5TH ANNUAL LABOR AND EMPLOYMENT LAW BRIEFING · 2014-06-11 · 5TH ANNUAL LABOR AND EMPLOYMENT LAW...
Transcript of 5TH ANNUAL LABOR AND EMPLOYMENT LAW BRIEFING · 2014-06-11 · 5TH ANNUAL LABOR AND EMPLOYMENT LAW...
5TH ANNUAL LABOR AND EMPLOYMENT LAW BRIEFING:
Strategic Guidance for Legal Trends and Developments
THURSDAY, JUNE 12, 2014
The Ritz-Carlton Philadelphia
#LaborLawTrends
5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
Employment & Labor Year In Review ‐and What’s Looming for 2014
Presented by
Scott F Cooper Blank Rome LLP
#LaborLawTrends; @BlankRomeLLP
Scott F. Cooper, Blank Rome LLP
Stephanie Kaplan, Blank Rome LLP
• What you need to know about major developments in the Courts, Congress, local governments and various
i
Introduction
agencies
• Issue Spotting
• Really fast
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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• Last year was a top ten list
• This year
So how are we doing to do this?
• This year . . . .
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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Employment Law Jeopardy
WorldGone Wild?
Wouldn’t Want to be “U”
Show Me the
Money
Whistling a Tune (up)
Super Size My Gov
Family Matters
Potpourri
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Topic 1:World Gone Wild?
How World Events Will Affect Employment in 2014 and Beyond
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• Global and domestic events will affect employment issues in most dramatic ways in decades
Economy and Global EventsOld World or New World?
• Return of “Old World” tensions in Europe
• Energy Revolution in the United States
• Extreme weather
• “New Normal” from recession still not settled
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• Stronger economy pressures wage increases
• Employee demands increase as mobility options
Management Challenges
• Employee demands increase as mobility options increase
• Return to the “Age of Good Managers”
“In bad economic times, you fire people you do not want to.
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In good economic times, you hire people you do not want to. “
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• More diverse workforce than ever
• Per Title VII and EEOC: Religious accommodation
Increasing Global Influence of Religion at Work
required unless undue hardship
• Employers cannot act based on the discriminatory religious preferences of others
• Religious belief must be sincerely held
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• The Equal Employment Opportunity Commission (“EEOC”) recently issued publications addressing workplace rights and
ibiliti ith t t li i d d i
EEOC Guidance on Religious Attire
responsibilities with respect to religious dress and grooming under Title VII of the Civil Rights Act of 1964.
• The EEOC explains that Title VII applies to all religious practices or beliefs that are “sincerely held.” A belief can be sincerely held even if it is recently adopted.
• Generally, an employer must accommodate an employee’s religious practices unless doing so would create an undue
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hardship on the operation of the business.• In addition, an employer cannot act based on the
discriminatory religious preferences of others, including customers, clients, or co‐workers.
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• Telecommuting on the decline?
• Increased remote location workforce
Mixed Signals on Working at Home
• Increased remote location workforce
• More working from home, with less reduction in work and leaves
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Massive World Productivity Slump Coming!
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• Soccer competition starts today & goes a month– 80% of world’s population
will watch
For Companies ‐ Not a Game, Not a Joke
will watch
– 3x Olympic viewership
– In 2010, $121M decrease in US economic output; £7.3B in UK
– This time in US time zones
– 43,600 broadcasts in world’s key nations; ESPN
Ad t $600M d 2 5 ti
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– Ads at $600M and 2.5 times Stanley Cup rates
– 26% of workers will take time off
Don’t Email Me (in French)
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Happy People in France
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Topic 2:Wouldn’t Want to Be “U”
Alarming Employment Law Issues in Higher Education ‐ That Will Spread
• A very tough time to be a University
• Universities again battleground over cutting edge legal
Universities – Legal Ground Zero
• Universities again battleground over cutting edge legal issues:
– Reporting
– Student Athlete Unions
– Affirmative Action
– Law school apps drop again
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Law school apps drop again
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• Colleges faced with tough decisions on reporting rape sexual assault
College Reporting
reporting rape, sexual assault, molestation and suicides
• At center of storm – conflicts of Interest and role of law enforcement
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• E.D. Pa. Court in Harris v. St. Joseph’s University found a student may proceed with claims
Changing Landscape of Universities
found a student may proceed with claims against the University that the school tribunal wrongly found he committed sexual assault
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• Harris v. St. Joseph’s University: St. Joseph’s University could be liable for tribunal findings of sexual assault
Changing Landscape of Universities and Potential Impact on Employers
could be liable for tribunal findings of sexual assault
• NLRB Ruling: Northwestern University football players can unionize
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• NLRB Northwestern Decision:
– On March 26 2014 the NLRB in Chicago issued a decision
Changing Landscape of Universities
– On March 26, 2014, the NLRB in Chicago issued a decision finding that the football players on Northwestern’s team receiving scholarships are “employees” within the meaning of the NLRA and can therefore unionize
– The decision has been appealed
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• Schuette v. Coalition to Defend Affirmative Action:
University at Center of Affirmative Action
Defend Affirmative Action: Permitting voters to decide the applicability of affirmative action policies
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• Supreme Court of the United States held that an amendment to Michigan’s constitution, Proposal 2, that prohibits state universities from considering race as part of its admissions process does not violate the Constitution’s Equal
l h f ’ h h ff l
Schuette v. Coalition to Defend Affirmative Action
Protection Clause. Therefore, state’s voters have the power to stop officials from using race to shape government programs.– The Court therefore cleared the way for voters elsewhere in the nation to opt to put an
end to so‐called “affirmative action” policies — as seven states now do.
• The U.S. Court of Appeals for the Sixth Circuit, had struck down Michigan’s ballot measure, relying primarily upon the concept that it is unconstitutional for voters to change the way public policies are developed to make it more difficult to adopt or keep policies that protect racial minorities from discrimination.
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• According to a concurring opinion by Justice Scalia, and joined by Justice Thomas, the majority opinion left open the power of government to adopt race‐based policies to cure “disparate impact” on racial minorities.
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Topic 3:Show Me the Money
A Wave of New Headaches Over Pay
• Minimum wage fights gaining ground
• Significant traction in the fast food industry
Minimum Wage Hike Fights Growing
• Significant traction in the fast food industry
• Local activism
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• Tech Giants Apple, Google, Intel and Adobe reach $324
Wage Fixing
$million accord to settle a lawsuit alleging the companies conspired to suppress salaries by not recruiting one another’s workers
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• The suit covered over 64,000 employees
• Growing use of analytics to staff retail establishments timed to the hour based on projected customer flow
Micro Staffing
timed to the hour based on projected customer flow
• Computer projected models such as these create new challenges for employers
• The resultant fall out on workers who cannot schedule with predictability is being increasingly scrutinized
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• DOL cracks down on internships that are “really work.”
• In April, NYC Mayor De Blasio signed into law an
Role of the Intern
amendment prohibiting discrimination against paid and unpaid interns
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DOL Guidance on Internships
Interns receiving training
for their own educational
benefit may work at for
profits without compensation
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• On March 26, 2014, the New York City Council unanimously passed the amendment to the New York City Human Rights Law applying the law to paid and unpaid interns.
• The amendment defines intern as an “individual who performs work for an employer
Changing Role of the Intern in NYC
p p yon a temporary basis whose work: provides training or supplements training given in an educational environment such that the employability of the individual performing the work may be enhanced; provides experience for the benefit of the individual performing the work; and is performed under the close supervision of existing staff.”
• This definition of intern tracks somewhat, though not precisely, all of the factors historically used to determine intern status for wage and hour purposes. Nevertheless, the amendment expressly states that interns are protected under the New York City Human Rights Law “without regard to whether the employer pays them a salary or wage.” The legislation comes on the heels of a federal court decision late last year, which dismissed a discrimination claim under the New York City Human Rights Law on
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the basis that the plaintiff intern was not a covered employee under the law.
