Delaware Employment Law Blog

After months of moribundity, the Employee Free Choice Act (“EFCA”) is showing signs of life. Or at least alternative means of imposing some of the major changes included in EFCA, such as greatly decreasing the time of an election campaign and limiting employers’ ability to actively participate in union elections, are being considered. It all depends on the possible confirmation of Craig Becker, whose nomination to the NLRB has been stalled in the Senate but was recently voted out of committee on a party line vote.

The theory goes that if Becker, who is currently Associate General Counsel of the SEIU, is confirmed by the full Senate, giving former union lawyers a 3-2 majority on the Board, strange (and bad) things may occur. Becker’s past published writings include such one-sided suggestions as excluding employers from participating in pre-election hearings to determine an appropriate bargaining unit, preventing employers from alleging that union campaign conduct coerced employees, and prohibiting employers from conducting mandatory meetings of employees at any time during the campaign (instead of only during the 24 hours before the election, as at present).

Given Becker’s extreme views, the theory goes, new NLRB Chairperson Wilma Liebman should have no trouble getting the majority of the Board to agree to embark on expanded rulemaking and in that fashion, impose many of the EFCA changes indirectly. Liebman has made no secret of her interest in having the Board expand its rulemaking activity, instead of limiting itself to ruling on cases presented to it.

Delaware's anti-discrimination laws have been amended to include
sexual orientation as a protected class.  

S.B. 121 passed the General Assembly on June 24, 2009, and was signed by Gov. Markell on July 2, 2009.  The law took effect immediately.

Additional Key Information

• Sexual orientation is defined exclusively to mean "heterosexuality, homosexuality, or bisexuality." 

• Religious organizations are exempted from the law.

• The law does not require employers to offer health, welfare, pension, or other benefits to domestic partners to the extent offered to spouses of married employees.

Delaware employers should prepare to add another protected characteristic to their list.  Late last night, the Delaware General Assembly passed Senate Bill 121, which would prohibit discrimination based on sexual orientation. It passed the Senate after a three-hour debate. 

The bill is headed to Gov. Jack Markell for signature.  The Delaware News Journal reports that Rep. Pete Schwartkopf (D-14th Dist.), who helped push the bill through the House, has said that Markell is expected to sign.   

The bill had been introduced every year for the past decade without success.  Five of those bills had passed the House but stalled in Senate committees.  We reported on an earlier version of the bill, which passed the House in March but died in the Senate Executive Committee.  A full version of the bill is linked below.

What do Delaware and Colorado employers have in common? If Delaware House Bill 231 is passed, both states will require employers to grant employees leave to attend school-related functions for their children. Unlike Colorado’s law, which applies only to employers with 50 or more employees, Delaware’s law would apply to all employers. In a nutshell, Delaware’s law would grant working parents 16 hours of unpaid leave per year to attend school-related events.

If passed, the law would require that all Delaware employers, regardless of size, permit employees to attend classroom activities, school meetings and extra-curricular school events related to the employee’s child if the meetings or classroom activities cannot be scheduled during non-work hours, up to 16 hours a year, per child. The time off can be taken in increments of up to 4 hours. The only consolation to small employers is that employers with ten or fewer employees working at one location could limit the number of employees who may take leave on any one day.

Any time off taken under the new law would be unpaid (like FMLA leave), but the employee could substitute any “available leave” such as vacation and personal days to be compensated for this time.

The only responsibility of the employee requesting such leave would be to provide at least 48 hours advance notice of the leave and make a reasonable effort to schedule the leave so as not to unduly disrupt the operations of the employer. The employer can request written verification of the event.

Any employer who violates this section shall be subject to a civil penalty between $1,000 and $5,000 per violation.

One interesting question is whether sick leave would be considered “available leave.” “Available leave” is defined in the statute as “annual or vacation leave, personal leave, compensatory leave or other similar leave provided to an employee with pay by an employer.” Unlike the Colorado law, Delaware’s statute does not explicitly identify “sick leave” as leave that could be used for this purpose. One would expect employees who have paid sick leave to attempt to use this leave, prior to other types of accrued leave.

Although the leave is unpaid, it could potentially present a considerable burden on smaller employers. Under the statute, an employer with 11 employees, 5 of whom requested leave to attend the same school-related function, would be required to let them all attend. It makes more sense to limit the statute to larger employers, like the FMLA, and like Colorado did in its similar law.

We’ll keep you posted on the progress of this bill.

Independent Contractor Update: A bill targeting the construction industry has been introduced   in the Delaware General Assembly. "The Construction Industry Independent Contractor Act,” HB129,   which is similar to one that failed to pass during the last legislative session, creates a presumption that an individual performing a service “in the making of improvements to real property” is an  employee rather than an independent contractor.  To overcome that heavy burden, an employer must prove that the individual is free from control or direction over the performance of that service, the service is outside the usual course of the employer’s business or performed outside of all of the employer’s places of business [seemingly impossible to prove in the context of a construction employer, who travels from place to place], and the individual is customarily engaged in “an independently established trade, occupation, profession or business.”

