• About Us

    Welcome to the Labor and Employment Law Update where attorneys from SmithAmundsen blog about management side labor and employment issues. We cover topics including addressing harassment and discrimination in the workplace, developing labor law, navigating through ADA(AA), FMLA and workers’ compensation issues, avoiding wage and hour landmines, key legislative, case law and regulatory changes and much more!
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    The Labor and Employment Law Update is provided for information purposes only, and should not be construed as legal advice on any subject matter, nor should it be construed as creating an attorney client relationship. Do not send confidential information or facts about a legal matter. The opinions of this blog's contributors do not reflect the opinions of SmithAmundsen LLC as a whole. See the disclaimer page for further information.

The ABCs of Independent Contractors and Unemployment Insurance

Contributed by Noah A. Frank

Good news: Unlike employees, an independent contractor (“IC”) is not eligible for unemployment benefits when the work relationship terminates.

Bad news: When a former IC files an unemployment claim (and they sometimes do) or the government disagrees with the IC status (either in approving a claim or performing an audit), whether the IC will be denied benefits often depends on whether the IC:

A. Is free from control and direction; and

B. Performs services outside the usual course of business for the enterprise for which such service was performed; and

C. Is engaged in an independently established trade, occupation, profession, or business.

This “ABC Test” exists in most states, though the elements/sub-elements may vary slightly. Typically, the party seeking IC status has the burden to prove that all three of these elements are satisfied.  Neither an IC agreement nor designation controls.

Worse news:  Administrative agencies (e.g., unemployment agencies, workers’ compensation/industrial commissions, and departments of labor and tax/revenue) may share information with each other regarding independent contractor misclassification.  This may increase the risk of an audit by one agency triggering an audit by others.

Recent Example:

An appellate court applied the ABC Test to IC window washers under a three year unpaid contributions audit, and found them to be employees, affirming an administrative finding of $64,051 in unpaid unemployment contributions plus $35,773 in unpaid interest. L.A. McMahon Bldg. Maint., Inc. v. Dept. Employment Sec., 2015 IL App (1st) 133227 (May 7, 2015).

The court found unpersuasive that the workers: were not exclusive or required to wear a uniform; used their own vehicles and supplies, for which they were not reimbursed; received no training or direction in their work process; advertised their own services; and hired their own helpers and employees.

Instead, the court found that the window washers were employees because their services were central to the business which could not exist without them (e.g., Element B). The company’s “place of business” extended to each location where the workers represented the company’s interests (customer’s homes), especially since the workers carried the company’s price card and invoiced under the company’s name.

Doing it Right:

Properly engaging independent contractors extends beyond an actual contract between the parties (helpful – if you ensure that the IC upholds its end of the bargain).  When using ICs to perform work central to your business (e.g., workers to pick-and-pack in your warehouse, or provide regular services to customers):

  1. Be sure that you have either engaged a separate company providing contract/temporary labor; or
  2. That all three elements of the ABC Test (or relevant statutory test) are fully and completely satisfied; or
  3. Ensure that the IC is a bona fide corporation or limited liability company.

Outside counsel should audit the relationship now to ensure that it is actually “independent” before a worker files a claim with any federal, state, or local administrative agency (triggering anti-retaliation protections!) and/or an agency initiates its own audit.

Another Appellate Court Decision Creates New Challenges for Employers Trying to Limit Big Workers’ Compensation Awards

Contributed by Les Johnson

The Illinois Appellate Court’s latest decision could make defending cases where an injured worker has permanent restrictions more challenging and costly. It increases the importance of co-opting with a trusted workers’ compensation and employment attorney earlier in the overall process.

However, the same decision exemplifies why disputing certain cases can still yield good results if done properly. Over the years and at an increasing rate, we hear insured’s and claims professionals wondering aloud if there is a point to litigating or denying and compromising questionable workers’ compensation cases. This case provides hope.

In Lenhart v The Illinois Workers Compensation Commission (USF Holland), 2015 I App (3d) 130743 WC, the third district sent a case back to the commission for a determination on wage differential, even though the claimant did not make an election to come within that provision of the WCA at the time of arbitration, instead asking for permanent and total disability. A company typically faces different litigation strategy (and exposure) decisions when a claimant seeks a wage differential award.  Vocational rehabilitation and job placement to mitigate a potentially long-lasting and expensive wage loss award come into play.  Before Lenhart, defense counsel could arguably rely upon the claimant’s need to “elect” to come within the wage differential scenario. Essentially, this decision eliminates the informal “safe harbor” in which defense could focus on permanent total disability issues (for example: odd-lot, job search, employability) and not automatically have to seriously consider the costly prospect of vocational rehabilitation and job placement (while paying maintenance). Before Lenhart, the court previously held that if a claimant fails to present evidence regarding his entitlement to a wage differential award, then he implicitly waives his right to such an award.

