Health Care Reform Law

President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act. This sweeping reform law includes many provisions that will impact both employers and employees.

• Employer Requirement – Penalties would be assessed on employers with 50 or more employees who fail to offer coverage to employees. The penalty would be assessed if even one employee receives a subsidy to purchase coverage through a health insurance exchange. Employers would also incur penalties if the coverage they offer is considered “unaffordable” to the employee or if the health plan has an actuarial value of less than 60 percent or pays less than 60 percent of covered health care expenses.
  
• Individual Requirement – The new law requires individuals to purchase health insurance coverage or pay a tax penalty beginning in 2014. The penalty, which is phased in, starts at $95 or 0.5% of income per individual in 2014 and increases to $750 or 2% of income in 2016. The penalties for families would be capped at $2,250. Religious and hardship exemptions are available.
  
• Excise Tax on High - Value Health Plans (“Cadillac” tax) – Employers offering health plans that exceed a certain cost (the total employee and employer cost) would be subject to an excise tax on the amount above that value. For individual coverage, the threshold would be $8,500; for family coverage, the threshold would be $23,000. These thresholds would be indexed at Consumer Price Index plus one percentage point. Certain high-risk provisions would have a higher cost threshold.
  
• Insurance Market Reforms – The new law requires insurance plans to provide coverage to any individual who requests insurance. It also includes a prohibition on pre-existing condition restrictions in the individual and small group health care market. Health insurance premiums would be allowed to vary based only on tobacco use, age, family composition, and geographic location. Large employers that purchase coverage through a health care exchange would be eligible for the above insurance protections. Both self-insured and fully-insured plans are required to provide dependent coverage for children up to age 26. Health plans are also prohibited from establishing annual and lifetime dollar limits on coverage.
  
• Wellness Programs – Employers can offer increased incentives or rewards to employees for participation in a wellness program or for meeting certain health status targets beginning in 2014. Rewards or premium reductions up to 30 percent of the cost of coverage are now permissible.
  
• Free Choice Vouchers – Employers offering coverage are required to provide “free choice vouchers” to qualified employees to purchase insurance through the exchanges. To be eligible for a voucher, an employee’s contribution under the employer’s plan would be between 8 percent and 9.8 percent of income, and the employee’s income would be at or below 400 percent of the Federal Poverty Level.
  
• Flexible Spending Accounts (FSAs) – Contributions to health FSAs would be capped at $2,500 beginning in 2011 and over-the-counter medicines would only qualify for reimbursement with a doctor’s prescription.
  
• Medicare Hospital Insurance Tax – Beginning in 2013, an additional Medicare tax of 0.9 percent is imposed on individuals with income in excess of $250,000 for joint filers or $200,000 for single filers.
  

More Changes Pending

While the new health care legislation was signed into law just this week, some additional changes are expected to be made in the coming days as part of what is called budget reconciliation. These changes, which include several of the effective dates and requirements outlined above, are being made as part of the agreement negotiated between the House and Senate to approve the overall health care reform package.

To review a side-by-side chart of the new health care law and the anticipated changes to it contained in the budget reconciliation bill, click HERE.

Adverse Impact and Reverse Discrimination

Ricci v. DeStefano (2009)

In Ricci v. DeStefano, the Supreme Court held that employers may violate Title VII when they engage in race-conscious decision making to address adverse impact--unless they can demonstrate a "strong basis in evidence" that, had they not taken the action, they would have been liable under a disparate impact theory. In this case, the Supreme Court held that the employer did not meet that threshold standard.

Ricci dealt with the fire department of the city of New Haven, Connecticut (the "City"), which used a written test to help decide which firefighters would be eligible for certain promotions. The City had hired a consultant to develop a test to qualify candidates for promotion to lieutenant and captain. The test had been "content-validated" under the EEOC's Uniform Guidelines on Employee Selection Procedures (Code of Federal Regulations, 29 CFR Part 1607 and 41 CFR Part 60-3), but the results showed that the test had a statistically significant adverse impact on African-American firefighters because they scored significantly lower than white firefighters.

The City rejected the test results and began the promotion process anew. The test results were not certified, and those with the highest test results lost their opportunity to be immediately promoted. As a result, 17 white firefighters and one Hispanic firefighter brought suit against the City alleging intentional discrimination (disparate treatment) based on their race. The Supreme Court agree with the white and Hispanic firefighters.