• It is critical that employers with operations in New York City consider:– Proper classification of workers as employees or unpaid interns under the appropriate analysis for
wage and hour purposes.
– Update policies, practices and training to include interns when it comes to issues addressing discrimination, harassment, retaliation and disability/religious accommodation
• Sandifer v. United States Steel Corporation: Parties to a CBA can negotiate whether time spent changing into protective clothing is compensable
Fair Labor Standards Act
protective clothing is compensable
• Executive Order mandates revisions to overtime regulations under the FLSA
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• Sandifer v. United States Steel Corporation: Section 203(o) of the Fair Labor Standards Act (FLSA) —which allows parties to a collective bargaining agreement to decide for themselves through negotiations whether “time spent in changing clothes … at the beginning or end of each workday” is compensable —applies to articles of protective clothing such as flame‐retardant jackets, pants, hoods, snoods, wristlets, leggings, hardhats, work gloves and steel‐toed boots.
“Th t t t ti i t t hi h § 203( ) id ti b th
Fair Labor Standards Act
• “The statutory compensation requirement to which § 203(o) provides an exception embraces the changing of clothes only when that conduct constitutes ‘an integral and indispensable part of the principle activities for which covered workmen are employed,’” the Court explained. And protective clothing is the only type of clothing that is integral and indispensable to the work of members of many occupations, such as factory workers, butchers, and longshoremen.
• Although the Supreme Court affirmed the decisions below, it did take issue with the de minimis rule —under which courts can declare short periods of time noncompensable under the rationale that the law does not take account of trifles — as applied to the FLSA. “We doubt that the de minimis doctrine can properly be applied to the present case,” the Court noted. “A de minimis doctrine does not fit comfortably within the statute at issue here, which, it can fairly be said, is all about trifles — the relatively insignificant periods of time in which employees wash up and put on various items of clothing needed for their jobs” (emphasis in original). Thus, the Court appears to have opened to door to considering the broader question of whether the long established de minimis rule will continue to apply
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considering the broader question of whether the long‐established de minimis rule will continue to apply to cases brought under the FLSA.
• The Court’s unanimous decision provides clarity for employers with unionized workforces on the issue of compensation for changing time. It also demonstrates the Court’s preference that issues such as compensation for clothes changing time be handled through the give‐and‐take of collective bargaining. On the other hand, the Court’s decision may weaken even further employers’ ability to use the de minimis defense in wage and hour litigation.
• On March 13, 2014, President Obama issued a memorandum directing the Secretary of Labor to propose
Fair Labor Standards Act –Changing Landscape
memorandum directing the Secretary of Labor to propose revisions to the Department of Labor’s existing overtime regulations under the Fair Labor Standards Act (“FLSA”)– The memorandum stated the President’s view that the regulations
regarding the FLSA’s overtime exemptions for executive, administrative, and professional employees (also known as the “white collar” employee exemptions) are “outdated” and “have not kept up with our modern economy”
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kept up with our modern economy.
– Commentators expect that the Secretary of Labor will propose to increase the minimum salary requirement for employees covered by the “white collar” exemptions. The minimum salary, currently $455 per week, was last increased in 2004.
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Equal Pay Issues
• In April, President Obama signed two executive actions to address pay di i i i d h hdiscrimination and strengthen the enforcement of equal pay laws among federal contractors
• The EEOC has prioritized sex discrimination and equal pay issues, pushing employers to consider flexible
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pushing employers to consider flexible schedules and telecommuting
• In April, President Obama signed two executive actions designed to address pay discrimination and strengthen the enforcement of equal pay laws among federal contractors.
Equal Pay Issues
– One Executive Order prohibits federal contractors from retaliating against employees or applicants who choose to discuss their compensation. This Order does not apply to situations where an employee with access to others’ compensation information as part of his/her essential job functions discloses that information to persons without such access. The Department of Labor (“DOL”) is expected to issue proposed regulations implementing the Executive Order.
– The second Presidential Memorandum instructs the Secretary of Labor to propose new regulations requiring federal contractors and subcontractors to b it t DOL “ d t th ti id t th i l
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submit to DOL “summary data on the compensation paid to their employees, including data by sex and race.” The President further instructed the Secretary to consider approaches that would (1) enable DOL to direct its enforcement resources toward entities whose data suggests potential compensation discrepancies , (2) minimize the reporting burden on federal contractors, and (3) encourage voluntary compliance with federal pay laws.
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• United States v. Quality Stores Inc : Severance payments are
Supreme Court Spotlight: Severance Payments
Inc.: Severance payments are taxable wages for purposes of the Federal Insurance Contributions Act (FICA)
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• Issue: whether a particular form of severance payments constituted “wages” under FICA, the federal payroll tax imposed by FICA on both employers and employees to fund the Social Security and Medicare programs
H ldi S C t f th U it d St t i l h ld (8 0 ith 1
United States v. Quality Stores Inc.
• Holding: Supreme Court of the United States unanimously held (8‐0, with 1 recusal) held that given the statutory definition of wages, “and as a matter of plain meaning” severance payments constitute “remuneration for employment.”– This decision overruled the Sixth Circuit which – affirming the judgments of the
bankruptcy court and the district court – had held that the payments were not wages, creating a split among the circuits.
• Rationale: In reaching this conclusion the Supreme Court noted that the payments are made to employees (or former employees), and they are typically based on such factors as the employee’s function and tenure with the
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typically based on such factors as the employee s function and tenure with the employer. In this way, they are “like many other benefits employers offer employees above and beyond salary payments,” such as “health and retirement benefits, stock options, or merit‐based bonuses,” all of which plainly constitute “remuneration for employment.”
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Topic 4:Whistling a Tune (Up)
Whistleblower Laws Continue Expanding Into New Areas
• Lawson v. FMR LLC: – Whistleblower protection applies to
Focus on Whistleblower Issues
employees of a public company's private contractors and subcontractors
• Wiest v. Lynch:– Application of Lawson, finding a non‐publicly
traded employer acted as an agent of publicly traded parent company
• Department of Homeland Security v
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• Department of Homeland Security v. MacLean:– Upcoming S. Ct.: Does whistleblower
protection extend to disclosing protected information
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• Jackie Hosang Lawson and Jonathan M. Zang v. FMR LLC et al. (Supreme Court)– Lawson and Zang were employees of private company under
contract with a public company to provide advisory services.
L ll d h h d d lti t l f d t it
Whistleblower Issues – Changing Dynamics
– Lawson alleged she was harassed and ultimately forced to quit because she provided Fidelity managers with information on inappropriate expense reporting, retention of investment company fees, and methodologies for reporting or accounting for mutual fund expenses and operations. Zang contended he was fired for informing Fidelity management that disclosures that were being prepared for submission to the Securities and Exchange Commission did not accurately reflect the details of some fund managers' compensation.
– First Circuit Held: only people who work for public companies are protected by the Sarbanes Oxley Act, which protects
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p y y , pwhistleblower activity.
– Supreme Court Held: The anti‐retaliation protection that the Sarbanes‐Oxley Act provides to whistleblowers applies to employees of a public company's private contractors and subcontractors.
• Wiest v. Lynch, E.D. Pa.– Issue: First federal ruling to examine the scope of
an agency relationship between a publicly traded company and a non‐publicly traded company
Whistleblower Issues – Changing Dynamics
company and a non publicly traded company necessary to trigger coverage under the whistleblower protection provision of the Sarbanes‐Oxley Act.
– Held: Plaintiff Jeffrey Wiest sufficiently showed that his former employer, the non‐publicly traded Tyco Electronics Corp. acted as an agent of its publicly traded parent company, Tyco Electronics Ltd. Plaintiff also sufficiently stated a claim against the President of the Tyco business
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against the President of the Tyco business.
– Rationale: The Court relied heavily on the U.S. Supreme Court's 2014 ruling in Lawson v. FMR LLC, which held that Section 806 covers "any officer, employee, contractor, subcontractor or agent of" a publicly held company.