While this presents new challenges, the same decision illustrates that there is still a positive cost-benefit to disputing a claim when you have obtained evidence that the claimant is exaggerating the subjective complaints to the treating physician.  The claimant had convinced his treating medical providers that he was extremely disabled and sought permanent total disability at the IWCC.  Surveillance showed otherwise and the commission found that much of the medical opinion testimony that the claimant relied on to meet his burden was based on his own subjective reporting of his capabilities to his medical providers. The commission found the opinion testimony of a physician to be “unreliable,” and found it significant that after the claimant’s treating psychiatrist viewed some of the surveillance video, he opined that the claimant appeared to be more mobile in the video than he was in his office. This doctor also noted that the claimant engaged in social interaction more than he reported being able to do.

What Does This Mean?

  • Assess the wage differential early, particularly when making employment separation decisions and coordinate your workers’ compensation defense with the firm’s labor and employment counsel.
  • Avoid surprises leaving you ill-prepared to defend on a last minute shift to wage differential claim/exposure by assessing it before the day of trial.  It’s possible to obtain a needed trial continuance if you have prior written confirmation from the claimant attorney that wage differential is not at issue.
  • Get good surveillance, provide it to the treating physician and remember that such contact typically requires permission from the claimant or attorney to avoid the risk of barred/excluded evidence/opinions. Continue to seek out anecdotal information about an injured worker’s home activities from co-workers, etc… that might reveal any exaggeration of subjective complaints.
  • Anticipate job performance issues, obtain legal advice from workers’ compensation and employment counsel, aggressively confront exposure with either voluntary job separation or providing restricted duty, early vocational placement activity.
  • After confirming exposure early on with job separation, consider avoiding costs of long term temporary /maintenance benefits and vocational expert costs with settlement or trial.

Remember, it is a constant battle requiring a pre-emptive approach combining workers’ compensation and employment law focuses, but it’s possible to achieve the most cost-efficient and risk-limiting results through proper steps.

Navigating the H-4 EAD Process: Be Ready to File

Contributed by Jacqueline Lentini

Moments after President Obama announced that he would be expediting H-4 work Visa Stampauthorizations last November, I received a call from a client inquiring about how to start the application process for his wife.  I can understand their desire to jump on the opportunity. The green card acquisition process can drag on for years, testing the patience of many foreign nationals and frustrating their spouses who want to work, but who cannot by law. A dependent spouse’s inability to work can strain the couple’s economic viability and their marriage and prompt them to consider moving to another country.

The prospect of H-4 work authorization has lifted the hopes of many of those couples.  The Department of Homeland Security (DHS) estimated that 179,600 spouses would apply for an Employment Authorization Document (EAD) in first year of availability with 55,000 requests each year afterward.  In February DHS announced that they would begin considering applications for employment authorization for certain H-4 dependent spouses on May 26, 2015. Eligible individuals include H-4 dependent spouses of H-1B nonimmigrants who either:

  1. Are the principal beneficiaries of an approved Form I-140 Immigrant Petition for Alien Worker; or
  2. Were granted H-1B status under sections 106(a) and (b) of the American Competitiveness in the Twenty-first Century Act of 2000. The Act permits H-1B nonimmigrants seeking lawful permanent residence to work and remain in the U.S. beyond the six year limit on H-1B status.

However, on Thursday April 23, three employees from Southern California Edison sued the DHS to stop the work authorization provision, claiming that they had been displaced by H-1B workers and would face increasing competition if H-4 spouses were authorized to work.  Save Jobs USA has also filed a preliminary injunction against the H-4 work authorization rule.

Given that the U.S. has not issued H-4 EADs before, we are in unchartered territory.  It is hard to say how these cases and the H-4 EAD process will go.  Rather than lose hope though, those interested in an H-4 EAD should be ready to file in case the May 26, 2015 date holds or for whenever DHS is able to accept applications.