And woe to the employer who misclassifies, either unwittingly or knowingly.  The law not only contains criminal fines and imprisonment penalties, it also authorizes civil suits, including class actions, and allows attorney’s fee awards to prevailing plaintiffs. An employer who knowingly misclassifies an individual can also be debarred from working on public projects. The law also makes the Secretary of Labor the judge, jury and executioner, authorizing administrative monetary penalties if he or she decides that there has been a violation, subject only to a hearing that can be requested after the initial decision has been made.

Since the Act only applies  to individuals, employers wishing to engage legitimate independent contractors may wish to require them to incorporate or form limited liability companies before entering into an agreement for construction-related services.  As an alternative, the cautious employer may want to rely heavily on temporary job services, with the individual remaining an employee of the service company, which would be responsible for taxes, withholdings and other legal requirements.  Of course these approaches will cost more money, and one wonders why, in the midst of an economic crisis, the Delaware General Assembly would want to create additional financial burdens for companies. The only message that can be inferred from this one-sided legislation is that Delaware is less friendly to business than it used to be.

See prior posts about Independent Contractors: Employee Misclassification Prevention Act Update, Construction-Industry Employers Should Be Aware of Proposed Legislation, Pennsylvania House Passes Construction Industry Independent Contractor Act, Delaware Legislation Proposes to Criminalize Employment Law. 

Delaware’s employment discrimination law is a step closer towards being amended. On March 26, 2009, a bill was introduced to the Delaware House of Representatives that proposes to add the term “sexual orientation” to the already-existing list of prohibited practices of discrimination in Delaware. If enacted, the legislation would forbid discrimination against a person on the basis of sexual orientation in housing, employment, public works contracting, public accommodations, and insurance. In addition, the proposed legislation provides that Delaware’s Superior Court (its trial court) would, in the first instance, hear and adjudicate alleged criminal violations of equal accommodations, fair housing and employment discrimination.

Tax-Free Qualified Transportation Fringe Benefits

By now, most employers are aware that they can provide tax-free transportation fringe benefits of parking, transit pass, van pooling and bicycle commuting reimbursement benefits to their employees. What never seemed appropriate from a policy (and fairness) viewpoint was that the monthly exclusion amount for parking far exceeds the amount allowed for transit passes and van pooling. In addition, employees can simply be reimbursed for the cost of their monthly parking while only transit passes (if available) are the only means of providing the benefit for public transportation. A “transit pass” is any pass, token, fare card, voucher, or similar item entitling a person to transportation (or transportation at a reduced price):

(1) on mass transit facilities (whether or not publicly owned), including, for example, rail, bus, and ferry; or

(2) provided by any person in the business of transporting persons for compensation or hire, if this transportation is in a highway vehicle with a seating capacity of at least six adults (excluding the driver).

Beginning in January 2009, the maximum monthly exclusion for parking is $230 and the maximum exclusion for transit passes and van pooling is $120. The monthly exclusion for bicycle commuting reimbursement is $20.

ARRA Increases Transit Pass And Van Pooling Benefit Exclusion

ARRA has temporarily leveled the playing field for tax exempt transportation fringe benefits. Beginning in March 2009 and through December 2010, the maximum exclusion for transit passes and van pooling will be the same as the exclusion for parking. Thus, for the remainder of 2009, transit passes and van pooling benefits valued up to $230 per month will be excluded from the income of the employees who receive such benefits. For 2010, the monthly exclusion for parking, transit passes and van pooling will the inflation adjusted $230 exclusion amount for parking. The exclusion for bicycle commuting reimbursement benefits remains unchanged by ARRA.

Salary Deferrals for Pre-Tax Transportation Fringe Benefits

Employers who cannot afford the increased benefits (or any transportation fringe benefits) can adopt an arrangement to permit their employees to pay for parking, van pooling and transit passes from their compensation with pre-tax dollars, up to the monthly exclusion amount. And, unlike cafeteria plans that require generally irrevocable annual elections to defer income, the pre-tax transportation fringe benefit arrangement can permit employees to change their deferral amounts monthly so long as the change relates only to income that is not yet payable to the employee.

*****          *****          *****          *****          *****          *****          *****          *****

This post was written by Guest Blogger, Timothy J. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway.  Tim has posted several important pieces on the impact on employers of the recently passed Economic Stimulus package.  For employers who haven't yet gotten up to speed on the numerous ways in which ARRA is changing the world of employee benefits, Tim's posts are a great place to start, beginning with the very helpful Guidance for Employers on the New COBRA Subsidy.  Also, be sure to get the new forms provided by the U.S. Department of Labor and the IRS, which you can do at these posts:  DOL Releases Model COBRA Notices and  Stimulus Package's COBRA Subsidy: Guidance Update.

