New York Labor and Employment Law Report : New York Employment Lawyer & Attorney : Bond Schoeneck & King Law Firm : NY Labor Relations, Employee Benefits

On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“Tax Relief Act”), which generally extended the Bush-era tax reductions through December 31, 2012. The Tax Relief Act also includes several employee benefits-related extensions of interest to employers.

Educational Assistance Programs

Section 127 of the Internal Revenue Code (“Code”) permits an employer to maintain a program to provide tax-free educational assistance to its employees, provided that certain eligibility and nondiscrimination requirements are satisfied. A qualified educational assistance program may provide up to $5,250 in tax-free educational assistance for the payment of tuition and related expenses for undergraduate and graduate level coursework. Code Section 127 was scheduled to expire on December 31, 2010. The Tax Relief Act extends the application of Code Section 127 through December 31, 2012, allowing employers to continue to provide tax-free educational assistance to their qualifying employees for an additional two years.

Adoption Assistance Programs

Code Section 137 permits an employer to provide tax-free adoption assistance benefits (up to $13,360 per eligible child for 2011) to its employees, subject to the satisfaction of certain eligibility and nondiscrimination rules. Code Section 137 was scheduled to expire on December 31, 2011. However, the Tax Relief Act extends the application of Code Section 137 through December 31, 2012.

Mass Transit and Vanpool Benefits

Under current law, an employee may exclude from income up to $230 per month in qualified employer-provided mass transit and vanpool benefits (along with employer-provided parking benefits), provided that the program satisfies the requirements of Code Section 132(f). However, the permitted exclusion amount for mass transit and vanpool benefits was scheduled to be reduced to $120 per month after December 31, 2010. The Tax Relief Act extends the $230 monthly exclusion amount for employer-provided mass transit and vanpool benefits through December 31, 2011. The exclusion for employer-provided parking benefits is not subject to this sunset provision.
 

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Last month, we posted on the NLRB’s renewed focus on remedies, including the use of federal court 10(j) injunction proceedings in cases involving discharges of union organizers. Last week, the NLRB’s Acting General Counsel, Lafe E. Solomon, issued a memorandum to Regional Directors discussing other remedies they should seek in cases involving alleged employer unfair labor practices committed during a union organizing campaign. The expressed rationale for this initiative is that stronger remedies are often required for unfair labor practices committed during a union organizing campaign in order to ensure a fair election. One cannot help but wonder, however, if the Board’s new-found emphasis on remedies related to organizing campaigns is not designed to compensate for the Obama administration’s inability to fulfill its promise to its union supporters by passing the Employee Free Choice Act.

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Providing further evidence that the Obama National Labor Relations Board will be highly activist and pro labor, the Board has proposed a new rule  which would require employers to post a notice informing employees of their National Labor Relations Act (“NLRA”) rights, including the right to: organize a union; form a union; bargain collectively through a union representative; and engage in concerted activity with other employees.

The Board justifies the rule as necessary based on presumption that  most employees are unaware of their rights under the NLRA to engage in protected concerted activities and form unions. The Board believes that requiring a notice posting by all employers will inform employees of their rights and will also dissuade employers from engaging in unfair labor practices under the NLRA.
 

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In a move akin to delaying Christmas after all the hard work of shopping, wrapping and baking is done, the IRS (and the Departments of Labor and Health and Human Services) have delayed compliance with the nondiscrimination requirements of the Affordable Care Act until after regulations or other administrative guidance are issued (IRS Notice 2011-1).  The nondiscrimination rules would otherwise apply to insured, non-grandfathered group health plans for plan years beginning after September 23, 2010. Grandfathered insured plans are required to comply beginning with the first plan year grandfathered status is lost.

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To date, three federal courts have ruled on the constitutionality of the section of the Patient Protection and Affordable Care Act (“PPACA”), which, beginning in 2014, imposes a monetary penalty on individuals who are not covered by adequate health insurance. The coverage requirement is commonly known as the individual mandate.

On December 13, 2010, Judge Henry E. Hudson of the United States District Court for the Eastern District of Virginia ruled that the individual mandate is unconstitutional and not enforceable. This decision conflicts with two prior Federal court decisions, one from the Eastern District of Michigan and one from the Western District of Virginia. In those cases, the courts held that the individual mandate is constitutional.