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• Department of Homeland Security v. MacLean– Issue: Whether certain statutory protections
Looking Ahead in the Supreme Court: More Whistleblower Issues
codified at 5 U.S.C. § 2302(b)(8)(A), which are inapplicable when an employee makes a disclosure “specifically prohibited by law,” can bar an agency from taking an enforcement action against an employee who intentionally discloses sensitive security information.
– Facts: Air marshal protested a decision to cut down on air marshals aboard flights out of Las Vegas.
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After dissatisfaction with the TSA response the employee went public and told a news reporter about the cut back and lost his job
– Cert granted in May 2014 case will be heard during October 2014 term
Topic 5:Super Size My Gov
Increasing Regulation of “Health Issues” in the Workplace
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• Governments are increasingly regulating health issues
– NYC attempted soda ban paid sick time off
Employee Wellness
NYC attempted soda ban, paid sick time off
– In April, Mayor Nutter signed an Executive Order banning smoking in city parks in Philadelphia
– E‐cigs too
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• Under the Earned Sick Time Act:
– Coverage: New York City employers with 20 or more employees must provide paid sick time in accordance with the law as of April 1, 2014. Beginning on October 1, 2015, the coverage threshold is lowered to employers with 15 or more employees. Employees who workat companies that do not meet the threshold requirements are nevertheless entitled to job protection for up to 40 hours of unpaid sick time each year.
– Earning and Accrual: Employers must provide at least one hour of sick time for every 30 hours worked by the employee, up to a maximumof 40 hours of sick time in a calendar year Sick time begins to accrue as soon as the employee is hired (so long as on or after
NYC: Earned Sick Time Act
maximum of 40 hours of sick time in a calendar year. Sick time begins to accrue as soon as the employee is hired (so long as on or after April 1), however an employee can only start using accrued sick time upon the later of 120 days after the commencement of theemployee’s employment, or 120 days after the April 1 effective date of the new law.
– Use of Sick Time: Employees get to determine how much accrued sick time they need to use, although employers can “set a reasonable minimum increment for the use of sick time not to exceed four hours per day.” Sick time may be used only for the following reasons: (i) the employee’s mental or physical illness, injury or health condition, or need for medical diagnosis, care or treatment of such an illness, injury or health condition; (ii) the employee’s need for preventative medical care; (ii) the care of an employee’s family member who needs medical diagnosis, care or treatment of a mental or physical illness, injury or health condition; (iii) the care of an employee’s family member who needs preventative medical care; (iv) closure of the employee’s place of business by a public official due to a public health emergency; or (v) the employee’s need to care for a child whose school or childcare provider has been closed by a public official due to a public health emergency. Employers may require an employee to provide written confirmation that the employee used sick time in accordance with the new law.
– Carry‐Over of Unused Sick Time: Unused accrued sick time must be carried over to the following calendar year. However, at no time is an employer required to allow the use of more than 40 hours of sick time in any calendar year, and an employer may choose not toallow unused paid sick time to carry over if the employee is paid for such unused paid sick time by the end of the applicable calendar year. In addition, employers are not required under the law to pay for unused sick time upon “termination, resignation, retirement, or other separation from employment ”
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other separation from employment.”
– Notice of Need for Sick Time: Employers are permitted to require reasonable notice of the need to use sick time. When the need is foreseeable, employers may require no more than 7 days’ notice, and, when not foreseeable, employers may require notice to be given as soon as practicable.
– No Retaliation: Employers may not retaliate or threaten to retaliate against an employee for exercising or attempting to exercise rights under the new law.
– Notice to Employees: Employers are required to provide employees at the commencement of their employment with written notice of the employee’s rights to sick time under the new law.
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• The American Psychiatric Association released a new edition of the DSM (“DSM‐5”) making it more likely
Americans with Disabilities Act – New Interpretations
edition of the DSM ( DSM 5 ), making it more likely for employees to claim ADA protection
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• Last summer the American Psychiatric Association released a new edition of Diagnostic and Statistical
Americans with Disabilities Act – New Interpretations
released a new edition of Diagnostic and Statistical Manual of Mental Disorders (“DSM‐5”)
– Includes new diagnoses for mental illnesses such as communication disorder (persistent difficulties in the social uses of verbal and nonverbal communication), new depressive disorders (including recognition of a premenstrual dysphoric disorder) and certain impulse related disorders (such as
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disorder), and certain impulse related disorders (such as hoarding and skin‐picking).
• These changes are likely to make it easier for employees to claim they qualify for ADA protection
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• Changes to Pennsylvania law expands child abuse mandatory reporting requirements to include
Changes in Pennsylvania Law: Reporting Child Abuse
y p g qprofessionals with “licenses”
– This may include attorneys
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Topic 6:Family Matters
Laws Keep Up with More Family at Work Issues
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Legal Watch: Evolution of Gay Marriage*
• In May, a Middle District of Pennsylvania CourtPennsylvania Court nullified Pennsylvania's marriage laws holding they violate the due process and equal protection clauses of the U.S. Constitution,
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following similar decisions in 12 federal courts including recently in Idaho, Arkansas and Oregon
• NJ and NY have both passed laws this year providing further protections for pregnant women
Legislative Watch: Broader Protections for Pregnancy
further protections for pregnant women
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• Pregnancy added to NJLAD and requires employers to offer reasonable accommodations to pregnant employees who request accommodation.
– The new law defines pregnancy as “pregnancy, childbirth, or medical conditions related to pregnancy
NJLAD
p g y p g y, , p g yor childbirth, including recovery from childbirth.” This definition is significant because it is likely broad enough to cover a range of conditions and ailments and specifically includes recovery from childbirth as being within its parameters. The new law prohibits an employer from treating any female employee that the employer knows or should know is pregnant less favorably from other non‐pregnant employees who are similarly situated in their ability or inability to work.
– The law also imposes a requirement that employers offer pregnant employees a reasonable accommodation unless it would cause the employer an undue hardship. The law includes examples of some reasonable accommodations: “bathroom breaks, breaks for increased water intake, periodic rest, assistance with manual labor, job restructuring or modified work schedules, and temporary transfers to less strenuous or hazardous work.”
– The law specifically declares that it “shall not be construed as otherwise increasing or decreasing” any existing statutory rights to paid or unpaid leave in connection with pregnancy
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any existing statutory rights to paid or unpaid leave in connection with pregnancy.
– With the enactment of these new protections for pregnant employees, New Jersey joins a number of other states — including Texas, California, Illinois and Connecticut — that have recently adopted laws addressing pregnancy discrimination.
• A new amendment to the New York City Human Rights Law imposes new obligations on employers with 4or more employees. The Human Rights Law has existing prohibitions against gender, pregnancy and disability discrimination. The amendment expands
ti d d ti bli ti f d l t d
NYC: Pregnancy Notice and Accommodation
notice and accommodation obligations for pregnancy and pregnancy‐related conditions, even if they do not qualify as a “disability” under the law. Therefore, New York City employers:
– Must provide a written notice of rights under the new law at the time of hire to all individuals hired on or after January 30, 2014.
– Must provide a written notice of rights under the new law to all existing employees, regardless of date of hire, on or before May 30, 2014.
– Must reasonably accommodate an employee’s “pregnancy, childbirth, or related medical condition that will allow the employee to perform the essential requisites of the job,” provided that (i) the pregnancy, childbirth or related medical condition “is known or should have been known” by the employer, and (ii) such accommodation does “not cause undue hardship in the conduct of the
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p y pcovered entity’s business.” Potential accommodations could include, depending on the circumstances, assistance with manual tasks, breaks, leave/time off or work station changes. As with disability accommodations, it is the employer’s burden to prove that an accommodation would pose an “undue hardship.”
– May – but are not required to – post written notice of rights under the new law at an accessible location in the workplace.
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Topic 7:Potpourri
A Few Biggies to Close, Which Just Don’t Fit Anywhere Else!