The Court's decision notes that if an employer announces a test as a selection device and administers the test to individuals who have relied upon the announcement of the selection device, then the employer cannot rely upon the statistical disparity alone to justify ignoring the test results--even if the test would cause adverse impact. If a validation study was conducted and the test is content-valid, job-related, and supported by business necessity, the employer must use the results, unless the employer can demonstrate that there are equally effective devices available having less adverse impact.

In it's opinion, the Court wrote:

Applying a "strong-basis-in-evidence" standard, the court concluded that the City did not have a lawful justification.

The Ricci decision makes clear that compnsating for apparent disparate impact discrimination by changing employment decisions to favor minorities may expose employers to disparate treatment liability to nonminorities. Cases challenging employer tests are usually filed as disparate impact claims. Ricci potentially makes it harder for employers to defend taking action to correct a disparate impact and increases the likelihood of both disparate impact and disparate treatment claims arising out of selection procedures.

While the Ricci case has several "takeaways," one of the most significant is that employers should reexamine their employment testing procedures. It is unwise for an employer to announce and use any test that has not been properly validated. While employers should still assess adverse impact, with respect to unvalidated tests, they should do so very cautiously, under the supervision of an employment attorney, and any changes contemplated as a result of the adverse impact should be addressed in conjunction with legal counsel.

LILLY LEDBETTER FAIR PAY ACT (2009)

>

This act amends Title II of the Civil Rights Act of 1964, Title I and Section 503 of the Americans with Disabilities Act of 1990, Sections 501 and 504 of the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1967.

The Ledbetter Act became the first bill signed into law by President Obama. Lilly Ledbetter was paid less than her male coworkers for almost two decades. The act overrules the U.S. Supreme Court's May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. In that case, the Court held that the 180-day time limit for filing a charge under Title VII of the Civil Rights Act starts after the initial unlawful employment action and does not restart upon receipt of each successive check.

The act provides that the charge-filing periods (with the PHRC--0r cross-file with the EEOC-- within 180 days or with the EEOC--or cross-file with the state agency--within 300 days) begin with:

• A discriminatory compensation decision or other practice is adopted.
  
• An individual becomes subject to the decision or practice.
  
• An individual is affected by the application of a decision or practice, including each time waves, benefits, or compensation is paid, resulting in whole or in part from such a decision or other practice.
  

Effectively, the statute of limitations starts each time an employee receives a paycheck based on the decision

The law also expands the plaintiff field and provides that an unlawful employment practice occurs when "an aggrieved person" is affected by a discriminatory compensation decision or practice. Now, non-employees such as family members, including spouses and children of a deceased worker, and potentially others, may become plaintiffs in discrimination suits claiming that pension benefits are reduced because of a discriminatory decision.

Additional information on the laws enforced by the Equal Employment Opportunity Commission (EEOC) can be found at www.eeoc.gov

Full text of Lilly Ledbetter Fair Pay Act

FLSA Overtime Security Advisor

When Congress enacted the FLSA, it created an exemption from the minimum wage and overtime pay requirements for "any employee employed in a bona fide executive, administrative, or professional capacity or in the capacity of outside salesman." Congress did not define these terms but instead granted authority to the Secretary of Labor to do so. Because your definitions of these terms may not match DOL's definitions, you may want to first review the Fact Sheet for a particular exemption to learn more about it or you may want to review the occupational index for help in determining which section to use. Please remember that to qualify for an exemption, an employee must meet specific duties tests and, in most cases, minimum compensation requirements.

FLSA Overtime Security Advisor Elaws page.

DOL Releases Model Employer CHIP Notice

Background

Most states currently provide premium assistance under Medicaid or CHIP programs for health coverage of qualifying residents and their dependents. At present, only 10 states do not offer premium assistance – Connecticut, Delaware, Hawaii, Illinois, Maryland, Michigan, Mississippi, Ohio, South Dakota, and Tennessee.

The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) requires employers that offer group health plans to notify their employees of potential opportunities to receive premium assistance under current state programs. CHIPRA also added new HIPAA special enrollment rights that allow employees and their dependents to enroll in their employers’ group health plans if they lose eligibility for Medicaid or CHIP coverage or become eligible for premium assistance under Medicaid or CHIP. The DOL has now released a Model Employer CHIP Notice that employers may use to satisfy their new notice obligations under CHIPRA.