Most recently, on December 16, 2010, the constitutionality of the individual mandate was argued before Judge Robert Vinson in the Northern District of Florida. The Northern District of Florida case, which has not yet been decided, was brought by twenty states and challenges the PPACA on several grounds, including the constitutionality of the individual mandate. The constitutionality of the individual mandate is likely to be determined eventually by the United States Supreme Court.

Despite the current uncertainty created by the conflicting court decisions, senior White House officials have said that the Obama Administration will continue to work vigorously to implement the PPACA. With respect to those PPACA provisions that become effective before 2014, employers and group health plan sponsors should do the same thing. Even though the individual mandate is not scheduled to become effective until 2014 (and may not become effective at all), employers and group health plan sponsors should continue to implement applicable PPACA requirements that took effect in 2010 or that will take effect beginning in 2011.
 

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On Monday, December 13, 2010, Governor Patterson signed the Wage Theft Prevention Act, which broadens greatly the Department of Labor’s enforcement powers, imposes new and expanded notification requirements on employers, and increases significantly employers’ potential liability for violations of the Labor Law. A summary of the major changes, which take effect on April 12, 2011, is provided below.

Notice Requirements

The Act makes significant changes to section 195 of the Labor Law by requiring employers to provide even more information to employees, both upon hire and on or before February 1 of each following year. Required information now includes, among other things: pay rates, basis of pay rate, how the employee will be paid (e.g., hour, shift, week, salary, etc.), any allowances claimed as part of the minimum wage, the regular pay day, and “such other information as the commissioner deems material and necessary.” Employers must provide this documentation in both English and in the employee’s primary language and maintain accurate records for six years. The Commissioner of Labor will establish dual-language templates for purposes of complying with these changes.

Failure to provide notice as required by section 195 within ten business days of the employee’s first day of employment allows either the Commissioner or the employee to bring an action to recover damages of $50 for each work week that the violation occurred, plus costs and reasonable attorney’s fees. Damages recoverable for prevailing employees are capped at $2,500. No such maximum applies for actions brought by the Commissioner.
 

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When a federal agency like the Occupational Safety and Health Administration (OSHA) wants to make new rules, it is supposed to engage in formal, “notice-and-comment” rulemaking: it first publishes a proposed rule, allows the public to submit comments, and then issues a final rule, which may or may not contain revisions based on the comments. Formal notice and comment rulemaking is time consuming and places significant administrative burdens on the agency.

In the last year, OSHA has avoided the formal rulemaking process by taking informal actions under the guise of enforcement policies. For example, in November 2009 it issued a “Fact Sheet” of specific measures that all retail stores should implement to protect their employees from unruly customers. Earlier this year, OSHA issued an open letter to employers stating that the Agency will issue a citation to any company whose work requirements encourage employees to text while they drive.
 

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GINA, the Genetic Information Nondiscrimination Act, took effect more than a year ago. Last month, the EEOC issued final regulations on GINA, as well as question and answer guidance on what the regulations mean for employers. The regulations are effective January 10, 2011. Most employers will not deliberately seek specific genetic information about employees or applicants and will not ever have to worry about many aspects of GINA. Because, however, GINA defines the term “genetic information” to include family medical history, the statute and regulations do raise some practical concerns for many employers who may end up with such information unintentionally. This post discusses those practical concerns.

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Documentation of employment activities and workplace investigations is critical for all employers. Federal contractors subject to affirmative action compliance audits by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) must be particularly diligent. The existence or absence of appropriate documentation during an OFCCP compliance audit often dictates the length and ultimate result of the audit.

Some of the records that are essential to the successful completion of an affirmative action audit are:

• proof of listing all non-executive vacancies with the local office of the Department of Labor;
• copies of outreach letters/e-mails to organizations showing efforts to attract qualified minorities, women, individuals with disabilities, and veterans;
• applicant tracking data, identifying race, gender, position applied for, and disposition of all “applicants;”
• identification by race and gender of hires, promotions, transfers, demotions, and terminations;
• annual adverse impact analyses of personnel activities, including applicant/hires, promotions, transfers, demotions, and terminations;
•  annual analysis of compensation for potential disparities due to race and/or gender; and
• copies of EEO-1 and VETS-100 filings for the prior three years.

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