney's fees.

Wednesday, May 18, 2016

New Overtime Rule is Here!!!!!

It's here. Last night, the Department of Labor released its eagerly anticipated final rule regarding overtime compensation and the white collar exemptions. It takes effect on December 1, 2016. So, without further adieu, what does it do?
  • Exempt employees must be paid on a salary basis that is at least $913/week ($47,476 annually). This is slightly lower than the proposed rule of about $970 per week; but, still ridiculously higher than the current requirement of $455 per week.
Not official use.
  • The minimum salary will update automatically every three years, starting on January 1, 2020 (which is a pain but still an improvement over the proposed rule, which would have updated every year). It is based on the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). 
  • The total compensation to qualify as a highly compensated employee (HCE) (which requires passing only the minimum duties test - a lower bar than that required for lower-paid employees), is now $134,004. That number is based on the 90th percentile of full-time salaried workers nationally, and will likewise update every three years. The current requirement is $100,000. 
  • Employers may also "count" nondiscretionary bonuses and incentive payments/commissions to satisfy up to 10% of the minimum salary level.
What does it not do? Per this handy fact sheet from DOL:  

"The Final Rule is not changing any of the existing job duty requirements to qualify for exemption."

And the people rejoiced... before going back to complaining about the changes above. DOL posted a number of resources that employers and employees may find helpful here.

This is just my quick take. I plan to have a white paper out soon, after I've had a chance to better digest the entirety of the rule.

Tuesday, May 17, 2016

Book Review: The Boys in the Bunkhouse by Dan Barry

There had to be something better than an institution. What if young men with intellectual disabilities could be (re)integrated into communities? That's the simple and well-intended start to the ultimately horrific real-life events detailed in Dan Barry's The Boys in the Bunkhouse, which comes out today.

In the late 60s, Texas sought to close its state schools for boys with intellectual disabilities. So, the state worked out a win-win-win (or so it seemed) - the boys would go to work for farmers and ranchers. The farmers and ranchers got cheap labor, the boys learned agricultural skills and received wages, room and board, and the state could save money by closing its institutions.

The titular "boys" ended up living in the "bunkhouse" in Atalissa, a small town in Iowa. They spent their days eviscerating turkeys for Henry's Turkey Service. Dan Barry leads readers through a promising start to their journey. They held jobs and took some pride in earning a living. The community embraced them, as they sang at church and danced at the local bars. Somewhere along the way, things went horribly wrong.

After several decades, the bunkhouse had fallen into disrepair, and became a cockroach-infested fire trap. The boys suffered awful emotional and physical abuse. They were often forced to work through injuries, and suffered degrading punishments. And the money... what happened to all the money they earned over their decades of turkey hanging? One "boy" (the boys were now elderly men) ended his career with about $80 to his name.

To Barry's credit, he provides a balanced account that recognizes the complexity of the situation. It would have been easy to paint a picture of dastardly cartoon villains (although the bunkhouse managers come close) and focus solely on the abuse. The truth is that there were a lot of failures along the way, but also a few successes that by no means make up for the abuse.

I often found myself asking questions while I read. Where were the boys' families? Why didn't the townspeople realize things had gotten so bad? Why didn't any of the agencies follow up on the reports of trouble? Why didn't the owners - who the book paints as actually caring for the boys - keep better tabs on things despite their apparent health problems? The missed opportunities to correct the problems are heartbreaking.

I'm posting this on my law blog, so I should mention that Barry does a masterful job of sprinkling in some legal issues without getting bogged down in technicalities. For example, the FLSA includes a minimum wage exemption for individuals with intellectual disabilities (they may be paid a sub-minimum wage "in proportion to the wage and productivity of experienced workers who do not have disabilities"). Barry also mentions some important historic precedent, like Buck v. Bell (1927 Supreme Court decision allowing compulsory sterilization of the intellectually disabled). There's also a chapter near the end (SPOILER ALERT) about the EEOC crushing Henry's Turkey Service in the courtroom (actual EEOC press release here).

Barry does a great job of covering a broad range of topics and timeframes, without it feeling like he's jumping around. It's a smooth ride. For all of the sorrow, Barry also provides some feel-good moments and - without revealing too much - the "boys" do get some redemption in the end.

This book forced me to think through some difficult policy issues. Frankly, humanity has always struggled to compassionately care for individuals with disabilities. The Boys in the Bunkhouse emphasizes the dignity of the individual, regardless of any intellectual disability; and, the disturbing consequences of failing to protect them.

Disclaimer: The publisher provided me with an advance copy of the book; I received no other compensation and the copy was provided with no conditions.