Model Notice

Employers Required to Provide Notice. An employer must provide the Employer CHIP notice if it maintains a group health plan (i.e., if the employer provides medical care benefits directly or through insurance, reimbursement, or otherwise) in a state that provides premium assistance under Medicaid or under a state children’s health insurance program for the purchase of group health plan coverage. Thus, whether an employer is subject to the notice requirement depends on where the group health plan participants or beneficiaries reside – not the location or principal place of business of the employer, plan, plan administrator, insurer or affiliated service provider.

Employees Entitled to Notice. Regardless of plan enrollment status, each employee who resides in a state that offers premium assistance programs must receive notice of potential opportunities for assistance. If the state in which the employee (or employee’s family) resides does not offer premium assistance programs, no notice is required.

Developing an Affirmative Action Plan

To develop a plan:

• Analyze all major job groups within your workforce to determine the representation of women or minorities within each job group.
  
  
• Determine the availability of minorities or women within a reasonable recruitment area by job group by using the data presented in Factor 1 available in the "Factors and Data" section
  
  • Availability is defined as an estimate of the number of minorities or women in the labor force in a given job group, expressed as a percentage of all qualified persons in the labor force in the job group. The purpose of the availability determination is to establish a benchmark against which the demographic composition of the contractor's incumbent workforce can be compared in order to determine whether barriers to equal employment opportunity may exist within particular job groups."
    
    
  • Previously, the contractors were required to consider each of eight factors when determining availability. However, the OFCCP revised these regulations in November 2000. You can obtain additional information on these regulations from the OFCCP.
    

• Complete a utilization analysis by comparing the representation of minorities and women in each job group within your organization with their representation among those available to be employed in that job group within the reasonable recruitment area. Identify areas of underutilization.
  
  
  
• Calculate the percentages of minorities or women among those promotable, transferable, and trainable within the contractor’s organization as explained in Factor 2 available in the “Factors and Data" section.
  
  
• Establish placement goals that serve to eliminate under-representation in groups discovered through the analysis and measure the effectiveness of efforts directed towards achieving results.
  

Source: http://www.paworkstats.state.pa.us

M.D. Pa.: FMLA’s Administrative Complexities Create Challenges for Employers

The U.S. District Court for the Middle District of Pennsylvania revisited a case on remand from the 3rd U.S. Circuit Court of Appeals and allowed an insurance company employee’s claims of Family and Medical Leave Act (FMLA) interference and retaliation to go forward. The case is noteworthy on more than one point; the 3rd Circuit remanded the case on findings that:

• The employee’s hours worked at home might be counted toward the 1,250 minimum hours needed to be eligible for FMLA leave.
  
  
• Evidence of ongoing “antagonism” between the company and the employee might form the basis of FMLA retaliation.
  
  
• A request for FMLA leave may be viewed as a “protected activity” under Pennsylvania’s Human Relations Act.
  

Nationwide Insurance Co. hired Brenda Erdman in 1980. Erdman was a full-time employee until 1998, when she began to work part time in order to care for her daughter, who was born with Down syndrome. In 2002, Erdman’s request for a four-day workweek schedule was granted. However, Erdman regularly worked extra hours from home, for which her supervisor consistently authorized payment, allowing Erdman to exercise “comp” time based on those hours.

In 2002, Erdman began to report to a new supervisor, and she asked that person whether continued comp time would be allowed. Although there was no specific response, the supervisor made no initial objection to Erdman’s continued use of comp time. However, in September 2002, that supervisor admonished Erdman on a number of performance issues and then told her that she could no longer use extra hours as comp time.

In February 2003, Nationwide informed Erdman that her part-time position was being eliminated and offered her a full-time job, which Erdman accepted. In April 2003, Erdman submitted paperwork asking for FMLA leave for the month of August, which she needed to prepare her daughter for school. Nationwide fired Erdman on May 9, 2003.

Erdman filed a lawsuit against Nationwide, including claims under the FMLA and the Pennsylvania Human Relations Act. In dismissing the case, the lower court initially granted summary judgment in favor of the company, holding that Erdman had not worked the necessary 1,250 hours to qualify for FMLA leave. Erdman appealed.

