Labor and Employment Law — 2009 Year in Review
Kelley Drye Client Advisory
As we bid farewell to 2009, we recognize that the year brought a great deal of change in the Labor/Employment area. Congress passed a number of new statutes, agencies were busy with new regulations and the Supreme Court issued several significant employment decisions. At the same time, as the deepening recession resulted in even more layoffs, a record number of charges were filed at agencies like the EEOC. The avalanche of FLSA lawsuits continued and shows no sign of letting up.
This year promises to be no less challenging. Some form of health care reform is likely to pass. Federal and state agencies are also increasing compliance efforts, with a particular focus on wage-hour and worker “mis-classification” issues. Labor bills that failed to pass in 2009, like the Employee Free Choice Act and mandates for paid sick leave, could resurface in 2010, once health care reform is off the table.
Employers need to be cognizant of the most recent employment law developments in order to help prevent lawsuits and position themselves for the challenges of the year ahead.
Below is a brief overview of changes and trends in employment law that we are watching.
- Lily Ledbetter Fair Pay Act: The signing of the Lily Ledbetter Fair Pay Act in February 2009 was one of President Barack Obama’s first official acts as a new President. The Ledbetter Act, which is described in more detail here, reversed a Supreme Court decision, and loosened the time limits for workers to file claims of pay discrimination - essentially tolling the statute of limitations for such claims. Ledbetter has already been applied to claims outside the salary discrimination area. Employers should review their document retention policies to ensure that documents concerning compensation and other decisions are retained for longer periods as appropriate, as employers may need to defend compensation decisions made many years in the past.
- ADA Amendments Act: The Americans with Disabilities Act (ADA) Amendments Act of 2008 (“ADAAA”) took effect on January 1, 2009, making a number of significant changes to the statute. The ADAAA broadens the scope of the ADA’s definition of a disability and expands the definition of “regarded as” disabled. The ADAAA and the publicity associated with its passage has already spurred an increase in disability discrimination claims.
- FMLA Expansions: The U.S. Department of Labor issued final regulations, effective January 16, 2009, implementing the expanded Family and Medical Leave Act. Notably, the new FMLA regulations clarify and increase employer and employee notice obligations, requiring employers to provide employees with a “general notice” about the FMLA, an eligibility notice, a rights and responsibilities notice, and a designation notice.
- New I-9: The U.S. Citizenship and Immigration Services (USCIS) once again revised the I-9 Form. As of February 2, 2009, employers were required to use the new I-9 Form for all new hires and re-verifications. The new I-9 Form limits the list of acceptable documents and reiterates that expired documents are not acceptable forms of identification.
- American Recovery and Reinvestment Act of 2009: The American Recovery and Reinvestment Act (“ARRA”) took effect February 17, 2009. The ARRA provides for reductions in premiums and additional opportunities to elect continued group health coverage under COBRA to employees who became eligible for COBRA coverage as a result of an involuntary termination of employment between September 1, 2008 and February 28, 2010 (as extended by subsequent legislation). There are proposals on the floor in Congress extending the number of months of COBRA premium assistance available to those currently eligible and making the premium available to employees laid off through June 30, 2010.
- Genetic Information Non-Discrimination Act: The Genetic Information Non-Discrimination Act (“GINA”) took effect November 21, 2009. GINA prohibits discrimination against employees based on genetic information. GINA makes it unlawful for an employer to refuse to hire, discharge, classify or “otherwise adversely affect the status” of an employee or applicant based on any “genetic information” concerning the employee or the employee’s “family member.”
- New SEC Rules on Executive Compensation: The SEC issued new rules for the reporting of executive compensation by public companies. These rules take effect February 28, 2010.
- New York Labor Law §195: Recent revisions to New York Labor Law §195 expand employers’ notice requirements to newly hired employees. Effective October 26, 2009, New York employers are required to obtain written acknowledgement from newly hired employees that they have received written notice of their: (1) rate of pay; (2) regular payday; and (3) for non-exempt employees, overtime rate.
- New Jersey Requires Paid Family Leave: New Jersey’s Family Temporary Leave Law took effect January 1, 2009. This law requires all employers subject to the New Jersey Unemployment Compensation Law to enroll in either a state or private plan that offers paid leave to employees on leave to care for a newborn, newly adopted child, or certain family member with a serious health condition. The law entitles employees to six weeks paid leave, during which the employee will receive two-thirds of his or her average weekly wage up to $524 per week. Benefits became available starting July 1, 2009.