Maribeth L. Minella has also provided helpful commentary on the employment-related effects Stimulus Package.  Her previous posts include:

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

Model COBRA Notices have been released by the U.S. Department of Labor (DOL).  There are four Model COBRA Notices in all, which are required to effectuate the provisions of the 65% governmental subsidy of COBRA premiums enacted as part of ARRA.

The Four Model COBRA Notices

The first model COBRA Notice is the General Notice.  It has been released in a full-length version, consisting of 13 pages, and an abbreviated version, totaling 9 pages in length.  The abbreviated version constitutes the second model COBRA Notice.

The General Notice informs Qualified Beneficiaries (QBs) of their right to elect COBRA coverage, the cost of the coverage, and the provisions of the COBRA premium subsidy--all in a Q & A format. The full version should be used for a QB who has just incurred a qualifying event and is entitled to elect COBRA coverage.The abbreviated version is to be provided to those QBs who had a qualifying event on or after September 1, 2008, and who are currently enrolled in COBRA coverage.

The third Notice is the Notice in Connection with Extended Election Periods.  This Notice is to be provided to those QBs who

• are or would be eligible for the subsidy but are not now enrolled in COBRA coverage; or
• were enrolled in COBRA coverage and subsequently discontinued coverage with regard to qualifying events that occurred on or after September 1, 2008, and on or before February 16, 2009.

The Fourth Notice is for use by insurers that provide group health-insurance coverage to persons who became eligible for continuation coverage under a state law.  The DOL points out that the continuation coverage requirements vary among states, and insurers must modify this model notice as necessary to conform it to the applicable state law.  All of the Notices have optional pages to be used if the employer chooses to allow the QBs to elect alternative, cheaper medical coverage.

All of the Notices include a form entitled Request for Treatment as an Assistance Eligible Individual.  This form must be completed by the QBs and returned to the employer for a determination by the employer of whether the QBs are entitled to the COBRA subsidy. If the employer determines that the QB is not entitled to the subsidy, the QB can appeal that denial to the DOL.

Now What?

Now that the DOL has issued the Model Notices, employers can begin notifying QBs of the availability of the COBRA premium subsidy available under ARRA. 

• All QBs who had qualifying events on or after September 1, 2008, and had not elected COBRA by February 17, 2009.
• Those QBs already covered by COBRA on February 17, 2009 must be provided with the appropriate Notice no later than April 18, 2009.

The subsidy must be provided beginning with the March 2009 COBRA coverage. At this point, it doesn’t seem that employers would be able to get the appropriate notices out to the QBs and make a determination of whether they are entitled to the subsidy in time for the payment of the April COBRA premiums. Therefore, employers should get the Notices out as soon as possible so that the QBs can return the completed forms and employers can make the determinations regarding a QB’s status as an Assistance Eligible Individual in time for the payment of the May premiums.  This means that the employers will be providing the Assistance Eligible Individuals with either refunds or credits for the amount of the premiums that they paid for March and April coverage that exceeded 35% of the premiums.

This post was written by Guest Blogger, Timothy J. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway.  Tim posted earlier this month offering very helpful Guidance for Employers on the New COBRA Subsidy.  Maribeth L. Minella has also provided helpful commentary on the employment-related effects Stimulus Package.  Her previous posts include:

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

Download this

Included in the package are the following:

• IRS Revised Form 941 (Employers Quarterly Federal Tax Return)
• IRS Instructions for Revised Form 941
• DOL FAQ and Fact Sheet
• DOL Flyer for Employers
• Model COBRA Notice: General Notice (full)
• Model COBRA Notice: General Notice (abbr.)
• Model COBRA Notice: Notice in Connection with Extended Election Periods
• Model COBRA Notice: Request for Treatment as an Assistance Eligible Individual

The American Recovery and Reinvestment Act of 2009 (ARRA) provides certain employees the opportunity to collect a subsidy equal to 65% of COBRA continuation premiums for themselves and their families for up to 9 months.  We've posted about the new COBRA subsidy previously and those posts contain important details on how the subsidy affects employers.  Here it is, though, in a nutshell:

Workers who have lost their jobs may qualify for a 65 percent subsidy for COBRA continuation premiums for themselves and their families for up to nine months.

Eligible workers will have to pay 35 percent of the premium to their former employers.

To qualify, a worker must have been involuntarily separated between Sept. 1, 2008, and Dec. 31, 2009. Workers who lost their jobs between Sept. 1, 2008, and enactment, but failed to initially elect COBRA because it was unaffordable, get an additional 60 days to elect COBRA and receive the subsidy.

This subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.

The IRS and U.S. Department of Labor have posted several helpful documents recently.  We've packaged them for you in one nice little PDF Portfolio for your easy reference.