Last year, the 3rd Circuit addressed an issue of first impression for that court: whether Erdman’s off-site work hours could be counted toward the number of hours needed to qualify for leave under the FMLA. The court decided that the issue was a question of fact because the FMLA counts all work hours that an employer “knows or has reason to believe” are being worked by the employee.

The 3rd Circuit held that a reasonable jury could conclude that Nationwide had constructive notice of the fact that Erdman had worked from home and therefore could find that she had worked the requisite number of hours to qualify for FMLA leave. The case was remanded back to the district court following that determination.

On remand, the district court specifically discussed Erdman’s FMLA retaliation claim and determined that Erdman had provided sufficient evidence of “ongoing antagonism”—including monitoring personal calls, misapplying company policies and providing inconsistent reasons for the termination—to establish a causal link between her FMLA request and her firing. According to the court, those actions could allow a trier of fact to discredit the company’s contention that “incidents of inappropriate workplace behavior” prompted it to terminate Erdman’s employment.

To establish a prima-facie case of retaliation under the Pennsylvania Human Relations Act (PHRA), Erdman had to show that she engaged in a protected activity for which an adverse action was taken. In this case, Erdman claimed that the protected activity was her request for FMLA leave. She pointed out that the PHRA prohibits sex-based discrimination, and one basis of the FMLA as stated by Congress is to “expressly delineate how sexual/gender discrimination can occur in caretaker roles and how the purpose of the FMLA is to minimize employment discrimination based on sex.” Here, the district court predicted that, although Pennsylvania courts have not yet addressed the issue, the Pennsylvania Supreme Court would find that an FMLA request qualifies as a protected activity under the PHRA. The district court therefore denied Nationwide’s motion for summary judgment on the PHRA retaliation claim.

Erdman v. Nationwide Insurance Co., M.D. Pa., No. 1:05-cv-0944 (Jan. 15, 2010).

Professional Pointer: This case is one that employers should review and understand before taking an adverse employment action against any employee who is on FMLA leave or who has requested such leave. While employers are entitled to impose disciplinary actions based on violation of company policies and procedures, such actions cannot be based on an employee’s FMLA leave. Importantly, frustration with an employee’s FMLA-related absences or intermittent-leave schedule does not provide a sufficient legal basis for disciplinary action against that employee.

by Maria Greco Danaher, who is an attorney with the firm of Ogletree Deakins in Pittsburgh. Reprinted from www.shrm.org

This article should not be construed as legal advice. Employers should consult their own labor law attorneys should they have any questions.

Pennsylvania Issues Proposed Guidance On Employer Practice Of Excluding Applicants From Employment Based On Criminal Convictions

The Pennsylvania Human Relations Commission (PHRC) recently proposed Policy Guidance that would apply a rebuttable presumption of disparate impact discrimination when an employer rejects African American and Hispanic applicants from employment pursuant to a policy regarding prior criminal convictions.1 Under the Policy Guidance, when investigating complaints of unlawful disparate impact discrimination by African American and Hispanic complainants, the PHRC will assume that the complainant has established a prima facie case under Section 5 of the Pennsylvania Human Relations Act (PHRA). This permits a claim to proceed administratively without requiring the complainant to provide statistical evidence that the employer's policy has a disparate impact on African Americans or Hispanics. The PHRC has taken this position in light of statistics that demonstrate African Americans and Hispanics are convicted at a rate disproportionately greater than their representation in the population nationally, with an even greater disparity in Pennsylvania.

The proposed Policy Guidance applies only to claims of disparate impact, not disparate treatment. Disparate impact occurs when a policy or practice that does not appear to be discriminatory on its face, nevertheless disproportionately and negatively affects a group of individuals based on a certain characteristic protected by equal employment laws, such as race. Disparate treatment occurs when an employer unlawfully considers a protected characteristic when making an employment decision, for example, when an employer rejects African American applicants who have a conviction record, but does not reject similarly situated Caucasian applicants. The PHRC will continue to use its standard policies and procedures for investigating claims of disparate treatment.

How Can an Employer Defend Itself from Such Claims?