- Illinois Amended State Equal Pay Act: Effective August 14, 2009, Illinois amended its Equal Pay Act to extend the time employees have to file a complaint, which increases the burden on employers to maintain and preserve wage records and to adopt the Ledbetter paycheck standard. Under the amended Act, employees have one year from the date of the underpayment to file a complaint with the Illinois Department of Labor.
SUPREME COURT DECISIONS
- An employee participating in an internal investigation is protected from retaliation: In Crawford v. Metropolitan Government of Nashville and Davidson County, the Supreme Court unanimously held that an employee who participates in an internal investigation has engaged in protected activity and is protected by the retaliation provisions of Title VII.
- A collective bargaining agreement may require an employee to litigate discrimination claims through the union grievance arbitration process: In 14 Penn Plaza v. Pyett, the Supreme Court held that an arbitration clause in a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. This decision clarifies the narrow scope of the Court’s earlier decisions in Alexander v. Gardner-Denver Co. and resolves a long-standing controversy about the arbitration of employment discrimination claims of union-represented employees.
- Employees alleging age discrimination under the ADEA must prove that age was the “but for” cause of the adverse employment action: In Gross v. FBL Financial Services, the Supreme Court ruled 5-4 that a plaintiff asserting a claim under the Age Discrimination in Employment Act must prove age discrimination was the “but-for” cause of an adverse employment action.
- Race-based action is impermissible under Title VII unless the employer can demonstrate a “strong basis in evidence” that it would have been liable under the disparate impact statute had it not taken the action: In Ricci v. DeStefano, the Supreme Court ruled 5-4 that the City of New Haven unlawfully discriminated because of race when it refused to certify the results of a promotional test on which white and Hispanic firefighters outperformed African-American firefighters.
- Pregnancy leave taken before the passage of the 1978 Pregnancy Discrimination Act does not have to be counted when calculating employee pension benefits: In AT&T Corp v. Hulteen, the Supreme Court ruled 7-2 that AT&T did not have to credit maternity leave taken in 1968, prior to the enactment of the Pregnancy Discrimination Act, when calculating pension benefits. In the majority opinion, Justice Souter wrote, “[a]lthough adopting a service credit rule unfavorable to those out on pregnancy leave would violate Title VII today, a seniority system does not necessarily violate the statute when it gives current effect to such rules that operated before the PDA.”
ON THE HORIZONThere are a number of significant pieces of legislation on the horizon, which we will continue to monitor, such as:
- The Employee Free Choice Act – Although unions failed to get this passed in 2009, they continue to lobby hard for passage in 2010.
- Protecting Older Workers Against Discrimination Act – This will reverse the Gross v. FBL decision and require an ADEA plaintiff to show only that age was a “motivating factor” and not the main factor in an employment decision.
- Arbitration Fairness Act – This will restrict the use of mandatory arbitration in resolving employment disputes.
- The Employment Non-Discrimination Act – This will prohibit nonreligious employers with over 15 employees from discriminating against employees on the basis of sexual orientation or gender identity.
- The Paycheck Fairness Act – This will amend the Equal Pay Act provisions of the Fair Labor Standards Act (“FLSA”) to prohibit employers from paying lower wages for jobs dominated by women and minorities than equivalent jobs dominated by men.
- The Healthy Families Act and the Family Leave Insurance Act – This bill, mandating paid family leave, is one of President Obama’s biggest agenda items for 2010.
- The “RESPECT” Act – This bill would allow supervisors to unionize.
There are also several cases pending before the Supreme Court this term in the labor/employment areas. Among the issues the high court will address are:
- Whether Title VII’s statute of limitations in disparate impact cases is measured from announcement or use of unlawful practice. (Lewis v. City of Chicago, U.S. No.08-974)
- Whether Title VII creates a cause of action for third-party retaliation for persons who did not themselves engage in protect activity. (Thompson v. North American Stainless, LP No. 09-291)
OTHER TRENDSWith the large number of employees laid off in 2009, we expect employment litigation to increase in 2010. Employers should be scrupulous in maintaining data and documents used in the layoff process in order to illustrate their legitimate non-discriminatory and non-retaliatory reasons for selecting specific employees. We also expect to see ever more FLSA class actions, so employers should be vigilant about complying with all wage and hour requirements under federal and state law, including proper classification of workers and proper payment of overtime. FLSA class actions have become a lucrative cottage industry for plaintiff-side employment attorneys.
Other “hot button” issues include:
- Use/misuse of “mobile” devices by non-exempt workers;
- Privacy of electronic data; and
- Employer and employee use of social media and networking sites, such as Twitter, Facebook, LinkedIn.