Included in the package are the following:

• IRS Revised Form 941 (Employers Quarterly Federal Tax Return)
• IRS Instructions for Revised Form 941
• DOL FAQ and Fact Sheet
• DOL Flyer for Employers

For our previous posts, see:

Guidance for Employers on the New COBRA Subsidy

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

The COBRA subsidy in the Economic Stimulus Plan (ARRA), will be available to “Assistance Eligible Individuals.” To qualify, the employee must satisfy two requirements. First, the employee must have been involuntarily terminated for reasons other than gross misconduct between September 1, 2008, and December 31, 2009. Second, the employee must have either (a) declined COBRA; or (b) elected COBRA but dropped off for a reason that would not have disqualified him for coverage (for example, inability to pay the premiums).

Assistance Eligible Individuals who were not covered by COBRA on the date of the enactment of ARRA must receive a notice of their right to elect COBRA by April 18, 2009. If they do elect coverage, the coverage and the subsidy will be effective March 1, 2009. The subsidy is for 65% of the COBRA premium.

For those individuals who are already on COBRA, employers have 60 days to effectuate the COBRA subsidy. If the Assistance Eligible Individuals pay the full premium for March and April 2009 coverage, the employer can either give them a credit for the subsidy against future premiums or refund the subsidy to them. Individuals on COBRA must also receive notice of the subsidy by April 18, 2009. The United States Department of Labor (DOL), was directed in ARRA to produce a model notice for the subsidy.

The subsidy is available for nine months or until the end of the COBRA coverage period, if sooner. It will not otherwise extend the COBRA coverage period. Those whose employment terminates involuntarily before December 31, 2009, will be entitled to the subsidy, which means that the subsidy will be provided through September 2010. The subsidy is phased out for single individuals with adjusted gross income between $125,000 and $145,000, and $250,000 to $290,000 for those filing joint returns. The COBRA subsidy is otherwise not taxable to the recipients. The employer is reimbursed for the subsidy by taking a credit against its payroll tax deposit obligation and will be reported on the revised Form 941. If the COBRA subsidy amount exceeds the employer’s payroll tax obligation, the employer will receive a refund from the IRS.

The government information being issued to assist employers and employees in administering the subsidy is being posted on the Internet. The DOL and the IRS both have posted documents to guide employers through the administration of the new subsidy. (See the DOL’s “COBRA Continuation Coverage Assistance Under The American Recovery and Reinvestment Act of 2009” with links to a COBRA Premium Fact Sheet and COBRA FAQs, and the IRS’s “COBRA: Answers for Employers”).

This post was written by Guest Blogger, Timothy P. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway.  Maribeth L. Minella has also provided helpful commentary on the Stimulus Package.  Her previous posts include:

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

Employers will be impacted by the Stimulus Package.  We've previously addressed the impact the $787 billion Economic Stimulus Package (a.k.a. the American Recovery & Reinvestment Act (the “Recovery Act”)), will have on employers' obligations with respect to COBRA, the Children's Health Insurance Program Reauthorization Act (CHIPRA), as well as the potential impact on available state unemployment-insurance benefits and tax implications.   This post highlights the McCaskill Amendment – the Act’s whistleblower-protection provision.

The amendment, introduced by Claire McCaskill (D-MO), includes several provisions.  First, the amendment proposes to permit inspector-general investigations.  Second, it proposes to gives employees rights to jury trials.  Third, it requires employers that receive Stimulus funds to inform employees of their new whistleblower rights.

That’s right employers, the Act imposes yet another obligation.

Under the Amendment, an employee of any non-federal employer receiving Stimulus funds may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing, including a disclosure made in the ordinary course of an employee’s duties, to the Board, an inspector general, the Comptroller General, a member of Congress, a State or Federal regulatory or law enforcement agency, a person with supervisory authority over the employee, a court or grand jury, the head of a Federal agency (yes, the list is that long!) information that the employee reasonably believes is evidence of:

• gross mismanagement of an agency contract or grant relating to Stimulus funds,
• a gross waste of Stimulus funds,
• a substantial and specific danger to public health or safety related to the implementation or use of Stimulus funds,
• an abuse of authority related to the implementation or use of Stimulus funds, or
• a violation of law, rule, or regulation related to an agency contract or grant awarded or issued to Stimulus funds.

Whew.

Not only is the list of potential topics quite broad, but the threshold for an employee complaint is quite low.  The standard is simply what the employee reasonably believes. A person alleging reprisal under the amendment is deemed to have affirmatively established the occurrence of the reprisal if he can demonstrate that his whistle blowing was a contributing factor in the reprisal.

A whistleblower can premise his case on circumstantial evidence, including: evidence that the official undertaking the reprisal knew of the disclosure, evidence that the reprisal occurred within a period of time after the disclosure such that a reasonable (there’s that word again!) person could conclude that the disclosure was a contributing factor in the reprisal.

Employers, if you want to rebut the whistleblower’s case, you need to do so under the rigor of clear and convincing evidence. An employer needs to show that it would have taken the action constituting the reprisal in the absence of the disclosure.

Finally, the McCaskill Amendment does not preempt, preclude, or limit state law. The amendment provides rights in addition to existing whistleblower laws.

