Legal Briefs for HR

Welcome to Legal Briefs for HR, an update on employment issues sent to over 4500 HR professionals, in-house counsel and business owners to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in!  Back issues are posted on my firm’s website at www.munckcarter.com under E-Newsletter.  

Here’s what’s up in this fresh new year:

1. This is Not a Text – Effective January 27, commercial truck and bus drivers are banned from sending text messages while driving, per new guidance issued by the Federal Motor Carrier Safety Administration (FMCSA) of the U.S. Department of Transportation (DOT).  Violations are subject to criminal and civil penalties, up to $2,750.00.  DOT will now take steps to put the ban into its regulations and may expand the scope to address other forms of distracted driving.  At the state level, there are bans on hand-held device use while driving in CA, CT, DC, NJ, NY, OR, WA and VI and bans on texting while driving in AL, AR, CA, CO, CT, DC, IL, LA, MD, MN, NH, NJ, NY, NC, OR, RI, TN, UT, VA, WA and Guam.  For more info on the subject, including links to these state laws, check out DOT’s designated webpage at www.distraction.gov.   Keep in mind there are also many local ordinances banning texting while driving, such as the one in Austin, TX which took effect January 1.  See sec. 12-1-34 of Austin City Code.  If you have employees who drive on behalf of your organization, know what the laws require you to do, then think about what you should do if there is no applicable law in your geographic area.
2. Bucks for Hiring– Legislation has been introduced to incentivize employers to hire more folks.  In the 30’s after the Depression, Congress enacted the Fair Labor Standards Act which encouraged employers to hire more people via the economic disincentive of mandatory overtime pay for employees who worked more than 40 hours in a workweek.  Fast forward to the current economic crunch, and this time they’re thinking of offering a tax credit for employers who add headcount, increase hours worked by existing staff or restore lost employee pay.  The current version suggests a credit of 15% of payroll, to any business that expands payroll by at least 3% in any quarter of 2010, and 10% for an expansion of at least 5% in any quarter of 2011.  For full text and to monitor progress of this bill, go to http://thomas.loc.gov and put H.R. 4437 in as the bill number.
3. Bucks for Hunting – The proposed federal budget for fiscal 2011 is out and includes $117 billion for the U.S. Dep’t of Labor, with $25 million and 100 additional enforcement personnel earmarked to hunt for employers who are misclassifying their employees as independent contractors.  For a summary of the DOL proposed budget, go to www.whitehouse.gov/omb/factsheet_department_labor/.   If you are not sure that you’re handling this issue correctly, get expert help to do a self-analysis and correction before someone else does this for you.
4. Take Notice– Updated COBRA notice forms are available at www.dol.gov/ebsa/COBRAmodelnotice.html.  The updated forms reflect extension of the subsidy eligibility period, which was due to expire on Dec. 31 but has been extended to Feb. 28 (and a further extension is in the works).  Other changes made under the Dep’t of Defense Appropriations Act include extending the length of assistance from nine months to fifteen, and allowing retroactive extensions for those who stopped paying premiums when his/her subsidy expired.
5. Ever-Evolving Employee Handbooks– A new year is a good time to browse your employee handbook and see if it’s kept up with the times.  Here are a few needed changes to check for:
   1. FMLA – Has your policy been updated to include care-giver and exigent circumstances leave involving your employee taking time off to tend to family members in the U.S. military?  Did you note the expanded categories of military personnel these leaves apply to, as of October 2009?  Are you REALLY still using a fixed 12-month period to track use of FMLA when a rolling, backward-looking 12-month period would probably suit you better?
   2. Electronic Communications – Did you know that employers can be liable for the unsolicited or solicited false or misleading statements their employees make in the blogosphere about their employer’s products and services, under Federal Trade Commission (FTC) guidance which took effect on December 1?  Does your electronic communications policy advise employees what to do and provide you with a potential defense?
   3. State Law Quirks – These are too numerous to mention but include things like up to ten days of job-protected leave for volunteer members of the Civil Air Patrol in CA, effective January 1, 2010 and a statewide smoking ban, to include private and public places of employment, which takes effect on May 1.
6. Calendar Conundrum– Payroll pros are already onto this, but did you know that employers who issue bi-weekly paychecks are going to have 27 paydays this year, not 26?  So decide real soon how to handle various deductions and accruals that are annualized, and whether you will pay above employees’ stated annual salary to make that 27^th payday, or reduce the amount of pay to be consistent with the agreed-upon salary amount.  This recurring surprise happens because 26 pay periods of 14 days comes to 364 days, but your calendar has 365 days per year.  This extra day plus the addition of Feb. 29 to the calendar every four years, means this 27^th payday pops up every five to six years (and with no year containing 25 bi-weekly paydays, there is no offset to rely upon).  Happy New Year!
7. Fortunate Ones – My hat’s off to all employers honored by Fortune magazine’s “100 Best Companies to Work For” with special love directed to the 12 who are HQ’d in Texas (most of whom are LB4HR subscribers)!  The Texas honorees in the January 2019 edition of Fortune are:  Camden Property Trust (#10), Methodist Hospital System (#17), Whole Food Markets (#18), NuStar Energy (#21), Shared Technologies (#33), Container Store (#36), TDIndustries (#39), USAA (#45), EOG Resources (#67), Mens’ Wearhouse (#68), Balfour Beatty Construction (#76) and National Instruments (#87).  The folks reading this email have a lot to do with that level of employee satisfaction, so pat yourself on the back!
8. Heads’ Up, Department of Defense Contractors-  In legal circles, there’s an old adage that goes “bad facts make bad law.”  Combine that with simmering distaste for mandatory arbitration of employment claims in the executive and legislative (see Arbitration Fairness Act at H.R. 1020 & S. 931) branches of the federal government and here’s what you get.  Apparently a private sector female worker was raped by co-workers while working overseas on a DOD contract.  When she tried to sue her employer for the assault, they pointed to a mandatory arbitration agreement she had signed and compelled arbitration in lieu of her day in court.  Fast forward to this year’s Dep’t of Defense Appropriations Act, where language was added to prohibit certain DOD contractors from enforcing arbitration agreements in cases of sexual assault, but amended before enactment to broaden the scope of the prohibition.  The “Franken Amendment” applies to DOD contracts for $1 million or more entered into more than 60 days after December  19, 2009 and prohibits covered DOD contractors from entering into new or enforcing existing agreements which require, as a condition of employment,  that employees or independent contractors resolve Title VII, tort claims arising out of sexual assault or harassment (including assault and battery), intentional infliction of emotional distress, false imprisonment or negligent hiring/supervision/retention claims via arbitration.  This is not limited to the employees who work on the DOD contract.  Also, the prime contractors must certify that their subcontractors (with subcontracts in excess of $1 million) have agreed to the same prohibition (in this case, limited to employees and independent contractors who work on the DOD subcontract).
9. Promises, Promises– A small company formed in 1996 experiences a rough patch in 1997.  In order to get eight original employees to stick around, they are promised 5% of the proceeds from any sale or merger of the business.  Seven of them are still around in 2001 when the deal goes down, but no pay-out is forthcoming so they sue the company and its shareholders (who allegedly received the assets).  Round One goes to the employer, based on finding that the promises to pay were illusory, since the employee were at-will and could be let go at any time.  Round Two in the Court of Appeals also goes to the employer, but the Texas Supreme Court took a different view in Round Three, siding with the employees.  They noted that this was not akin to noncompete agreements, where there is an exchange of promises (aka bilateral agreement).  Instead, here the employees acted on the promise by sticking around, and once they performed, the unilateral agreement became enforceable. The Court explained by using the example that an offer to pay to have one’s house painted can be withdrawn at any time . . . until the person performs by painting the house.  Vanegas v. American Energy Services (Tex. 12-09).
10. Data Breach Is No Day at the Beach– The federal and state governments continue in their quest to prod organizations into preventing electronic and hard copy personal identifier (PI) data (e.g., name, address, phone number, SSN, PIN numbers, credit card info, medical info) from falling into the wrong hands.  Just a few samples:
    1. Texas – Cornerstone Fitness will pay $28,000.00 and is subject to a permanent injunction barring them from improperly disposing of customers’ records containing PI, including SSNs and driver license numbers.  The Texas Attorney General found that when the fitness center changed locations, the contents of a cabinet with personal training contracts were placed into a dumpster.  Going forward, they must  make that information unreadable, via shredding or other means, before disposing of it.
    2. Massachusetts – Starting March 1, PI that is electronically transmitted or stored on portable devices must be encrypted.  Also companies must have a written security plan and any contract with a third party that handles their PI must include safeguards to protect against disclosure of the PI.
    3. Connecticut – Attorney General is suing a multi-state managed care company that did not properly secure patients’ medical records and financial information, and failed to notify affected enrollees until nearly six months after it learned a laptop containing the unencrypted PI of 1.5 million members  (446.000 of them in CT) had gone missing. 
    4. Federal – Use http://thomas.loc.gov to see Data Breach Notification Act (S. 139) and Personal Data Privacy and Security Act (S. 1490) for attempts to replace the patchwork of state laws with a streamlined federal approach to the problem.
11. For the Birds– If you like being “tweeted” and want breaking news on employment law changes, follow me on Twitter.  I’m at @amross.

