The rule recently promulgated by the National Labor Relations Board requiring employers to post on bulletin boards and on their websites notices of employee rights partially survived a court challenge.  The U.S. District Court in Washington, DC permitted the Board to require the posters, but vacated the portions of the rule creating a new unfair labor practice of failure to post the notice and providing that the statute of limitations for filing unfair labor practice charges is extended if the employer did not properly post the notice.NLRB-Notice-Posting-Decision 03-02-2012.pdf  In the words of Judge Amy Berman Jackson:

The Court holds that the NLRA granted the Board broad rulemaking authority to implement the provisions of the Act, and that the Board did not exceed its statutory authority in promulgating Subpart A of the challenged rule – the notice posting provision. But it also holds that the provision of Subpart B that deems a failure to post to be an unfair labor practice, and the provision that tolls the statute of limitations in unfair labor practice actions against employers who have failed to post, do violate the NLRA and are invalid as a matter of law.

The decision is subject to appeal, of course, and the likelihood is that both sides will appeal certain aspects of the decision.  At this point, it does appear that employers will be required to comply with the basic posting requirement as of April 30, 2012.  It is not clear that there will be any effective penalty for failing to do so, however.

The Office of the General Counsel for the NLRB has recently updated its memo summarizing recent social media decisions.  The memo provides a reference for employers regarding the limitations on disciplining or terminating employees based on comments they make on FaceBook and other social media sites.

The first case summary in the memo is telling.  The Board held that a collections agency violated the National Labor Relations Act when it terminated an employee for an expletive-filled FaceBook rant disparaging the company and its decisions.  The Board reasoned that the termination was unlawful, along with the company’s policy, which prohibited:

“[m]aking disparaging comments about the company through any media, including online blogs, other electronic media or through the media.”

The Board noted that the company’s written policy did not provide an exception for engaging in Section 7 rights (the rights of employees to engage in protected, concerted activity).

Of course, it remains to be seen how courts would regard a similar set of facts. Nonetheless, the memo serves as yet another reminder of the Board’s take:  An employee may have a federally-protected right to badmouth her employer.   Here, a key factor was that several of the employee’s co-worker FaceBook friends joined in the rant.  Hence, the exchange amounted to concerted activity according to the Board.

A new report issued by the Employee Benefit Research Institute shows that Health Savings Accounts (HSA’s) and Health Reimbursement Arrangements (HRA’s) grew in popularity in 2011. Paul Fronstin, “Health Savings Accounts and Health Reimbursement Arrangements: Assets,
Account Balances, and Rollovers, 2006–2011,” EBRI Issue Brief, no. 367, January 2012.  The report shows that the number of accounts increased from 5.4 million to 8.4 million from 2010 to 2011, a 58% jump.  In 2006, there were only 1.3 million accounts.  The average account in 2011 had just over $1400 in it, also an increase from 2010, resulting in the total held in both HRA’s and HSA’s combined increasing from $7.3 Billion to $12.4 Billion in just one year.  The increasing popularity of these accounts, which give individuals more more control over their health care purchasing, may run into a barrier with the Affordable Care Act.  The Act limits the degree to which employers can utilize HRA and HSA benefits, and the Administration has already placed limits on the types of health expenditures for which HSA and HRA funds can be used. The first took effect in 2011, when the Affordable Care Act eliminated over-the-counter drug purchases as qualified expenditures. (In a perverse twist, given the professed goal of encouraging the use of less expensive alternatives, the IRS will allow reimbursement of non-prescription drugs if the patient actually goes to a doctor and has the doctor write a prescription for the non-prescription medicine.)  In any case, with HSA’s and HRA’s skyrocketing in popularity, the Affordable Care Act’s inhospitability to those accounts may well create issues for employers who would like to use those accounts as a significant part of their overall health and wellness program for their workforce.

On January 20th, the Department of Labor’s Occupational Safety and Health Administration (OSHA) finally released its fall 2011 regulatory agenda on its website.  It reveals that OSHA’s top priorities include small business review of an injury and illness prevention program rule, a request for information on revision of OSHA’s permissible chemical exposure limits, and a projected release date for long-awaited silica exposure regulations.  In addition to these ambitious efforts, the agency is considering more stringent record-keeping requirements for covered employers and new infectious disease control requirements of importance to the health care industry.