• Socko v. Mid‐Atlantic Systems of CPA, Inc., No. 1223 MDA 2013 (Pa Super May 13 2014): rejected an
Changes in Pennsylvania Law: Trade Secrets*
MDA 2013 (Pa. Super. May 13, 2014): rejected an exception to consideration for non‐compete agreements
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• Employers continued to be faced with issues of whether to monitor
l ’ i l di
Continuing Social Media Issues
employees’ social media
• WSJ reports: 39% of employers dig into job candidates on social sites
• 43% said they had found something that made them deep‐six a candidate
• 19% said they found information that sold them on a candidate such as
63 #LaborLawTrends; @BlankRomeLLP
sold them on a candidate, such as communication skills or a professional image
• Terminations due to social media posting are on the rise
Pulling It All Together With a Bang
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• Big Events – world, economy and social changes – will affect
Conclusion
social changes will affect employment issues
• But another year of incremental changes through cases and regulations
• Higher focus on wages
65 #LaborLawTrends; @BlankRomeLLP
• Higher focus on wages
• More accountability –whistleblowing and government regulation
THANK YOU for attending!
66 #LaborLawTrends; @BlankRomeLLP
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Questions?
67 #LaborLawTrends; @BlankRomeLLP
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Agencies Filling the Vacuum in AbsenceAgencies Filling the Vacuum in Absence of Congressional Action:
EEOC, NLRB, and Executive Orders
Presented by
Mark Blondman Blank Rome LLP
#LaborLawTrends; @BlankRomeLLP
Mark Blondman, Blank Rome LLP
Philip M. Kovnat, Equal Employment Opportunity Commission*
Scott A. Mayer, Aramark
Dennis P. Walsh, National Labor Relations Board **Mr. Kovnat’s and Mr. Walsh’s views are their own and not those of their respective agencies
• Divided government exists when President’s political party does not also control both chambers of Congress
Government Activity and Divided Party Control
party does not also control both chambers of Congress
• Greater levels of policy gridlock noted during periods of divided government
69 #LaborLawTrends; @BlankRomeLLP
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History of Executive OrdersNumber of executive orders for the first five years of a two‐term
president or four years for a single term president. Kennedy and Ford served less than four years.
300
400
500
600
700 Truman
Eisenhower
Kennedy
Johnson
Nixon
Ford
C t
70 #LaborLawTrends; @BlankRomeLLP
0
100
200
300 Carter
Reagan
Bush (GHW)
Clinton
Bush (GW)
Obama
“America does not stand still – and neither will I. So wherever and whenever I can take steps without
Barack Obama: State of the Union Address 2014
wherever and whenever I can take steps without legislation to expand opportunity for more American
families, that’s what I’m going to do.”
71 #LaborLawTrends; @BlankRomeLLP
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• Signed on February 12, 2014
• Increases minimum wage for federal contractors to
Executive Order:Minimum Wage for Contractors
Increases minimum wage for federal contractors to $10.10 per hour
• Increases minimum wage for tipped workers to $4.90 per hour• When wages paid by employer combined with tips do not
amount to minimum wage of $10.10 per hour, employer is required to supplement wages so wages equal the minimum
72 #LaborLawTrends; @BlankRomeLLP
required to supplement wages so wages equal the minimum wage
• Goes into effect January 1, 2015
• Increases to minimum wage every year thereafter
• Amendments to NLRB Election Procedures
• Handbooks Social Media Policies and Private Use of
National Labor Relations Board Activity
• Handbooks, Social Media Policies and Private Use of Employers’ Email Systems
• Changes to Successorship Standard
• Joint Employment Standard
73 #LaborLawTrends; @BlankRomeLLP
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• Employers’ Separation Agreements
Equal Employment Opportunity Commission Activity
• Employers’ Use of Background Checks
• Pregnancy‐Related Impairments
74 #LaborLawTrends; @BlankRomeLLP
• New rules announced by NLRB in February 2014 regarding union election procedures
Amendments to NLRB Election Procedures
regarding union election procedures
• Largely a revival of the NLRB’s proposed rules from June 2011, that were met with much criticism
75 #LaborLawTrends; @BlankRomeLLP
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• Substantial reduction in time from Petition to Election
• Delays most legal challenges until after election has
NLRB Amendments to Union Election Procedures
Delays most legal challenges until after election has taken place
• Rule allows for electronic filing and transmission of election petitions and other documents and allows inclusion of telephone numbers and email addresses in voter lists
76 #LaborLawTrends; @BlankRomeLLP
•Modernizing processes
NLRB’s Aim in New Union Election Procedures
• Enhancing transparency
• Eliminating unnecessary
77 #LaborLawTrends; @BlankRomeLLP
Eliminating unnecessary litigation and delay
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• Potentially higher union success rate
NLRB Amendments to Union Election Procedures: Impact on Employers
• Potential increase to litigation on back end
78 #LaborLawTrends; @BlankRomeLLP
• February 2014 – EEOC brought a suit against CVS in Illinois federal court, alleging that the pharmacy
EEOC Activity: Targeting Employers’ Separation Agreements – CVS and CollegeAmerica
, g g p yimproperly conditioned certain employees’ severance pay on an “overly broad, misleading and unenforceable” separation agreement
• May 2014: EEOC brings suit against CollegeAmerica for placing conditions on severance pay and other
79 #LaborLawTrends; @BlankRomeLLP
placing conditions on severance pay and other separation benefits that effectively interfere with employee’s rights to file discrimination charges or cooperate with the EEOC
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• NLRB is taking a hard look at companies’ social media policies and Employee Handbook provisions
NLRB: Handbooks and Social Media Policies
p p y p
• Reminder that NLRA applies to all employers –unionized or not
• Provisions drawing scrutiny from the NLRB:– Policies forbidding workers from discussing compensation (NLRB GC)
Social media policies (Costco)
80 #LaborLawTrends; @BlankRomeLLP
– Social media policies (Costco)
– Confidentiality policies applying to personnel information (Flex‐Frac)
– Policies regarding solicitation on company property (Target)
• Register Guard (2007) – Employees do not have a statutory right to use employer e‐mail systems
NLRB: Private Use of Employers’ Email Systems:Register Guard and Purple Communications
y g p y yfor non‐business purposes, including union organizing activity protected under Section 7 of the NLRA
• Purple Communications – NLRB invited interested parties to file briefs on whether that position should be reexamined and what impact i ld h l B i f b fil d
81 #LaborLawTrends; @BlankRomeLLP
it would have on employers. Briefs are to be filed by June 16, 2014
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Will employee access to corporate email systems for Section 7 protected purposes facilitate
NLRB: Overturning Register Guard?
for Section 7 protected purposes facilitate unionizing campaigns?
82 #LaborLawTrends; @BlankRomeLLP
EEOC v. Kaplan Higher Education Corp. (6th Cir. 2014)
– EEOC challenged Kaplan’s use of background checks in hiring
EEOC: Employers’ Use of Background Checks
– EEOC challenged Kaplan s use of background checks in hiring process as causing disparate impact on African American applicants
– EEOC argued that even though credit check process was “racially blind” – it caused a disparate impact
83 #LaborLawTrends; @BlankRomeLLP
– Sixth Circuit Court of Appeals affirmed district court ruling rejecting the EEOC’s challenge
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• Existing standard: successor employer free to establish the initial terms and conditions of employment under
NLRB: Successorship Standard
p ywhich it may hire employees of the predecessor without first bargaining with the incumbent union. – But: where it is clear that the new employer plans to retain all of the employees in a bargaining unit, a successor employer must first negotiate with the union that represents the seller’s employees before establishing terms and conditions of
l
84 #LaborLawTrends; @BlankRomeLLP
employment.
• February 2014: NLRB General Counsel, Richard Griffin, issues Memo calling for a change in successorshipstandard.
• Who is a “perfectly clear successor”?
• Obligation to hire all of the incumbent employees?