Until next time,

Audrey E. Mross
Labor & Employment Attorney
Munck Carter LLP
600 Banner Place
12770 Coit Road
Dallas, TX  75251

972.628.3661 (direct)
972.628.3616 (fax)
214.868.3033 (iPhone)
amross@munckcarter.com
www.munckcarter.com

Legal Briefs for HR (“LB4HR”) is provided to alert recipients to new developments in the law and with the understanding that it is guidance and not a legal or professional opinion on specific facts or matters.  For answers to your specific questions, please consult with counsel.  If you wish to be removed from the group, reply and put “Remove” in the subject line.  You may also reply to notify the author of an additional or changed email address.

If you wish to post, reprint or send LB4HR for the benefit of your organization, please contact the author for permission.  Upon approval, nonprofit entities may post, reprint or send LB4HR to their members for no fee.  For-profit entities may be charged a nominal fee. LB4HR is copyrighted work product and may not be posted, reprinted or sent without permission, however, individual subscribers are welcome to forward LB4HR to individuals or within their place of employment without seeking permission, so long as the author’s complete contact information is included.

Subscribers are encouraged to notify their Internet Service Provider (ISP) that amross@munckcarter.com is a trusted source, in order to receive an uninterrupted subscription to LB4HR.  Due to the size of the email group and occasional use of sensitive words, LB4HR can be perceived as spam or inappropriate email and deleted or diverted by your ISP’s filter.