The bottom line is that the amendment gives employees the right to act as watchdogs for how an entity spends its Stimulus funds, which is not entirely a bad thing. In fact, we can all be watchdogs and use the federal government’s website, www.recovery.gov, which has been set up to allow taxpayers to figure out where Recovery Act money is going. Nonetheless, the amendment, like the other portions of the Act previously highlighted, burdens employers with one more responsibility.

Employers may benefit from the Economic Stimulus Package.  So far, this blog’s posts on the $787 billion Stimulus Package (formally known as the American Recovery & Reinvestment Act (ARRA)) have focused on the burdens placed upon employers that result from new laws on issues like extended COBRA coverage and unemployment insurance modernization. Notwithstanding the additional responsibilities, the Stimulus Package does have some tax perks for companies, particularly small businesses. In fact, President Obama alluded to the importance of ARRA’s tax provisions in his presentation to Congress last night. Below are some of the federal tax issues employers should raise with their tax advisors:

Net Operating Loss Carryback. Tax law under ARRA will extend the “carryback” period for net operating losses generated by small companies from two years to five years. From some employers, this means if you lost money in 2008, but paid taxes on profits in the last five years, you may be eligible to apply last years’ loss to prior-year taxes.

Equipment Deductions and Depreciation. Current tax law allows small businesses to immediately expense new equipment or machinery. The 2009 deduction will be $250,000.

Making Work Pay Tax Credit. This is a tax cut which refunds a maximum of $400 to single filers making less than $75,000 and $800 to married couples making less than $150,000. Taxpayers who qualify will see the amount deducted from their paychecks. Self-employed owners, find out if the can apply to you. This tax cut will be accomplished by adjusting federal income tax withholding tables, and the revisions will be integrated with employers’ payroll systems.

Work Opportunity Tax Credit. The WOTC is a voluntary program by which employers earn a tax credit for hiring individuals from one or more specific groups- i.e., unemployed Veterans and disconnected youths (someone who is between 16 and 25 years old and who is not regularly attending school or regularly employed for a six-month period prior to their date of hire).

For more information on the impact the Stimulus Package will have on employers, see:

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

The Stimulus Package's impact on employers is hardly clear at this stage.  So far there have been three: Governors from Mississippi, South Carolina, and Louisiana each have gone on the record with their intention to reject millions of dollars marked in the $787 billion Stimulus Package (a.k.a. the American Recovery & Reinvestment Act) for states to expand their unemployment insurance benefits. The goal of the $7 billion Unemployment Insurance Modernization Act (UIMA) is to close gaps in current unemployment insurance programs.

The Governors have a decent argument. Their concern is that if they expand eligibility for unemployment benefits, the consequence may be that their state is forced to raise unemployment insurance tax – literally a tax on employment, which seems contrary to the notion of economic stimulus. Governor Barbour (Mississippi) told CNN’s “State of the Union” Sunday that he does not want Mississippi to accept UIMA funds because it may require the state to change or somehow loose control of its employment laws.

Data from the National Employment Law Project (NELP) shows that 19 states immediately qualify for UIMA funds and 12 more could quickly become eligible by making a few policy changes. The immediate benefit of increasing unemployment eligibility by using federal funds is that under UIMA states who tap into such funding can receive millions of dollars up front, deposited all at once in their state unemployment trust funds.

Under UIMA, a state qualifies for one-third of its UIMA share if it has in place a policy called the “alternative base period,” which counts a worker’s recent earnings to qualify for benefits. To qualify for the remaining two-thirds, states have the option of providing benefits in two of the following four situations:

1. part-time workers who are denied benefits because they are required to seek full-time work,
2. individuals who leave work for compelling family reasons (domestic violence, spouse relocation, illness and disability),
3. workers with dependent family members who qualify for state benefits but whose benefits should be increased to care for dependents, or
4. permanently laid off workers who require extra unemployment benefits to participate in training.

According to the National Employment Law Project’s UIMA fact sheet, Delaware does not have an “alternative base period” policy, but it does have programs that would later qualify the state for UIMA funds. If Delaware decides to tap into UIMA, it could be eligible for $21.8 million.

For more information on the impact the Stimulus Package will have on employers, see:

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

We alerted employers to the new COBRA subsidy created by the Stimulus Package last week.  There is yet another insurance angle employers must be aware of: the Children’s Health Insurance Program Reauthorization Act (CHIPRA).

This Act extends and maintains health coverage for uninsured children, which was a hot topic during the Presidential campaign. The Act, which was signed into law on February 4, 2009, helps employees get insurance through their employers should their coverage run out by allowing employees to enroll kids even after the enrollment period is over.

The result is one more compliance issue for employers. Like the COBRA subsidy, employers need to identify eligible employees, notify them of the opportunity to enroll after enrollment periods are closed, and amend health insurance plans to allow for the extended enrollment. 

The Kaiser Family Foundation has put together a fact sheet offering an overview of the CHIPRA provisions, which may be helpful.  Employers, the Act takes effect April 1, 2009, so start your due diligence now.