NLRB: Possible Changes To Successorship Standard
• Obligation to hire all of the incumbent employees?
• Obligation to abide by terms of a collective bargaining agreement?
• Impact of terms especially toxic pension funds?
85 #LaborLawTrends; @BlankRomeLLP
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• EEOC is developing guidance on pregnancy and pregnancy‐related impairments
EEOC Activity: Taking A Closer Look at Pregnancy‐Related Impairments
p g y p
• While pregnancy itself is not a disability, some pregnant women develop impairments (ex: gestational diabetes) that have the potential of being covered disabilities
86 #LaborLawTrends; @BlankRomeLLP
• Courts are now dealing with the question of whether the Pregnancy Discrimination Act and the ADA require employers to offer reasonable accommodation during pregnancy
• Applied by NLRB to determine whether employers that are legally separate should be considered joint employers under th NLRA
NLRB: Joint Employer Standard
the NLRA
• For two separate business entities to be held to be joint employers, they both must exercise a significant degree of control over the same employee’s essential terms and conditions of employment
87 #LaborLawTrends; @BlankRomeLLP
• To establish joint employer status there must be a showing that the employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction
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Where joint employment status is found
NLRB: Effect of Finding Joint Employment Status
Where joint employment status is found, the employees are entitled to the protections
provided under the National Labor Relations Act with respect to both employers
88 #LaborLawTrends; @BlankRomeLLP
• May 12, 2014 – NLRB invited parties to submit briefs in Browning –Ferris Industries on several issues including:
NLRB’s Invitation to File Briefs on Joint Employer Standard
Browning Ferris Industries on several issues including:
– Whether the Board should adhere to its existing joint‐employer standard or adopt a new standard; and
– If the Board adopts a new standard, what should the standard be, and what factors should be examined
89 #LaborLawTrends; @BlankRomeLLP
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• It is anticipated that the NLRB is likely to expand the standard for qualifying as a joint employer
NLRB: Expanding the Joint Employer Standard?
standard for qualifying as a joint employer
• An expanded joint employer standard could potentially have a detrimental effect on employers
90 #LaborLawTrends; @BlankRomeLLP
Questions?
91 #LaborLawTrends; @BlankRomeLLP
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Don’t Hate Tolerate:Don t Hate, Tolerate:Sexual Orientation, Bullying, and Tolerance
in the Workplace
Presented by
Brooke T Iley Blank Rome LLP
#LaborLawTrends; @BlankRomeLLP
Brooke T. Iley, Blank Rome LLP
Stephen E. Tisman, Blank Rome LLP
Julie E. Reid, Blank Rome LLP
Lewis I. Gantman, The Honickman Group
Gray area between inappropriate bullying and unlawful di i i ti d h t
Focusing on the Evolving Workplace
discrimination and harassment
New and changing state/local laws
Updating policies and practices to reduce potential liability
Added exposure resulting from social media
93 #LaborLawTrends; @BlankRomeLLP
Promote tolerance to improve morale and productivity
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The Slippery Slope of Workplace Intolerance
BULLYINGBULLYING
DISCRIMINATION
HARASSMENT
94 #LaborLawTrends; @BlankRomeLLP
VIOLENCE
Extra, Extra, Read All About It!!
95 #LaborLawTrends; @BlankRomeLLP
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Hot TopicBullying
96 #LaborLawTrends; @BlankRomeLLP
• Examples of conduct that causes problems
– Losing temper; shouting
Bullying:Identifying it in the Workplace
– Losing temper; shouting
– Pointing in someone’s face
– Picking on colleagues
– Inappropriate jokes
– Cursing and insults
– Demeaning comments
97 #LaborLawTrends; @BlankRomeLLP
Demeaning comments
Can occur face‐to‐face, or indirectly by e‐mail,texting, or social media
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• If it’s not illegal, why emphasize a respectful, bully‐free workplace?
Bullying: Approaching the “Danger Zone”
workplace?
– Right thing to do
– Fewer complaints
– Increases productivity
– Better work environment
– Reduce opportunity for conflict/violence
98 #LaborLawTrends; @BlankRomeLLP
Reduce opportunity for conflict/violence
• Identify when bullying becomes harassment
WATCH FOR: Physical or verbal conduct that could quickly escalate into full‐blown harassment
99 #LaborLawTrends; @BlankRomeLLP
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• Amendment to California’s Fair Employment and Housing Act (“FEHA”) broadens definition of harassment
Laws that Cast a Wider Net
Housing Act ( FEHA ) broadens definition of harassment– No longer requires that plaintiff prove harassment is motivated by sexual interest or desire
– Encompasses bullying behavior in zone of “unlawful behavior”
• Application Taylor v. Nabors Drilling USA
100 #LaborLawTrends; @BlankRomeLLP
• Plaintiff (heterosexual male) called homophobic epithets while working on oil rig. No proof of sexual motivation or desire.
• Jury awards $160,000 on hostile environment claim
• The Healthy Workplace Bill
State Anti‐Bullying Laws
– Introduced in 26 states; active bills in 15
– Offers avenue for redress for “health‐harming cruelty” at work
– Defines “abusive work
101 #LaborLawTrends; @BlankRomeLLP
environment” with high standard for misconduct
– Plaintiff can sue bully in his/her individual capacity
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• Traditional workplace does not always end at the company doors
The “New Water Cooler”Responsibility in the Extended Workplace
– Work‐related travel and events– After‐hours– The virtual workplace
• Misconduct directed at employees by customers or vendors
102 #LaborLawTrends; @BlankRomeLLP
How does social media complicate matters?
Identify , avoid, and prevent inappropriate conduct
Monitor changing local and state laws
Train your workforce
Update / develop policies on bullying
IF YOU CAN SEE IT HANDLE IT
103 #LaborLawTrends; @BlankRomeLLP
IF YOU CAN SEE IT, HANDLE IT
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Hot TopicWorkplace Violence
104 #LaborLawTrends; @BlankRomeLLP
• Any violence, physical assault, or significant threatening behavior in the work setting
• Know how to identify warning signs and indicators
Workplace Violence
Know how to identify warning signs and indicators
• Need for standards of conduct and reporting policies
• Using background checks – EEOC guidance
– State and local laws
• Remember: Harboring a workplace bully could lead to li bilit if th b h i b h i i l t
105 #LaborLawTrends; @BlankRomeLLP
liability if the behavior becomes harassing or violent
Does your company have a standard of conduct?
Would your employees know what to do?
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An example of how unresolved bullying leads to violence
Are you Headed Toward the Bottom of the Slippery Slope?
p y g
– Ronaldo Negrin was a TSA screener in Miami, Florida.
– During a “body scan training exercise,” it was revealed that Negrin had a small penis.
– For months afterward, Negrin was teased and ridiculed by his colleagues. Co‐workers laughed off his pleas for compassion.
di li i d h “ ld k h
106 #LaborLawTrends; @BlankRomeLLP
– According to a police report, Negrin stated he “could not take the jokes anymore and lost [his] mind.” He violently assaulted an employee.
