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

Effective for plan years beginning on or after November 1, 2011, fiduciaries of participant-directed individual account based retirement plans will be required to provide plan participants and beneficiaries with certain fee, expense and investment-related information. These rules are part of a final regulation issued by the United States Department of Labor ("DOL") on October 20, 2010. In a proposed regulation issued on June 1, 2011, the DOL proposed a 60-day extension of the time period that a plan administrator has to provide certain initial disclosures, once the final regulation becomes applicable to the plan. Given the limited duration of the delay, however, plan administrators should begin or continue to take steps to comply with the requirements of the final regulations.

Background

To the extent that a plan assigns investment responsibilities to participants and beneficiaries, the DOL takes the position that pursuant to ERISA’s fiduciary obligations such individuals should be provided with sufficient information regarding plan fees, expenses and designated investment alternatives so that they can make informed investment decisions. Participant-directed individual account plans that elect to comply with ERISA Section 404(c) in order to protect plan fiduciaries from liability based on the investment choices made by participants are currently required to disclose certain investment-related information. The final regulation expands on the current disclosure requirements in the current ERISA Section 404(c) regulation. Significantly, the new disclosure rules apply to all individual account participant-directed plans covered by the final regulation, regardless of whether such plan is intended to comply with ERISA Section 404(c).
 

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When an OSHA citation goes to the very heart of a business--such as requiring delivery-company employees never to place boxes on the floor while sorting them for shipment--it is sometimes best to enter into a corporate-wide settlement agreement (CSA), so both OSHA and the company have clearly defined expectations of what methods and workplace conditions will or will not lead to a citation. But companies must be careful. Failure to follow the terms of a CSA can create even greater liability. The largest OSHA citation in history--over $50 million dollars--was not a new citation, but rather a citation issued to BP in 2009 for failure to adhere to a CSA it had entered into in 2005. BP eventually agreed to pay the entire amount of the citation, and also agreed to spend $500 million more on a comprehensive safety and health program.

Why bring this up now? Last week, OSHA--without announcement or fanfare--issued a new directive regarding CSAs that are both national and regional in scope.  The directive states that CSAs may "go ... beyond the subject of the citations to include additional safety and health program enhancements" that were not the reason for the inspection or citation. CSAs may require employers to hire additional safety and health employees, or hire safety and health independent consultants to provide recommendations--but when a company does so, it may cede control to such consultants, as it generally must implement the recommendations or be subject to a failure-to-abate citation.  The new directive also sets a firm two-year time limit for CSAs. This firm time limit gives employers less time to make the agreed-upon changes before being subject to failure-to-abate citations.

A CSA may be the best outcome for both the employer and OSHA following a citation, but employers should be aware of the risks associated with CSAs before suggesting it as an alternative to litigation.
 

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In a huge victory for the nation’s largest private employer, the United States Supreme Court ruled on June 20, 2011, that a class comprised of an estimated 1.5 million former and current female Wal-Mart employees could not proceed with a class action lawsuit alleging gender discrimination under Title VII of the Civil Rights Act of 1964. Due in part to the sheer magnitude of the proposed class, the case – Wal-Mart Stores, Inc. v. Dukes – has received an enormous amount of media attention. At least within legal circles, the decision is likely to continue to receive attention for years to come because it has a significant impact on the standard used to determine whether the claims of diverse plaintiffs have enough in common to be certified as a class action.   The decision will make it much more difficult for very large groups of plaintiffs to litigate their employment-related claims together and thereby increase their economic leverage in litigation.

The issue before the Court was whether the former and current employees could proceed with their claims together in the form of a class action sex discrimination lawsuit. The plaintiffs alleged that Wal-Mart discriminated against female employees by denying them equal pay and/or promotions. More specifically, the plaintiffs contended that the discrimination was due to Wal-Mart’s pay and promotions policy. The policy generally left pay and promotion decisions to the broad discretion of managers and supervisors. There was little oversight of such decisions by upper management. The plaintiffs contended that this broad discretion fostered a discriminatory corporate culture that included the use of gender stereotypes in pay and promotion decisions.
 

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Earlier today, the United States Department of Labor (“Department”) issued a Notice of Proposed Rulemaking which would expand the reporting requirements of employers and the labor relations consultants they hire to advise them during a union organizing campaign. The Labor-Management Reporting and Disclosure Act (“LMRDA”) already requires employers and labor relations consultants to file annual reports with the federal government to disclose agreements (and any associated payments), where a purpose of the agreement is to persuade employees “to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively.”

However, the LMRDA does not require a report when the services rendered relate to the “giving or agreeing to give advice” to an employer. This so-called “advice exception” has long been interpreted to exempt various activities engaged in by consultants, including the preparation of speeches and other written material used by an employer during a union organizing campaign, as long as the consultant does not meet directly with the employees for the purpose of engaging in persuader activity and the employer is free to accept or reject the written material prepared by the consultant.
 

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The New York State Department of Labor (“NYSDOL”) recently published additional guidance on compliance with the Wage Theft Prevention Act (“WTPA”). This guidance supplements the NYSDOL’s previously-issued templates, instructions and FAQs on the WTPA. Specifically, the NYSDOL recently published a “sample” paystub, demonstrating how employers should comply with the WTPA’s amendments to New York Labor Law Section 195(3). As we reported previously the amended Section 195(3), requires employers to include the following information in all employee paystubs:

• Dates of work covered by wage payment;
• Name of employee;
• Name of employer;
• Employer’s address and phone;
• Rate or rates of pay;
• Basis of rate(s) of pay (hourly, shift, day, week, salary, piece, commission or other);
• Gross wages;
• Deductions;
• Allowances, if any are claimed as part of the minimum wage (tips, meals, lodging); and
• Net wages. 

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Over the last couple of years the New York State Department of Labor has issued several opinion letters which significantly narrow its interpretation of New York Labor Law Section 193, the law governing permissible deductions from wages. We have discussed some of these interpretations in prior posts. To summarize, NYSDOL  takes the position that a deduction from wages is not permissible unless it is a deduction which is similar to those expressly recognized in the statute as lawful, e.g. payments for insurance premiums, pension or health and welfare benefits. This interpretation varies from the Department’s historical focus on whether the deduction was for the “benefit of the employee.” Based on the newer standard, NYSDOL has rejected suggestions that an employer may make deductions from wages for items such as an overpayment of wages, parking, or for wage-linked card purchases of food at an employer-subsidized cafeteria.

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A recent decision from a United States District Court in Texas is a reminder of the risk created by an adverse employment action which follows closely in time the employer’s first knowledge of an employee’s disability or other protected characteristic. The situation where an employer learns of a disability, often through a leave request, just as it is about to impose discipline for performance problems or violations of policy is not at all uncommon. And it is very similar to the situation created when an employee who is about to be disciplined complains of discriminatory harassment. When such events occur, the employer is faced with a real dilemma: either impose the discipline and risk a retaliation or discrimination claim, or sit on the discipline for some undetermined period of time. Which course is best depends on a variety of facts and operational considerations. But one thing is certain. No action should be taken unless and until a complete and thorough investigation of the underlying performance issue or policy violation is completed. We have ridden the investigations hobby horse in other contexts. The Texas case plainly illustrates its importance in this context as well.

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