Under the Policy Guidance, an employer can rebut the presumption of disparate impact by using conviction data from a more limited geographical boundary than the entire Commonwealth of Pennsylvania, or by using conviction data for the specific crimes being screened. An employer may also use "applicant pool" data to show that fewer African Americans and Hispanics applied for the position in question compared to other groups. However, the Policy Guidance notes that applicant pool data may have little persuasive effect on the PHRC because such data may exclude otherwise interested applicants who choose not to apply due to the existence of the policy. Further, the Policy Guidance does not prohibit employers from denying employment based on a criminal record where the employer is required or authorized to do so based on existing state or federal laws (e.g., laws regarding child care and nursing home positions). However, an employer cannot rebut the presumption of disparate impact by relying on evidence of diversity within its workplace (known as the "bottom-line defense").

An employer may also defend against claims of disparate impact by presenting evidence that its policy or practice is required as a matter of business necessity. To demonstrate business necessity, an employer must show that the rejected applicant claiming disparate impact has been convicted of a crime as opposed to merely being arrested, and would pose an unacceptable level of risk in the workplace. In evaluating the employer's claim that the applicant would create an unacceptable level of risk, the PHRC will consider the following factors:

• The circumstances, number and seriousness of the applicant's prior offenses;
  
• Whether the applicant's prior conviction substantially relates to his or her suitability for the job, considering the duties and responsibilities of the job and the relationship of those duties and responsibilities to the applicant's prior criminal offenses;
  
• The length of time elapsed since the conviction or release from prison, with a presumption against business necessity if there has been seven or more years (excluding time spent incarcerated) between the applicant's last offense and rejection from the job;
  
• Evidence of the applicant's rehabilitation, including satisfactory completion of parole or probation, maintenance of steady employment, subsequent education or training and letters of recommendation from employers or parole or probation officers who have worked with the applicant; and
  
• The manner in which the employer solicited the applicant's criminal history during the hiring process (i.e., the Commission will look favorably upon an employer that has a hiring process that does not consider criminal history until the later stages of the hiring process, for example, after an interview or a conditional offer of employment has been made).
  

If the employer is able to demonstrate that it rejected the applicant due to business necessity, the applicant may still prevail on a disparate impact claim by showing that there was an alternative, less discriminatory policy or practice that the employer could have adopted that would have satisfied its demonstrated business needs.

The proposed Policy Guidance does not have the force of a statute or administrative regulation, has no binding force or effect, and may not be cited as binding legal authority for any Commission ruling or other adjudication. It is intended only to indicate the manner in which the Commission exercises its administrative discretion. However, employers should expect it to be used against them as yet another tool, even indirectly as persuasive authority, in claims of failure to hire due to race discrimination.

Pennsylvania already has a statute in force, the Pennsylvania Criminal History Record Information Act (PCHRIA), which generally prohibits employers from considering during the hiring process arrests which did not lead to a conviction.2 Under the PCHRIA, employers may consider felony and misdemeanor convictions only if "they relate to the applicant's suitability for employment in the position for which he applied." However, because that statute is not enforced by the Commission, the Commission felt that it was underutilized.

What Should Employers Be Doing Now

The PHRC is tentatively scheduled to consider the final Policy Guidance during its monthly public meeting on February 22, 2010, after which the Policy Guidance may be implemented in its current or slightly modified form. While it might be several months before the Policy Guidance is in force, Pennsylvania employers should consider auditing their hiring practices now to ensure that they would pass muster under the PHRC's stated policy objectives regarding the consideration of criminal convictions in the hiring process.

Jason E. Ruff is an associate in the Philadelphia office of Littler Mendelson.

Practicing Netiquette in Your Email Communication

Email has become a standard form of communicating in the business world, but the protocols of using the Internet to exchange messages are still being formulated in many circles. Forbes.com, an Internet business newsletter, has created a list of do’s and dont’s for those regularly communicating via email that are worthy of consideration. The list includes:

• Assume all email is public
• Get to the point as early as the subject line and/or initial paragraph
• Keep as short as possible
• Break message up into paragraphs and bullets
• Forgo unnecessary graphic attachments
• Mirror your correspondent in style and tone
• When emotions rise, slow down
• Don’t resend unanswered email a second time

Opinions differ on the use of emoticons in business email. Greater detail about each of the above points can be found at the Forbes.com website