Recognize the potential for workplace violence
Identify and defuse behavior that could lead to violence
Determine whether your reporting policy is adequate
Update / develop policies on violence
C t ti i l ti itt
107 #LaborLawTrends; @BlankRomeLLP
Create anti‐violence action committee
Create and train on emergency response protocols
TAKE ALL COMPLAINTS SERIOUSLY
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Hot TopicSexual Orientation/Gender Identity
108 #LaborLawTrends; @BlankRomeLLP
Achieving a workplace where employees are treated fairly and are judged on their work
Prevalence of Harassment and Discrimination
Any Form of Discrimination
Harassment Lost a Job
All LGB Respondents 27.1% 27.1% 7.1%
Out of Work LGBRespondents
37.7% 38.2% 9.2%
Not out of work LGBRespondents
10.4% 10.4% 0%
BUT: Those who express transgender identity or gender non‐conformity experience disproportionately higher rates of
109 #LaborLawTrends; @BlankRomeLLP
conformity experience disproportionately higher rates of discrimination:
78% report at least one form of harassment/mistreatment47% report discrimination in hiring/firing/job retention
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• Limited protections under federal law– Sexual orientation and gender identity are not protected classes under
Title VII
Limited Protections for Sexual Orientation and Gender Identity
Title VII
– Attempts to bootstrap protection through same‐sex harassment and gender‐nonconformity claims are limited
• State Laws– Pennsylvania – No state law
– New Jersey – Protects both
– New York – Only protects sexual orientation
110 #LaborLawTrends; @BlankRomeLLP
New York Only protects sexual orientation
• Local Laws– Philadelphia – protects both
– New York City – protects both
• Federal Employee Nondiscrimination Act (“ENDA”)
– Would prohibit private employers with more than 15
Changing Legal Landscape Likely to Provide Greater Protections
– Would prohibit private employers with more than 15 employees from discriminating on the basis of both sexual orientation and gender identity
– Passed the Senate on November 7, 2013 (64‐32)
– Currently stalled in House
• Possible new state protections
111 #LaborLawTrends; @BlankRomeLLP
• Marriage Equality
– Implications for employees with same‐sex spouses
– FMLA issues
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Update harassment/discrimination policies to include sexual orientation and gender identity
Promote tolerance and train your workforce
Identify and defuse bullying behavior targeted at sexual orientation and gender identity
112 #LaborLawTrends; @BlankRomeLLP
orientation and gender identity
Monitor and prepare for new legal protections
STAY AHEAD OF THE GAME
• Continued focus on religious accommodation– New EEOC Guidelines on Religious Garb and Grooming
Other Emerging Issues in the Evolving Workplace
e OC Gu de es o e g ous Ga b a d G oo g
• Pregnancy Accommodation Laws – NYC (Jan. 2014)
– NJ Pregnant Worker’s Fairness Act (Jan. 30, 2014)
f b f l / l
113 #LaborLawTrends; @BlankRomeLLP
• Leaves of Absence for Domestic Violence / Sexual Assault Issues– NJ Security and Financial Empowerment Act (Oct. 2013)
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Evaluate your workplace
Identify gaps in corporate policies
Determine whether to take a stricter approach to bullying
Consider if your policies and practices will be in line with the changing legal landscape
114 #LaborLawTrends; @BlankRomeLLP
the changing legal landscape
“BUY IN” TO TOLERANCE IN THE WORKPLACE
Questions?
115 #LaborLawTrends; @BlankRomeLLP
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Drinks Drugs and Drags:Drinks, Drugs and Drags:Alcohol, Marijuana, and E‐cigarette
Emerging Issues
Presented by
Frederick G “Gus” Sandstrom Blank Rome LLP
#LaborLawTrends; @BlankRomeLLP
Frederick G. Gus Sandstrom, Blank Rome LLP
Anthony A. Mingione, Blank Rome LLP
Richard W. Diaz, Blank Rome LLP
Sean V. Burke, University of Pennsylvania
118 #LaborLawTrends; @BlankRomeLLP
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Up in Smoke? Recent Developments in E‐cigarette and
Marijuana Laws
119 #LaborLawTrends; @BlankRomeLLP
120 #LaborLawTrends; @BlankRomeLLP
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• Battery‐powered devices that are designed to mimic cigarettes by vaporizing nicotine‐laced liquid
E‐cigarettes: What are they?
g y p g qthat is inhaled by the user
121 #LaborLawTrends; @BlankRomeLLP
• FDA proposed regulations: no sale to minors; no vending machine sales; no free samples; required health
E‐cigarettes: Current and Proposed Laws
vending machine sales; no free samples; required health warnings
• State laws restricting e‐cig use:
– in 100% smoke‐free venues: 3
i th 10
122 #LaborLawTrends; @BlankRomeLLP
– in other venues: 10
• Local laws restricting e‐cig use in 100% smoke‐free venues: 172
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• Workplace bans are on the rise
– Wal‐Mart Target Starbucks Home Depot GE
E‐cigarettes: In the Workplace
– Wal‐Mart, Target, Starbucks, Home Depot, GE
– Most lump e‐cigarettes in with tobacco rather than drug policies
123 #LaborLawTrends; @BlankRomeLLP
• Considerations– Benefits: no smoke breaks; higher productivity;
E‐cigarettes: In the Workplace
Benefits: no smoke breaks; higher productivity; employee morale; may help reduce employee tobacco use overall
– Costs: secondhand “smoke” concerns; limited research; potentially just as harmful as tobacco to co‐workers, customers and others that come in contact with the vapors makes co workers and
124 #LaborLawTrends; @BlankRomeLLP
contact with the vapors; makes co‐workers and customers uncomfortable
– Ensure consistency with other policies (cigarettes and other nicotine products)
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Marijuana
125 #LaborLawTrends; @BlankRomeLLP
126 #LaborLawTrends; @BlankRomeLLP
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Marijuana: State Laws
127 #LaborLawTrends; @BlankRomeLLP
Marijuana: Proposed Bills/Initiatives
128 #LaborLawTrends; @BlankRomeLLP
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• State laws authorize individuals who suffer
Marijuana: State Laws
individuals who suffer from a “debilitating medical condition” to use marijuana upon receipt of a “registry identification card”
129 #LaborLawTrends; @BlankRomeLLP
• Majority of state laws do not prohibit employment discrimination based on marijuana use nor require employers to allow marijuana use in their policies
• AZ and DE law include a specific employment‐based anti‐discrimination
Marijuana: State Law Exceptions
employment based anti discrimination section that protects medical marijuana cardholders
• Employers are prohibited from taking adverse actions based on an employee’s or applicant’s status as a cardholder, or a qualifying patient’s positive drug test, unless the qualifying patient used, possessed or was
130 #LaborLawTrends; @BlankRomeLLP
q y g p , pimpaired by marijuana while at work or during work hours
– Laws do not define “impaired”
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• Private employers have the right to set their own policies (AZ/DE exception)
Marijuana: Employer Policies
policies (AZ/DE exception)
– Employers can enforce their drug policies regardless of state or local laws permitting the medical and/or recreational use of marijuana
– Outstanding issues:
• Can employees terminated pursuant to an employers’ l b l l
131 #LaborLawTrends; @BlankRomeLLP
policy banning marijuana use claim unemployment compensation?
• ADA implications?
Drowning in Gin? Alcohol and the Workplace
132 #LaborLawTrends; @BlankRomeLLP
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• Common Pitfalls– Holiday party
Alcohol
y p y
• Best practices to reduce exposure
– Work happy hours
• On duty or off duty?
– Applicability of policies
–Worker’s compensation
Liabilit for improper/illegal cond ct
133 #LaborLawTrends; @BlankRomeLLP
– Liability for improper/illegal conduct
• Recovery – ADA implications during and following
How to Handle Employee Drug and Alcohol Use
134 #LaborLawTrends; @BlankRomeLLP
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• Have a clear drug and alcohol policy – Lay out expectations:
Drug and Alcohol Policy
• Covered substances;
– Test for each substance?
– Prescription, OTC drugs?
• Impairment;
• Work and non‐work use;
• Possession;
135 #LaborLawTrends; @BlankRomeLLP
• Testing; and
• Discipline.
– Ensure policies are applied consistently and in a nondiscriminatory manner
• Pre‐employment
Testing
• Post‐employment
– Reasonable suspicion
– Safety sensitive position
– Accidents
– Screening for prescription drugs
136 #LaborLawTrends; @BlankRomeLLP
Screening for prescription drugs
– Re‐testing
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• Issues to consider:
Discipline
• Flexibility vs. no tolerance
• Rehab/assistance programs
• Refusal to test
137 #LaborLawTrends; @BlankRomeLLP
Refusal to test
138 #LaborLawTrends; @BlankRomeLLP
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Questions?