Taking action to prepare to file will feel better than just waiting and will allow you to file as soon as the window for applications opens.  Here’s what you will need to file an H-4 application for employment authorization:

  1. Form I-765, plus filing fee of $380.
  2. Two passport style photographs.
  3. Proof of your marital relationship.  If your marriage certificate is in a language other than English, you’ll need an English translation for it.
  4. A valid passport.
  5. A copy of your visa stamp.  Make sure that you have a visa stamp and that you have a copy of it to submit with your application.
  6. Your H-4 approval notice if you have one.
  7. Evidence of your I-94 stamp.  The I-94 stamp is the stamp you received in your passport on the day you entered the United States.
  8. A copy of any prior EAD cards that you had.  If you were a student and obtained an EAD card then, you’ll need to submit a copy of that card with your application.

Note: the above list is not meant to be an exhaustive list of documents to include nor is it meant as legal advice for any one specific individual.

California Law Update: New Family Rights Act Regulations Starting July 1, 2015

Contributed by Heather BaileyCalifornia

As California employers are well aware, the California Family Rights Act (CFRA) gives employees certain leave rights for medical conditions, similar to the federal Family & Medical Leave Act (FMLA).  However, starting July 1, 2015, the regulations are updated to align more with FMLA in certain areas and to clarify areas where CFRA is different than FMLA.

CFRA alignment includes:

  • “Covered employers” now contains successors in interest and joint employers are defined similar to FMLA;
  • Spouse is defined to include same-sex spouses as FMLA;
  • When calculating the 12 months of eligibility cut off, the break in service is now seven years or more like FMLA;
  • Employer has five business days to respond to the need for CFRA leave;
  • Key employees are defined as those in the highest 10% of the workforce; and
  • Employers have the ability to deny reinstatement if an employee fraudulently uses CFRA leave, doesn’t cooperate with the medical certification process or fails to cooperate with employer questions re: leave.

It is important to highlight some of the key variances that remain between the two very alike, but different medical leave laws:

  • If your workforce has 10% or more employees who speak another language as their primary one, you must translate the CFRA notice in that language.
  • New CFRA Certification of Health Care provided should be used.
  • Although under FMLA, an HR professional or administrator may contact the doctor to authenticate or clarify a medical certification, under CFRA, they may only contact the doctor to authenticate.
  • Second opinions? More difficult under CFRA.  You need a “good faith, objective reason” to request one, and don’t bother asking for one unless it’s for the employee’s serious health condition.
  • During the certification process, employers may not ask for additional information such as the underlining diagnosis of the need for leave or symptoms.
  • Medical continuation must be provided for employee’s entire unpaid pregnancy disability leave (4 months) including the subsequent CFRA leave (12 weeks).
  • While an employee is on Paid Family Leave, employer cannot require they exhaust/use any accrued paid leave during this time even if it’s covered under the CFRA.

Practice Tips:

  • Use the new CFRA medical certification form;
  • Update your handbooks and related policies with the new changes;
  • Update the poster with the revised CFRA poster;
  • Survey your existing workforce to determine if at least 10% speak a different language;
  • Vet out a reputable translation service for the new notices (in the event the department does not do so on its own);
  • Train, train, train your management so they understand the triggers so they know when to get HR involved in employee leaves; and
  • When in doubt, contact your labor and employment counsel.

Too Little Too Late: NLRB Rejects Employer’s Attempt To Repudiate

Contributed by Beverly Alfon

In a 2-1 decision, the National Labor Relations Board (NLRB) issued a decision against an auto dealer, finding that the company violated the National Labor Relations Act (act) by implementing and maintaining: (1) a 2010 social media policy that required employees to identify themselves when posting comments about the company, its business, or a policy issue and prohibited employees from using the company’s logo in any manner; and (2)  a 2010 dress code policy that prohibited employees from wearing pins, insignia or other message clothing.  Boch Imports, Inc., 362 NLRB No. 83, 4/30/2015.  In light of the NLRB’s aimed campaign to attack what it characterizes as “overly broad” work rules, these findings are not all that surprising.  What makes this decision a brow-raiser is the fact that the NLRB rejected the company’s attempts to correct these policies – even though the company did so with the assistance and approval of the NLRB regional office that investigated the unfair labor practice charge.

Notice PostingIn 2013, the company replaced the 2010 policies with lawful language (except for the dress code provision) and distributed a new employee handbook to every employee.  The purpose was clearly to achieve compliance with Section 7 of the act.  Nonetheless, the board found violations by the company for its 2010 policies – regardless of the company’s rescission of those policies.  The board found the revised policies to be an inadequate remedy and ordered the company to post a notice to employees that enumerated the various overbroad policies and rules that were contained in the 2010 handbook.