The American Recovery and Reinvestment Act of 2009 (ARRA), has been signed into law by President Obama.  ARRA creates a federal subsidy of the premiums payable by certain terminated employees for continuation of coverage under employer-sponsored group health plans pursuant to the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).  What does this really mean for employers?

It means employers, go back to September 1, 2008. Under ARRA, employers have an obligation to inform employees who experience an involuntary termination of employment (but not for reasons of gross misconduct) from September 1, 2008, to December 31, 2009, that they automatically qualify for a 65% subsidy for COBRA premiums for up to nine months after their date of termination or layoff.  So, employers get your ARRA notices ready.  Employers have an affirmative obligation to identify every employee who has been laid off since September 1, 2008, and send them an ARRA notice.

Below are some of the points your ARRA notice should include:

• A description of the former employee’s automatic qualification for the subsidy, subject to the employee ability to meet the subsidy’s income requirements.
• The forms necessary for establishing eligibility for the subsidy.
• Pertinent contact information for the COBRA plan administrator or anyone else who can assist former employees with access to the subsidy.

Although it may not seem like much, there is a small burden placed upon employees who qualify for the subsidy. Covered individuals who become eligible for coverage under another group health plan or become eligible for Medicare coverage before the expiration of the nine month period must notify the health plan providing COBRA in writing or face a 110% penalty of the subsidy received. Make sure you add that point to your ARRA notice.

Hilda Solis, President Obama's choice for Secretary of Labor, will not be taking the office any time soon.  Republicans have professed concern about Solis' role as Treasurer for American Rights at Work (ARW), a pro-union advocacy organization.  Opponents of Solis' confirmation have pointed to a potential ethical issue because ARW is a lobbying organization and the Treasurer position requires money handling.

Likely, the real message being sent is the Republican anti-EFCA message.  The Employee Fair Choice Act (EFCA) is high on Solis' priority list.  Preventing (or at least delaying) the passage of the EFCA has been a top priority of employee-and-business proponents.  The hold on Solis' confirmation for Secretary is proving to be an effective way to stall the bill and there doesn't seem to be any indication when the hold might be lifted.

In the meantime, President Obama has asked Edward Hugler to serve as Acting Secretary of Labor until Solis is confirmed.  Hugler, a 30-year veteran at the Department of Labor, is currently the deputy assistant secretary for administration.

The news of Hugler's temporary appointment yesterday came on the same day that Labor turns up its campaign to pressure Congress to speed up its consideration of the EFCA. 

The Lilly Ledbetter Fair Pay Act of 2009 has passed the Senate and could be on President Obama's desk within days.  The wage-discrimination statute, Senate Bill 181, reverses a decision by the U.S. Supreme Court in 2007, which narrowly defines the time period during which an employee can file a claim of wage discrimination.  This may be the first piece of legislation signed by the new President.  Obama has been a strong advocate for the legislation.  Lilly Ledbetter, the plaintiff in the lawsuit that inspired the legislation, was invited to the inauguration.

The bill was approved during the first week of the new congressional session, perhaps indicative of the momentum behind the expected pieces of labor legislation.

In Ledbetter v. Goodyear Tires, the case at the center of the legislation's history, the Court held that the discriminatory act, which starts the clock running on the time period to file a claim, occurs at the time of the discriminatory decision.  In other words, in a failure-to-promote claim, the date of the promotion decision is the date when the clock begins to run.  Ledbetter argued that the clock would begin to run each time a new paycheck was issued because each paycheck represented a new discriminatory act--the unequal payment of wages.  Ledbetter claimed that she did not know that she had been getting paid less than her male counterparts until a note was left in her mailbox at the end of her 19-year career with the company. 

Opponents of the law contend that it will effectively eliminate a statute of limitations period and could result in increased filings of unmeritorious lawsuits.  Employers will be hard pressed to "disprove" the decision- making process involved in a pay raise issued 20 years earlier. 

A middle ground, offered by Republican Senator Kay Bailey Hutchinson would have started the time period when the employee knew or had reason to know that discrimination was occurring.  Hutchinson said her alternative would protect both employee and employer. 

The alternative was rejected by women's-rights advocates, as the issue has become one largely divided on gender lines.  Women's-rights groups argue that the law is necessary to protect women from continued unequal pay.  Very little has been mentioned about the fact that the Ledbetter bill would apply to other protected classes, such as race, ethnicity, and national origin--not just gender.