Small businesses will be significantly impacted by OSHA’s development of a rule which would require employers to implement an Injury and Illness Prevention Program.  Flagged as OSHA’s highest-priority rulemaking under the Obama administration, the rule would require employers to locate and correct workplace hazards.  Such a mandatory program is expected to build upon OSHA’s current Safety and Health Program Management Guidelines (54 FR 3904-3916), which are presently voluntary, and other industry recognition and best-practices initiatives. 

The agenda lists a January 2012 start date for a small business review panel of the proposed program.  The Small Business Regulatory Enforcement Fairness Act requires agencies to conduct a small business review of proposed rulemakings if a proposed rule may have a significant economic impact on small businesses.  Around January 6th, OSHA notified the Small Business Administration and the White House that it intends to convene a panel within 60 days, meaning that review would start in early March.  OSHA is also proceeding with an assessment of the scope of the rulemaking and a cost-benefit and risk analysis.  This proposed rule-making would place substantial financial and operational burdens on small-businesses by mandating them to undertake costly review, planning, implementation, and evaluation of their operational procedures.  

This rulemaking would also provide another basis for OSHA to impose penalties on small businesses, even where no specific OSHA standards are violated.  These rules would newly penalize employers for failing to go beyond OSHA’s standards to identify hazards on the small business worksite and for failing to develop written programs to address those hazards.  From OSHA’s perspective, if an injury occurs, OSHA can either cite the employer for failing to identify the hazardous condition and cover it in a plan, or, if the condition has been identified, for failing to develop an adequate program.

Also on the horizon is OSHA’s effort to re-evaluate and possibly update its permissible exposure limits (PELs) for numerous chemicals, most of which were set in 1971 based upon science dating back to the 1960s.  OSHA has reached out to stakeholders and the public to identify priority hazardous chemicals that create the most occupational risks and has requested information from the National Institute for Occupational Safety and Health regarding a group of chemicals.  OSHA’s latest agenda revealed that it is planning another information request in August 2012 to seek input from the public in order to identify options and alternatives for addressing occupational hazards posed by outdated exposure limits. 

More imminently, OSHA aims for a February release of a long-awaited proposed rule on workplace silica exposure.  Breathing dust containing crystalline silica, such as that generated in cement work, can cause a dangerous lung disease, silicosis, as well as other health conditions.  In 2002, OSHA issued a draft proposed rule on silica exposure, which contemplated drastically lowering the PEL for silica and implementing a slew of requirements including prohibiting “dry-sweeping,” mandating exposure monitoring, establishing certain regulated areas, and requiring medical evaluations and certain approaches to implementing engineering controls and respiratory protections.  All construction and other industry employers potentially affected by silica regulations should closely monitor this rulemaking.

OSHA also plans to conduct a small business review in March 2012 of its rulemaking regarding infectious disease controls.  This rulemaking could affect health care, emergency response, correctional facilities, homeless shelters, drug treatment programs, and other occupational settings where employees are at increased risk for exposure to communicable diseases.  Prior stakeholder meetings discussed whether and to what extent OSHA should require employers to develop written worker infection control plans and how OSHA can improve compliance with current infection control guidelines imposed by agencies like the Centers for Disease Control and Prevention (CDC), the National Institutes of Health (NIH), and others.  Health care employers should monitor this rulemaking because it may subject them to OSHA requirements on infection control, in addition to the existing requirements of other agencies. 

In February 2012, OSHA also hopes to propose recordkeeping rules to “improve” the reporting and tracking of workplace injuries and illnesses.  These rules will require employers to report amputations and inpatient hospitalizations to OSHA much more quickly.  The recordkeeping proposal is also likely to reflect OSHA’s efforts to move to a real-time, electronic approach for injury reporting.

OSHA’s released agenda has been characterized as ambitious by both labor and industry.  OSHA was unable to issue its Fall 2011 regulatory agenda until 2012, which makes it appear unlikely that OSHA will be able to meet all of the substantive goals set forth in its agenda in 2012.  However, the agenda indicates that the OSHA is hoping to take a “full speed ahead” approach on several comprehensive regulatory initiatives that will have substantial effects on businesses, especially small businesses. 

The U.S. Department of Transportation’s ban on the use of hand-held mobile phones by commercial drivers is now effective. There are complex rules for who and what are covered, and very serious penalties on drivers and employers for violations.  Employers in the industry definitely ought to establish written policies banning mobile phone use by CMV drivers.  For further details about the new rules and the actions necessary to comply with them, please review our Firm’s client alert.  The actual text of the Rules can be found here.

