July 2010 Quick Clips

The I-9 Gets Electronic, July 30, 2010

On July 22, 2010, the Department of Homeland Security (“DHS”) issued its Final Rule (available at http://edocket.access.gpo.gov/2010/2010-17806.htm) regarding electronic signatures and storage of Form I-9s. Employers are permitted to electronically complete, sign, scan and store I-9 forms, so long as there are certain performance standards in place. Existing I-9s may be scanned and stored electronically as well. Employers are not required to use electronic systems, but are now have the option to use paper storage files, electronic storage systems, or a combination of both, for their I-9 forms (including the backup employment eligibility documentation). The final rule explains that employers must complete the I-9 within three business (not calendar) days of an employee’s hire.

OSHA Releases Final Rule on Crane and Derricks, July 28, 2010

by Randi Klein Hyatt

Today, the Occupational Safety and Health Administration released its much anticipated final rule that will toughen and bring up-to-date the safety requirements for cranes and derricks in the construction industry. The new regulations update the original 1971 standard, and address key hazards involved with cranes and derricks on construction worksites, including electrocution, crushing by equipment, being struck by equipment, and falls. OSHA estimates the rule will apply to nearly 267,000 construction employers with a total of 4.8 million workers. The rule will be published in the Federal Register on August 9, 2010 and is set to take effect on November 8, 2010, although certain provisions will have delayed effective dates (ranging from one to four years).

Poor Night Vision Means ADA Protection, July 27, 2010

by Randi Klein Hyatt

Last week, the Ninth Circuit Court of Appeals held, in Livingston v. Fred Meyer Stores, Inc., No. 08-35597 (9th Cir. 2010), that a retail store clerk who had difficulty walking and driving safely at night time because of her vision, was a disabled individual within the meaning of the Americans with Disabilities Act (ADA). Although the employee was able to perform these tasks during the daytime without issue, because her nighttime ability to perform the tasks was compromised, the court concluded she was substantially limited in the major life activity of seeing. Her employer had originally permitted her to work only during the daytime, but changed its mind after one year, and insisted she work some evening shifts. The employer did not provide sufficient justification for removing the accommodation and the court held that it was a reasonable accommodation to permit the employee to work day shifts only, particularly because there was no evidence of hardship from the prior year’s accommodation.

DOL Issues Fact Sheet: Break Time for Nursing Mothers under the FLSA, July 26, 2010

by Randi Klein Hyatt

Back in March 2010, when Congress enacted the Patient Protection and Affordable Care Act, an FLSA amendment implementing a mandatory break for nursing mothers was enacted. The DOL has issued a Fact Sheet to help clarify what is required by this FLSA Amendment (http://www.dol.gov/whd/regs/compliance/whdfs73.htm). The highlights of this Fact Sheet are as follows:

Employers must provide a reasonable amount of break time to express milk as frequently as needed by the nursing mother for one year after the child’s birth. This will be tricky as it will vary from mother to mother and can become an easy opportunity for abuse.
Employers must provide a private place (shielded from view and free from intrusion), other than a bathroom for the employee to express breast milk. The location provided must be “functional” as a space for expressing breast milk (the Fact Sheet does not clarify what is meant by “functional”). The space does not need to be exclusively for expressing breast milk, but it must be made available when needed by an employee.
Only non-exempt employees under the FLSA are entitled to these breaks. Further, employers with fewer than 50 employees (all employees wherever located are counted) are not subject to this break time if compliance would impose an undue hardship (determined by difficulty or expense of compliance for a specific employer in comparison to the size, financial resources, nature and structure of the employer’s business).
The break time need not be compensated, but if an employer already provides paid breaks, an employee using that break time to express milk must be compensated as other employees would be.

No Recusal For Becker In Several SEIU Cases Before the NLRB, July 24, 2010

by John S. Bolesta

When President Obama signed Executive Order 13490 on January 21, 2009, every appointee in every executive agency appointed on or after January 20, 2009, was required to sign a pledge to not “participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients…” This rule includes any commissioner appointed to the NLRB. NLRB Member Craig Becker was sworn in on April 5, 2010, following his recess appointment by President Obama. Since Becker served as the general counsel for the Service Employees International Union (SEIU) immediately prior to coming to the NLRB, one would assume that Becker would be forced to recuse himself from any cases involving the SEIU until April 5, 2012. Not so, says Becker, who recently wrote that the pledge “does not require me to recuse myself from all cases in which local unions affiliated with the SEIU are parties.”.