What Other Great Minds Have to Say

Several e-law bloggers have already issued their insights on the legislation, so have a look at some of these posts to learn more about the ins and outs of what may be the first pro-employee legislation passed in 2009:

John Phillips at The Word on Employment Law, Fair Pay Act Ready to Become Law

Michael Moore at the PA Labor and Employment Blog, Ledbetter Fair Pay Act passed by Senate and awaiting Obama Signature

Jon Hyman at the OH Employment Law blog, Ledbetter passes Senate – President’s signature is next

Frank Steinberg at the NJ Employment Law Blog, Ledbetter Act Passes Senate

Ross Runkel at LawMemo, Lilly Ledbetter Fair Pay Act of 2009 awaits President's Signature 

Dennis Westlind at The World of Work, Senate Passes Lilly Ledbetter Bill 61-36

Dan Schwartz at the CT Employment Law Blog, Lilly Ledbetter Fair Pay Act of 2009 Passes Senate, 61-36; President Will Sign

Tracing the Story Back to the Beginning

And to read about the bill since its inception, see the following posts:

Equal Pay Becomes Front Runner as Lilly Ledbetter Act Takes Center Stage

Equal Pay: Fair Pay Restoration Act Voted Down in Senate

More Fodder for the Fair Pay Debate

A New Day for Employers

Employers should stay tuned to what may be the first in a series of legislation that advocates for employees to the disadvantage of businesses.

More than 50 Delaware employers attended The Union Revival Effort, a panel hosted by the Employment Law Department at Young Conaway Stargatt & Taylor, LLP last week. The panel, which included Sheldon N. Sandler, William W. Bowser, Scott A. Holt, and Teresa A. Cheek, and which was moderated by Section Chair, Barry Willoughby, discussed the various pro-labor legislation that is likely to see some significant activity, even passage, following the swearing in of President-Elect Obama.  Below are the laws that were discussed and a quick summary of each.

Employee Free Choice Act (EFCA)

Would amend the NLRA in three ways: (1) card check instead of secret-ballot election; (2) require compulsory, binding arbitration of initial two-year contract if no agreement in 120 days; and (3) increase penalties for violation of NLRA during organizing and before CBA (now cease and desist) (proposed is 2 times back pay as liquidated damages and civil penalty of $20,000 each willful or repeated violation)

RESPECT Act

Would amend the definition of “supervisor” to delete “assign” and “responsibility to direct” and require a “majority of time” spent supervising others (currently 10-15%). Would be subject to union organizing in the unit that they manage and would be subject to union rules and discipline for crossing picket lines. Issues with loyalty to management and conflicts of interest.

Lilly Ledbetter Fair Pay Act

Would overrule Ledbetter v. Goodyear Tire & Rubber Co., so the time limit to file a charge of discrimination with the EEOC or state agency would begin to run each time an employee receives a paycheck that manifests discrimination. Under the Court’s ruling in Ledbetter, the period begins to run only once—at the time the discriminatory pay-related decision is made.

Employment Non-Discrimination Act

Adds sexual orientation and gender identity as protected classes. Exemption for employer dress codes, small employers, religious organizations, and military.

Civil Rights Act of 2008

Sweeping changes to numerous statutes, including: lowers the burden of proof to get attorney’s fees; prohibits arbitration agreements in employment contracts; allows recovery of expert’s fees; removes caps from Title VII claims; prohibits denial of back pay to illegal immigrants; and expands equal pay claims under FLSA.

Working Families Flexibility Act

“Union-of-one” legislation that would requires good-faith negotiations with any employee who wants to change days worked, hours of work, or location of work. Five-step procedure for meetings and documentation of negotiations. If not granted, employer must provide reasons in writing and specify the costs in agreeing to change; effect of change on customer demand; and the overall financial resources of the company. Employee may have a representative of his choice at the negotiation meetings.

FOREWARN Act

Would amend the WARN Act to (1) lower coverage to employers with 50 or more employees (from 100 or more); (2) require 90 days’ advance notice of mass layoff or closing (instead of 60); and (3) double the amount of back pay owed if required notice is not given.

Want to be the first to know about upcoming employment law seminars?

If you would like to receive information about upcoming seminars and events hosted by Young Conaway's Employment Law Department, just send an email with your name, company name, and e-mail address to:  employmentlaw@ycst.com.  We'll confirm that you've been added to the list and you'll be the first to know when new seminars and other events are added to the calendar.

The U.S. Department of Labor's (DOL), Office of Labor-Management Standards (OLMS), issued a final rule that will provide union members with more complete information about finances held in union trusts.  Union trusts are established and maintained primarily to provide benefits to union members and their beneficiaries, and common examples include credit unions, strike funds, redevelopment or investment groups, training funds, apprenticeship programs, building funds and educational funds. Under the rule, unions will be required to annually file a Form T-1 for trusts in which a union, alone or in combination with other unions, possesses managerial control or financial dominance.

The Form T-1 will use the same basic template as the existing Form LM-2. Only labor unions with total annual receipts of $250,000 or more will need to file a Form T-1. Additionally, labor unions will not be required to file a Form T-1 on trusts subject to certain other disclosure requirements.

The union-trust transparency rule was issued on the same day as the regulations dealing with the Family and Medical Leave Act (FLMA).