 

The Internal Revenue Service had some activity this past week that employers should keep an eye on.  One was a new “Tax Gap” study, which analyzed the 2006 tax year. It found that overall compliance was statistically unchanged from 2001.  Initial compliance was slightly better, but within the statistical margin for error, while payment of late fees and penalties was slightly lower as a percentage of the overall tax liability, again not at a statistically significant level.  This study is important for employers, since it perpetuates the view of the IRS, and then eventually to Congress, that there are lots of funds available for the taking, without changing tax rates.  Moreover, the view of the IRS, as reported in the stud, is that compliance depends in large part upon whether there is “third party” reporting.  In other words, where employers provide W-2’s, compliance is allegedly close to 100%, while payments of cash or payment to independent contractors, with or without 1099 reporting is only a bit above 50%.  The essence of the Report is reflected in the following excerpt:

The tax gap can be divided into three components: non-filing, underreporting and underpayment.

As was the case in 2001, the underreporting of income remained the biggest contributing factor to the tax gap in 2006. Under-reporting across taxpayer categories accounted for an estimated $376 billion of the gross tax gap in 2006, up from $285 billion in 2001. Tax non-filing accounted for $28 billion in 2006, up from $27 billion in 2001. Underpayment of tax increased to $46 billion, up from $33 billion in the previous study.

Overall, compliance is highest where there is third-party information reporting and/or withholding. For example, most wages and salaries are reported by employers to the IRS on Forms W-2 and are subject to withholding. As a result, a net of only 1 percent of wage and salary income was misreported. But amounts subject to little or no information reporting had a 56 percent net misreporting rate in 2006.

The problem for employers is that this mindset results in additional burdens being imposed on them to prevent alleged tax evasion by the people the employers contract with or employ. It also encourages false counting of government revenue in legislation, such as the ridiculously costly 1099 requirement contained in the Affordable Care Act and finally repealed in 2011.

Speaking of the Affordable Care Act, there is a provision in it that requires employers to provide a report to employees, on their W-2’s, of how much the employer pays to provide health care to them.  There is no additional tax, but the thought apparently was that employees did not appreciate how much their insurance coverage cost, so they would keep agitating for more costly coverage.  In turn, that would drive up demand for health care services and increase the cost of health care overall.  The law did not limit the report to the specific cost of health insurance.  That would probably have been too simple and might not have allowed any assumption about reduced demand for health coverage.  Rather, the figure is supposed to include all the employer costs, for example, contributions to Health Reimbursement Arrangements, other supplemental plans and subsidies.  There were issues about whether the reporting was to be on an individual basis, or averaged over the entire employee base.  The IRS was unable to develop rules in time for the initial reporting, so it gave employers an extension.  Earlier this week, it issued additional guidance in Notice 2012-9 for employers on the reporting that will be required on the W-2 forms for 2012, which must be provided by January 31, 2013.  Notably, employers who do not have to provide more that 250 W-2’s are completely exempt for 2012.  There are a number of other limitations on the reporting required of larger employers.  HRA amounts are includable, but Flexible Spending Account expenses generally are not.  Most costs that are taxable to employees will not have to be included.  Most of the interpretations make it easier for employers to do the calculations, although the literal language of the Act could well support broader reporting.  There is nothing to prevent reinterpretations in the future that would make the process much more burdensome for employers. For the time being, however, small employers can breathe easier for another year and large employers should be able to cope without excessive costs.  Of course, with the limitations on reporting, the alleged benefits for the health care system of this requirement are slight.  The cost-benefit analysis still comes out on the far negative side of the ledger.

 

Earlier today the White House announced recess appointments to the Consumer Financial Protection Bureau and the National Labor Relations Board. The appointments were asserted to be recess appointments despite the fact that the Senate has not technically been in recess under the historical understanding of that term.  Indeed, Congress has gone out of its way to avoid being in recess specifically to prevent recess appointments being made. 

While the specific individuals appointed have not been objected to (and, in the case of two of the Board nominees, have not even been considered by any of the Senate Committees since their nominations were only recently announced), the positions must be filled for the agency to operate with full effectiveness.  Rich Cordray, a friend of mine and fellow Michigan State alum, is a very qualified person.  However, the Republicans do not want anyone to serve as Director of the CFPB because they oppose the broad, unchecked power of that agency.  As to the NLRB, without at least three members, the Board cannot take any official action. Since its recent actions have been opposed by most Republicans, they would prefer it be dormant.  It is certain that there will be challenges to this unprecedented assumption of appointment power by President Obama.  How soon the challenges will be resolved remains to be seen.  It is also certain that 2012 will continue to feature more fireworks.