In Service Employees International Union, Nurses Alliance, Local 121RN (Pomona Valley Hospital Medical Center) and Carole Jean Badertscher, No. 21–CB–14428, 2010 NLRB LEXIS 145 (June 8, 2010), Becker published an opinion in which he concluded that he was not obliged to recuse himself because, even though he had been general counsel for the SEIU, he had not, in the past two years, represented the local chapter in question. Although the distinction between the national SEIU and the locals is questionable at best, Becker nevertheless opined that the “SEIU is a separate and distinct legal entity from the many local labor organizations affiliated with SEIU” and that “[a]lthough the relationship between international unions and affiliated local unions is often cooperative, it sometimes results in conflict between the distinct organizations.” As Kevin Williamson recently wrote for the National Review, however, “[t]he SEIU’s national body exercises a high level of control over the locals. In fact, the SEIU is the locals — the union’s constitution defines the SEIU as an organization that “shall consist of an unlimited number of Local Unions chartered by it, and the membership thereof, and such affiliated bodies as may be established from time to time.” Williamson further points out that “the finances of the national SEIU are directly dependent upon those of the locals, and the SEIU is an organization with money on its mind: It funds itself through a “tax” on dues paid to local chapters, the rate being $7.65 per member per month. With 2.2 million members nationwide, that’s a substantial monetary motive: nearly $17 million a month.”

Although Becker ruled against the SEIU in the Pomona case, his insistence on deciding any case concerning the SEIU, whether it be the international or a local, is plainly a conflict of interest (and not just in those cases where he was counsel of record for the SEIU). At the very least, his continued involvement in any case involving the SEIU for the next two years raises an inference of impropriety, and he should recuse himself.

Finally Some Clarity On Business Associate Agreements, July 24, 2010

by John S. Bolesta

On July 14, 2010, the U.S. Department of Health and Human Services (HHS) published a Notice of Proposed Rulemaking (NPRM), containing dozens of proposed amendments to three sets of Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations: the Privacy Rule; the Security Rule; and the Enforcement Rule. The proposed amendments are directed principally at implementing the Health Information Technology for Economic and Clinical Health Act (HITECH Act), which amended HIPAA and went into effect on February 17, 2010.

Under the HIPAA Privacy Rule, a covered health plan is prohibited from disclosing PHI to a "business associate," a service provider that creates or receives PHI on the plan's behalf (e.g., a third-party administrator, pharmacy benefits manager, or insurance broker) unless the plan enters into a written agreement, known as a "business associate agreement," which contains provisions prescribed by the Privacy Rule. Unfortunately, the HITECH Act created uncertainty about the content of these business associate agreements because the Act does not itself specify which, if any, of the new obligations imposed on business associates must be addressed in the business associate agreement. Since the HITECH Act went into effect on February 17, 2010, employers subject to HIPAA have been left guessing- how do they incorporate the new obligations into their business associate agreements?

The proposed regulations should eliminate the confusion by revising the Privacy Rule's provision that describes the required content of a business associate agreement. These changes would require that language addressing the following points be added to existing business associate agreements: (a) the business associate must comply with the HIPAA Security Rule; (b) the business associate must report breaches of unsecured PHI to the covered entity; (c) the business associate's subcontractors must agree to the same restrictions on the use and disclosure of PHI as the business associate; and (d) if the business associate performs any of the covered entity's compliance obligations (such as distributing the notice of privacy practices), the business associate must comply with the HIPAA Privacy Rule to the same extent as the covered entity with respect to those delegated obligations.

Fortunately, the proposed regulations would grandfather all existing business associate agreements until eighteen months after the proposed rules become final, which likely will take another year or so in light of the fact that HHS has solicited public comment on several of the proposed amendments.

EFCA Update- Be Careful What You Wish For In Midterm Elections, July 24, 2010

by John S. Bolesta

For those of us who are opposed to the Employee Free Choice Act, the upcoming midterm elections may appear to present the final nail in the coffin of the proposed union-bolstering legislation. Indeed, most commentators, and even most casual observers, anticipate large Republican gains this November, which may very well make the Republicans the majority party in the House (and maybe even the Senate, although this is less likely to occur). These changes should make passage of EFCA impossible once the new members are sworn-in. But since those changes don’t officially take place until January 2011, Democratic lawmakers are planning an ambitious lame-duck session to pass laws that otherwise have failed to garner enough support. One of those laws could be EFCA, as Arizona Rep. Raul Grijalva was recently quoted as saying that passage of portions of EFCA through the lame duck session “would be the last chance, quite honestly, for the foreseeable future.” Seeing as Obamacare passed with less than 40% popular support, it would not be all that surprising to see lame duck members of Congress ignore the widespread opposition to EFCA and push for passage of the law before the new Congress is seated.