139 #LaborLawTrends; @BlankRomeLLP
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Trade Secrets Protection in the Age of Cybersecurity
Presented by
Anthony B. Haller, Blank Rome LLP
#LaborLawTrends; @BlankRomeLLP
Anthony B. Haller, Blank Rome LLP
Larry R. “Buzz” Wood, Jr., Blank Rome LLP
Joseph G. Poluka, Blank Rome LLP
Michael Levy, U.S. Attorney’s Office ‐ Eastern District of PA
Jack Clark, Siemens
The Growing Threat of Cybercrime
141 #LaborLawTrends; @BlankRomeLLP
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142 #LaborLawTrends; @BlankRomeLLP
• Importance of Trade Secrets
Discussion Topics
• The Legal Landscape
• Report on Recent Trends in Cybercrime
143 #LaborLawTrends; @BlankRomeLLP
• Practical Advice for the Protection of Trade Secrets in the 21st Century
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• Protect investment in research and development marketing efforts and
Why are trade secrets important?
development, marketing efforts, and strategic planning
• Protect information that may not beprotected by patents, trademarks, or copyrights
144 #LaborLawTrends; @BlankRomeLLP
copyrights
• Provide powerful litigation tools and strategies
• State Trade Secret Laws
– All states have adopted some form of the
Laws Related to Trade Secrets
– All states have adopted some form of the model Uniform Trade Secrets Act except NY, NC, and MA
• Federal Trade Secret Laws
– Federal Computer Fraud and Abuse Act
145 #LaborLawTrends; @BlankRomeLLP
p
– Economic Espionage Act
– Proposed Federal Trade Secret Legislation
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© Blank Rome LLP 2014. All Rights Reserved
• Information, including a formula, drawing, pattern, compilation including a customer list, program, device,
State Trade Secret Laws:What is a Trade Secret?
compilation including a customer list, program, device, method, technique, or process that:
1. Derives independent economic value, actual or potential, from not being generally known to the public; and
146 #LaborLawTrends; @BlankRomeLLP
2. Is the subject of reasonable efforts to maintain secrecy.
• Prohibits unauthorized access to a protected computer
Computer Fraud and Abuse Act
• Prohibits transmission of a virus to a protected computer
• Trafficking in passwords or other access credentials
• Criminal & Civil Enforcement
147 #LaborLawTrends; @BlankRomeLLP
• Criminal & Civil Enforcement
• Penalties include up to 20 yearsin prison
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Criminalizes misappropriation of trade secrets with intent to benefit foreign power or injure owner of the trade secret
Economic Espionage Act
• Expanded scope after Aleynikov decision and passage of Theft of Trade Secrets Clarification Act
• Bipartisan “Defend Trade Secrets Act” introduced in April 2014 would provide private right of action
148 #LaborLawTrends; @BlankRomeLLP
Recent Trends in Cybercrime
• FBI’s Internet Crime Complaint Center (IC3) established in 2000
– Complaints have grown from under 20,000 per year to approximately 300,000 per year
149 #LaborLawTrends; @BlankRomeLLP
• $100 billion lost to cybercrime each year (McAfee)
• Types of schemes to steal information
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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Top Ten States Ranked by the Total Number of Complaints Received by IC3 in 2013
150 #LaborLawTrends; @BlankRomeLLP
Establishing Reasonable Protections of Confidential Information
• Company must take “reasonable measures” to protect trade secrets
151 #LaborLawTrends; @BlankRomeLLP
• What are best practices in the 21st Century?
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Preserve evidence – do not power down
S lf H l ?
Steps to Take Upon Discovery of a Breach Comprehensive Incident Response Plans
• Self‐Help?
• Decide whether to engage outside counsel to run internal investigation
• Decide whether to contact law enforcement
• Disclosing the breach (affected individuals, insurer, SEC)
152 #LaborLawTrends; @BlankRomeLLP
Disclosing the breach (affected individuals, insurer, SEC)
• Manage media
• Efforts that companies should take to ensure that they are not receivingmisappropriated information:
Avoiding Allegations of Misappropriation
are not receiving misappropriated information:
‐ Hiring Protocols – ask about the individual’s post‐employment obligations, including non‐disclosure agreements
‐ Clear advice to candidates for employment who are presently working for a competitor about their obligations
153 #LaborLawTrends; @BlankRomeLLP
‐ Signed acknowledgements that employee has not and will not download/misappropriate confidential information from prior employer
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Questions?
154 #LaborLawTrends; @BlankRomeLLP
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
Benefits in Focus:A Closer Look at Recent Developments
Presented by
Barry L Klein Blank Rome LLP
#LaborLawTrends; @BlankRomeLLP
Barry L. Klein, Blank Rome LLP
Nancy Oliphant Ryan, Blank Rome LLP
Amy R. Webb, RHU, CBC, Saratoga Benefit Services, LLC
• Affordable Care Act: Select Issues for Employer
Recent Developments
• The Downfall of the Defense of Marriage Act (DOMA): Implications for Employee Benefit Plans
157 #LaborLawTrends; @BlankRomeLLP
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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• Government sponsored programs
All Individuals Must Have “Minimum Essential Coverage”
• Employer‐sponsored plan
• Plans in the individual market
158 #LaborLawTrends; @BlankRomeLLP
• Grandfathered health plan
• Coverage under a “grandfathered health plan”
• Ambulatory patient services
• Emergency services
• Hospitalization
The 10 “Essential Health Benefits”
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
159 #LaborLawTrends; @BlankRomeLLP
y
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Plans in effect on March 23, 2010
Grandfathered Status
• No subject to all Health Care Reform mandates
• Events trigger loss of grandfathered status
• Special rules for collectively bargained plans
160 #LaborLawTrends; @BlankRomeLLP
Special rules for collectively bargained plans
• Not practical to maintain grandfathered status indefinitely
• No discrimination in favor of higher‐wage employees
Select PPACA “Market Reform”Mandates
• No lifetime benefit limits (G & NG)g g p y
in insured plans (NG)
• Extension of child coverage to age 26 (G & NG)
( )
• Waiting periods not to exceed 90 days (G & NG)
161 #LaborLawTrends; @BlankRomeLLP
• G=Grandfathered
• NG=Non‐Grandfathered
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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• Availability of more meaningful wellness
Select PPACA Mandates
• Mandatory internal and external appeals process g
program incentives (G & NG)
• Summary of Benefits and Coverage (G & NG)
pp p(NG)
• No Pre‐existing condition exclusions age 19 and under (current), all ages (2014) (G & NG)
162 #LaborLawTrends; @BlankRomeLLP
( ) ( )
• Restricted to Eliminated Annual Dollar Limits
Select PPACA Mandates
• 100% Coverage of Preventive Care Services
(G & NG)
• Health FSA Cap (G & NG)
(NG)
• No OTC medication reimbursement w/o prescription (G & NG)
163 #LaborLawTrends; @BlankRomeLLP
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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• Reporting plan value on Form W‐2 (G & NG)
Select PPACA Mandates
• Automatic enrollment (G & NG)( )
• Limited coverage revocations (G & NG)
( )
• Increased Medicare Taxes for High Earners (1.45% to 2.35%)
164 #LaborLawTrends; @BlankRomeLLP
Employer Excise Tax –“Shared Responsibility Payment”“Applicable Large Employer” (50 or More Full Time Employees or FT Equivalents in Previous CY)?
Offers Opportunity to Enroll in Group Health Plan for All Employees and Dependents?
“Affordable” and Provides “Minimum
Value”?
NoN
Y Y
N
YN
165 #LaborLawTrends; @BlankRomeLLP
Employer Subject to TaxExempt
Has At Least 1 FTE Been Certified to Employer as Enrolling in Coverage Purchased out of Exchange and Received “Premium Tax Credit” or “Cost Sharing Reduction”?