The United States Court of Appeals for the Seventh Circuit recently affirmed a district court’s summary judgment dismissal on behalf of our client, USF Holland.  The disability discrimination case involved a truck driver who sought to switch from a city driver to a line-haul driver position based on his claim that he could not perform the dock work duties of the city driver position. A copy of the Court’s opinion is attached.

There are good nuggets in this case for employers defending claims of disability discrimination, especially trucking industry or similar physically-demanding positions.  Plus, even though the Court applied the facts to pre-ADAAA amendments, the majority of the opinion would stand even in an ADAAA case.  In fact, as the Court notes, the ADAAA now makes it eminently clear that an individual that is not actually disabled, but only regarded as disabled, is not entitled to accommodations from his employer and cannot pursue claims related to accommodations. 

 Significant points from this decision:

  • Having work restrictions alone does not render an individual disabled under the ADA. 
  • An employer does not “regard” an individual as disabled simply because it views the employee as limited in his ability to perform his own job at the Company.  The Court held:  “Powers has not presented any evidence that Holland viewed him as limited in his ability to work for an employer other than Holland. . . .” 
  • The existence of a 100% healed policy does not serve as evidence that the employer regarded the claimant as disabled.

 My colleague, Jennifer Whitney, had the opportunity to argue this case in front of the United States Court of Appeals for the Seventh Circuit and the esteemed bench of the honorable Richard D. Cudahy, Richard A. Posner and Daniel A. Manion.  The bench was active, peppering both lawyers with detailed questions.  The Court issued its opinion nine months after the oral argument.  Judson Stelter also contributed to the appellate brief, and Lisa Jones assisted on the motion for summary judgment.

For me, the case also serves as a reminder of the significant time expended in the judicial process.  This case did not languish on the docket, and both the District Court and Court of Appeals moved the case promptly, in my experience.  Even so, this has case spent about four years and six months in litigation. 

A recent Reason magazine article by Peter Suderman on Medicare’s Whac-a-Mole approach to cost control is both an excellent analysis of why Medicare is in trouble and an explanation of one of the reasons we are having so much trouble in the rest of the health care system.  As employers trying to do the best we can for our employees, we don’t always see that our problems are linked to the way Medicare (along with other public programs) pays and doesn’t pay providers.  The fix for Medicare is going to create pain for non-Medicare consumers, whether as part of the Patient Protection and Affordable Care Act’s provisions or otherwise.  Prior to Medicare’s addition of 19 million consumers with fully subsidized care into the system, health care took up a steady 5% of GDP–now it is more than three times that, and rising. The article is well-worth reading.

While most Americans were out preparing for Christmas last week, the NLRB had some presents of its own.  For employers, the Board postponed its posting rule (which created a new unfair labor practice and potentially extended the statute of limitations) from January 31 to April 30, 2012.  For unions, the Board issued a decision that allows persons who write up employees for discipline and issue it to the employees to engage in pro-union electioneering.  The case, DirecTV U.S. DirecTV Holdings, LLC, was decided by a 2-1 margin.  The majority found that the three-tier review of recommended discipline, conducted by the employer to ensure conformity with company procedures and various laws, meant that the alleged supervisors did not “responsibly recommend” discipline.  This was true even though the percentage of recommendations adjusted during the reviews was very small (less than 10%).  They did not give any weight to the fact that the alleged supervisors actually administered the discipline.  The dissenter found that, based on a number of previous Board decisions, a review of recommendations initiated by alleged supervisors does not mean that they fail to meet the statutory test.  From a practical standpoint, there would be few modern employers who do not subject disciplinary recommendations from anyone in their organization to a  thorough review.  Failure to do so would result in needless mistakes in our complex employment system.

Finally, the Board itself received a “present” of sorts, when President Obama nominated two individuals to the Board. Sharon Block is a Democrat presently serving with the Department of Labor on its Congressional Affairs. She formerly worked for Senator Kennedy on the HELP Committee in the Senate.  Richard Griffin is the General Counsel of the International Union of Operating Engineers, and serves on the Board of the AFL-CIO Lawyers Coordinating Committee.