IRS Only Getting Larger, July 13, 2010

by Michael R. Severino

The federal government keeps on growing. Earlier this month, IRS National Taxpayer Advocate Nina E. Olson released her report to Congress. In it, she raises several issues regarding the IRS’ ability to handle increased responsibilities imposed by Obamacare. For example, the IRS is now charged with investigating businesses that do not provide insurance and individuals who do not have insurance. Ms. Olson also noted the new requirement on businesses to issue form 1099s to vendors (and the IRS) for the purchase of goods from any vendor that totals more than $600. This new mandate is sure to ensnare many small businesses and increase the cost of doing business for all employers. Maybe not the best thing in this economy, unless you plan to work for the IRS.

Are Stock Options Optional? Maybe, July 13, 2010

by Michael R. Severino

A recent Maryland Court of Appeals decision reaffirmed the principle that stock options that are conditionally granted do not constitute wages pursuant to Maryland’s Wage Payment and Collection Law unless the precedent condition has been satisfied.

In Catalyst Health Solutions, Inc. v. Magill, an employee received a series of stock options as part of his compensation package. The stock option agreement stated that upon termination only those options that were immediately exercisable or vested could be exercised. Upon separation from the company, Mr. Magill attempted to exercise options that had not yet vested. The Court rejected Mr. Magill’s argument that the stock options constituted wages for work already performed and restated the rule that conditions giving rise to the right to receive a benefit must be met before one becomes entitled to the benefit.

While the rule seems straightforward, an employer must still be vigilant in drafting a clear and effective compensation agreement.

Unions Outspending Corporations On Campaign Ads, July 13, 2010

by Michael R. Severino

In the wake of the Supreme Court’s decision in Citizens United v. Federal Election Commission, liberals would have us believe that we are about to be inundated with massive corporate spending on campaign ads that will destroy the electoral process. On the contrary, it turns out that unions have far outspent corporations on independent campaign ads.

A Washington Post analysis published on July 7th revealed that of the $24.7 million in independent spending reported to the Federal Election Commission, unions have spent $9.7 million or 39 percent. Corporations, on the other hand, only spent $3.4 million. Apparently, we will all live to vote another day.

New Mexico Supreme Court Orders Union to Pay Member Over $30,000, July 9, 2010

by Frank L. Kollman

The New Mexico Supreme Court has ruled that a union failed to represent a black employee properly because it failed to bring discrimination charges on his behalf. The court awarded the employee over $30,000 in punitive damages, as well as $1,000 in compensatory damages. As most readers know, the Obama administration has a love affair with labor unions. Perhaps the president should read this case. I understand that he used to be a lawyer. Akins v. United Steel Workers Local 187, No. 31,637 (New Mexico Supreme Court, June 22, 2010).

Outside Salesmen Must Make Sales to be Exempt, July 7, 2010

by Frank L. Kollman

How would you like a $100,000 a year job visiting doctors, taking them to dinner, and handing them pamphlets on drugs your company sells to pharmacies? Did I mention overtime on top of your salary?

A federal appeals court has rejected arguments, which were adopted by the trial court, that pharmaceutical representatives are exempt from overtime as either outside sales employees or administrative employees. Kuzinski v. Schering Corp., No. 09-1945 (2d Cir., July 6, 2010). The appeals court said that these highly paid employees made no actual sales to the doctors, so they were not outside sales people. As far as the administrative exemption went, the court found they exercised very little independent judgment, which is what administrators do.

There are about 2,500 affected employees.

Union Elections Decline, July 5, 2010

by Frank L. Kollman

According to the Labor Department’s Bureau of Labor Statistics, the number of elections conducted by the NLRB declined 60 percent from 1997 through 2009. The Board conducted 3,261 elections in 1997, but only 1,304 in 2009. Unions, however, won a greater percentage of those elections in 2009, perhaps showing that Unions were less likely to file with the Board where success was remote.

Statistics for government employee elections, which are not conducted by the NLRB, were not mentioned in the report. We suspect that those elections increased, resulting in more unionized government employees, as unions financed the election of government officials friendly to them.

While the card check bill is not dead, there has been no significant effort to pass it in this Congress. The President, on the other hand, has stacked the NLRB with radical pro-union appointments in an effort to keep his union supporters at bay.

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