Y
N
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
Determining Amount of Excise Tax
Sponsor GHP For All FTEs and Dependents?p
Lesser of
YN
166 #LaborLawTrends; @BlankRomeLLP
(#FTEs ‐ 30)x $2000
• (# Certified FTEs) x $3000• (#FTEs ‐ 30) x $2000
Eligibility For Premium Tax Credit
Is Household Income 100% ‐ 400% of Federal Poverty Line For Applicable Family?
Y
N
If Married, Does Individual File a Joint Return?
Does Individual, Spouse or Dependent Purchase Coverage on a State Exchange?
Does Individual Pay Premium For h ?
Y
Y
YN
N
N
167 #LaborLawTrends; @BlankRomeLLP
The Coverage?
Is Individual Eligible Under Governmental Plan, Grandfathered
Plan or Affordable Employer Plan That Provides Minimum Value?
YFor Employer Plan, Employee Pmt Less
Than 9.5% Household Income (W‐2) and Employee’s Cost
Share Less Than 60%?
Y
N
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
Eligibility For Premium Tax Credit
Is Individual Covered By AnEmployer Plan?
Is Individual A Dependent onAnother Tax Return?
Y
N
N
Y
168 #LaborLawTrends; @BlankRomeLLP
Not EligibleEligible
• Applicable Large Employer
– Any Employer with 50 or more full‐time or full‐time equivalent
Key Terms
– Any Employer with 50 or more full‐time or full‐time equivalent employees during the preceding calendar year
• Full‐Time Employee (FTE)
– An employee who works, on average, at least 30 hours per week or 130 hours per month
– Use Common Law Test
169 #LaborLawTrends; @BlankRomeLLP
• Full‐Time Equivalent Employees
– Aggregate number of hours of service for all employees that are not full‐time/120
Page 81
5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
Employer Options
2014 Individual & Small Group2017 + Large EmployerPublic
E change
Employer‐Selected Benefit Plans (insured or self funded) withCost‐sharing
TraditionalModel
PrivateMulti-ProviderExchange for
Group
Exchange
Employee Health Care
170 #LaborLawTrends; @BlankRomeLLP
Defined ContributionPlan Offerings Decided by Exchange
Defined ContributionPlan Offerings Decided by Employer
Private Single ProviderExchange for
Group
Skinny Plans
Employer Considerations
Should we pay the tax?
Lots of Low Wage Employees
Can we minimize penaltiesthrough new workforce strategies?
Should our employees
be at risk for the tax?
Private exchanges?
How can we
171 #LaborLawTrends; @BlankRomeLLP
Underwriting Requires Minimum Number of Employees or All Employees
communicate and engage
with our employees?
Page 82
5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• June 26, 2013
The Supreme Court’s Windsor Decision
• The Court invalidated § 3 of the Defense of Marriage Act
– Section 3 excluded a same‐sex married partner from the definition of “spouse” for federal law purposes
• The ruling essentially means that the federal
172 #LaborLawTrends; @BlankRomeLLP
• The ruling essentially means that the federal government must recognize same‐sex marriages in the same way that it recognizes heterosexual marriages
• Married same‐sex couples are to be treated as married for all federal tax purposes
The IRS Reacts:Revenue Ruling 2013‐17
for all federal tax purposes
• Look to State of Celebration:
– If the marriage is validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage, then the marriage is recognized for federal tax purposes
173 #LaborLawTrends; @BlankRomeLLP
g g p p
– State of residence is irrelevant for this purpose
Page 83
5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Terminology for federal tax purposes:– The words “spouse,” “husband,” “wife” and “husband and
More from Revenue Ruling 2013‐17
p , ,wife” all include individuals married to a person of the same sex
– The word “marriage” includes a marriage between two people of the same sex lawfully married in a state or country whose laws authorize same‐sex marriage
174 #LaborLawTrends; @BlankRomeLLP
– These terms do not apply to registered Domestic Partnerships or Civil Unions, even if the state law creating or recognizing those relationships extend all benefits of “marriage” to them
• DOL Technical Release No. 2013‐04
– The words “spouse ” “husband ” “wife” and “husband and
The DOL Follows Suit – Sort of
– The words spouse, husband, wife and husband and wife” all include individuals married to a person of the same sex
– The word “marriage” includes a marriage between two people of the same sex lawfully married in a state or country whose laws authorize same‐sex marriage
175 #LaborLawTrends; @BlankRomeLLP
• Covers everything under ERISA – but FMLA says “spouse” is defined by state law
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Must follow “State of Celebration” rule even if the Employer operates in a state that does not recognize
Implications forQualified Retirement Plans
Employer operates in a state that does not recognize same‐sex marriage
• Must treat a same‐sex spouse as a spouse for all purposes including:
– QJSA , QPSA and all other annuity provisions
– Beneficiary designations
176 #LaborLawTrends; @BlankRomeLLP
Beneficiary designations
– Required Minimum Distribution rules
– QDROs
– Key employee attribution and similar attribution rules
• Timing for Operational Compliance:– Plan operations must reflect the outcome of Windsor as of
Implications for Qualified Retirement Plans –IRS Notice 2014‐19
p6/26/13
– However, a plan that before 9/16/13 recognized a same‐sex spouse of a participant only if the participant was domiciled in a state that recognized same‐sex marriage is okay
– Plans may implement amendments to reflect Windsor for some or all purposes as of a date before 6/26/13
177 #LaborLawTrends; @BlankRomeLLP
• So long as doing so complies with all applicable qualification requirements (e.g., nondiscrimination rules).
• Must specify the effective date and the purposes for which the rules are applied
Page 85
5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Documentary Compliance:– If a plan is inconsistent with Windsor, then the plan must be
Implications for Qualified Retirement Plans –IRS Notice 2014‐19
p , p usamended
– No amendment is required if the plan’s terms are consistent with Windsor. However, the IRS suggests a “clarifying amendment” to note when operations changed to reflect Windsor
178 #LaborLawTrends; @BlankRomeLLP
– If an Employer wants to apply Windsor rules to a period before 6/26/13, the plan must be amended to specify the date as of which and purposes for which the rules are applied
• Plan amendments must be adopted by the latest of:
– Last day of plan year in which the change is effective
Implications for Qualified Retirement Plans –Timing for Documentary Compliance
– Last day of plan year in which the change is effective
– Due date for the Employer’s tax return for the tax year in which the change is effective
– December 31, 2014
179 #LaborLawTrends; @BlankRomeLLP
• Safe Harbor plans may be amended mid‐year for this purpose. (IRS Notice 2014‐37)
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
© Blank Rome LLP 2014. All Rights Reserved
• Federal tax: same‐sex spousal benefits treated the same as opposite‐sex spousal benefits
Tax Implications forHealth and Welfare Benefits
as opposite sex spousal benefits
– No more imputed income for health benefits
– Cafeteria plan change‐in‐status rules
– COBRA eligibility
180 #LaborLawTrends; @BlankRomeLLP
g y
• State tax: follows state law.– States that recognize same‐sex marriage treat benefits to all
Tax Implications forHealth and Welfare Benefits
g gmarriages the same. PA is the latest to join that group.
– Some states that prohibit same‐sex marriage still provide the same tax benefits to same‐sex spouses as opposite‐sex spouses because they follow federal tax law for most purposes.
181 #LaborLawTrends; @BlankRomeLLP
– Some states that otherwise follow federal tax law, have adopted special rules providing that same‐sex spouses will not be treated as spouses under their tax laws.
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5th Annual Labor and Employment Law Briefing:Strategic Guidance for Legal Trends and Developments
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• Insured plans: state insurance law generally dictates who must be covered
Coverage Implications forHealth and Welfare Benefits
who must be covered
– Generally, in states that recognize same‐sex marriage, same‐sex spouses must be eligible for spousal benefits
• Self‐funded plans: not generally governed by state insurance law
182 #LaborLawTrends; @BlankRomeLLP
– Must such plans provided benefits to same‐sex spouses if provided to opposite‐sex spouses?
• District Court in New York says: not when the plan specifically excludes them
Questions?
183 #LaborLawTrends; @BlankRomeLLP
Page 88