The Family and Medical Leave Act (FMLA), will be clarified when the U.S. Department of Labor (DOL), formally publishes new regulations on Monday, November 17, 2008. Among the many changes contained in the regulations, are provisions dealing with the recently enacted leave benefits for family members of both seriously injured or ill service members and National Guard and Reserve members who have been called to service.

On January 28, 2008, President Bush signed into law the National Defense Authorization Act for FY 2008 (NDAA). One section of the NDAA was an amendment to the Family and Medical Leave Act of 1993 (FMLA) which created two new types of FMLA leave: Military Caregiver Leave and Active-Duty Leave. Although the NDAA became effective immediately following the President's signature, the DOL announced that it would not look to enforce the Act until it issued regulations as long as an employer was attempting to comply with the NDAA "in good faith." The new regulations apparently end this amnesty period.

Active-Duty Leave, as the name suggests, is triggered when the employee's relative is called to active duty. It can be taken by employees spouse, parent, or child who is on or has been called to active duty in the Armed Forces. These workers may take up to 12 weeks of FMLA leave when they experience "any qualifying exigency." The new regulations finally define what is a "qualifying exigency."

Section 825.126(a) of the final rule defines qualifying exigency by providing a specific and exclusive list of reasons for which an eligible employee can take leave because of a qualifying exigency. These reasons are divided into seven general categories: (1) Short-notice deployment, (2) Military events and related activities, (3) Childcare and school activities, (4) Financial and legal arrangements, (5) Counseling, (6) Rest and Recuperation, (7) Post-Deployment activities, and (8) Additional activities.

The short-notice deployment category involve the situation where a covered military member is notified less that seven days prior to a deployment. Under these circumstances, leave can be taken to address any issue that arises from the deployment. Leave taken for this purpose can be used for a period of seven calendar days beginning on the date the covered military member is notified of an impending call or order to active duty.

The Military Events and related activities category allows leave to attend any official ceremony, program, or event sponsored by the military and to attend family support and assistance programs and informational briefings sponsored or promoted by the military, military service organizations, or the American Red Cross that are related to the active duty or call to active duty status of a covered military member.

The Childcare and School activities category allows an eligible employee to take leave to arrange childcare or attend certain school activities for a biological, adopted, or foster child, a stepchild, or a legal ward of the covered military member, or a child for whom the covered military member stands in loco parentis, who is either under age 18, or age 18 or older and incapable of self-care because of a mental or physical disability at the time that FMLA leave is to commence.

Leave may be taken under this to arrange for alternative childcare when the active duty or call to active duty status of a covered military member necessitates a change in the existing childcare arrangement; (2) to provide childcare on an urgent, immediate need basis (but not on a routine, regular, or everyday basis) when the need to provide such care arises from the active duty or call to active duty status of a covered military member; (3) to enroll the child in or transfer the child to a new school or day care facility when enrollment or transfer is necessitated by the active duty or call to active duty status of a covered military member; and (4) to attend meetings with staff at a school or a day care facility, such as meetings with school officials regarding disciplinary measures, parent-teacher conferences, or meetings with school counselors, when such meetings are necessary due to circumstances arising from the active duty or call to active duty status of a covered military member.

The Financial and Legal Arrangements category allows qualifying exigency leave to make or update financial or legal arrangements to address the covered military member’s absence while on active duty or call to active duty status, such as preparing and executing financial and health-care powers of attorney, transferring bank account signature authority, enrolling in the Defense Enrollment Eligibility Reporting System (“DEERS”), obtaining military identification cards, or preparing or updating a will or living trust. It also allows leave to act as the covered military member’s representative before a federal, state, or local agency for purposes of obtaining, arranging, or appealing military service benefits while the covered military member is on active duty or call to active duty status and for a period of 90 days following the termination of the covered military member’s active duty status.

The Counseling category allows qualifying leave to attend counseling provided by someone other than a health-care provider for oneself, for the covered military member, or for the biological, adopted, or foster child, a stepchild, or a legal ward of the covered military member, or a child for whom the covered military member stands in loco parentis, who is either under age 18, or age 18 or older and incapable of self-care because of a mental or physical disability at the time that FMLA leave is to commence, provided that the need for counseling arises from the active duty or call to active duty status of a covered military member.

The Rest and Recuperation category provides leave to spend time with a covered military member who is on short-term, temporary rest and recuperation leave during the period of deployment. Eligible employees may take up to five days of leave for each instance of rest and recuperation.

The Post-Deployment activities category allows qualifying exigency leave to attend arrival ceremonies, reintegration briefings and events, and any other official ceremony or program sponsored by the military for a period of 90 days following the termination of the covered military member’s active duty and to address issues that arise from the death of a covered military member while on active duty status, such as meeting and recovering the body of the covered military member and making funeral arrangements.

Finally, the Additional Activities category allows leave to address other events which arise out of the covered military member’s active duty or call to active duty status provided that the employer and employee agree that such leave shall qualify as an exigency, and agree to both the timing and duration of such leave.

A future post will address how the new regulations answer the many open issues surrounding military caregiver leave. Stay tuned.