This decision is troublesome for employers because although the board acknowledged that an employer may repudiate its unfair labor practices, it would have required the company to provide notice of the unfair labor practices to the employees, an admission of wrongdoing, even before an administrative law judge ruled on the merits of the charge.

Bottom line:  The region’s informal blessing of your attempts to correct the conduct at issue in an unfair labor practice charge, does not amount to an effective repudiation.  Before you decide to correct a policy or procedure that is the subject of an unfair labor practice charge, explore the possibility of a non-board settlement with the charging party – one that would not require a notice posting or admission of fault.

Unanimous U.S. Supreme Court: EEOC Must Attempt to Conciliate Claims

Contributed by Noah A. Frank

Amid much anticipation, the Court unanimously held in Mach Mining, LLC v. EEOC that under Title VII, the EEOC must attempt to conciliate prior to filing suit against an employer. U.S. Sup. Ct., No. 13-1019 (Apr. 29, 2015). Title VII’s enforcement mechanism governs employment discrimination and Gavelretaliation claims related to race, color, religion, sex/pregnancy, national origin, age, and disability.  Under Title VII, the EEOC’s duty is to endeavor to eliminate discrimination by informal methods of conference, conciliation and persuasion and to insist upon legal compliance; the employer’s obligation is to refrain from illegal conduct.

Conciliation involves communication and exchange of information between the parties.  The EEOC must:

  • Inform the employer about the specific allegation(s);
  • Describe what the employer has allegedly done;
  • Describe which employee(s) or class allegedly suffered;
  • Engage in some form of discussion with the employer; and
  • Provide the employer an opportunity to cure the allegedly discriminatory practice.

However, the requirement that the EEOC conciliate is but a minor victory for employers as the required effort is limited to the employer being afforded a chance to (i) discuss and (ii) rectify the specified discriminatory practice.    Further, the proper remedy for the EEOC failing to take those specific conciliation steps prior to bringing a cause of action is for the court to order the EEOC to undertake the mandated efforts to obtain voluntary compliance.

What this means for businesses:

An ounce of prevention is worth years and thousands (or more) of dollars of cure.  Companies should proactively ensure that their written employment policies and implemented practices comply with federal and state law.

If a claim arises or a charge of discrimination is filed, employers should engage seasoned employment counsel who regularly work with the EEOC and understand the ramifications of this decision to help investigate and respond to the charge.

And, in those cases where the EEOC finds “reasonable cause” of a violation, counsel should make certain to engage the EEOC in good faith discussion and conciliation efforts along the lines outlined by the Supreme Court with an eye to resolving the claim, if at all possible.

 

Employers Do Not Have to Allow Unacceptable Workplace Behavior Due to a Disability

Contributed by Michael Wong

The Americans with Disabilities Act (ADA, ADAAA) and Rehabilitation Act, which incorporates most of the ADA standards, prohibit discriminating against employees based on their disabilities.  Indeed, with the ADAAA amendment, recent court decisions have broadened the scope of what is considered a disability, as well as what steps an employer must take in order to comply with the law.

In doing so, employers may feel that their hands are tied behind their back in dealing with employees who perform poorly and/or act out at work.  However, just because an employee is disabled does not mean that they should be given carte blanche freedom in what they say and do in the workplace. Recently, the Eastern District of Wisconsin dismissed a former Wisconsin Department of Transportation employee’s claims under the Rehabilitation Act (which incorporates most of the ADA standards) and Family Medical Leave Act, finding that the employee’s conduct was unacceptable.  In doing so the court followed the Seventh Circuit case, Brumfield v. City of Chicago, 735 F.3d 619 (7th Cir. 2013) and held that an employer may terminate an employee for engaging in unacceptable workplace behavior without violating the ADA (or Rehabilitation Act), even if the behavior was precipitated by a mental illness.

Specifically, the court held that the employee’s hysterical screaming and suicidal behavior in front of co-workers and members of the public was simply not behavior that an employer generally has to tolerate or accommodate. Indeed, the court recognized that absent a disability, an employer would otherwise be entirely justified in immediately terminating an employee who engaged in such behavior.

While this may be an extreme example, employers should understand that their hands are not tied when it comes to dealing with employees who blame their poor performance or unacceptable workplace behavior on a disability. However, since this is a sensitive subject that can very easily lead to a discrimination claim, employers should make sure to understand the current case law and consult with legal counsel before taking disciplinary steps that may include termination.

 

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