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Friday, April 24, 2009

Employee Free Choice Act Update

Employee Free Choice Act Update – Procrastination is Risky
Reprint - Opelika & Auburn News, April 26

Lulled either by a false sense of security or by numbness stemming from the confusing messages related to the prognosis for the Employee Free Choice Act (EFCA), most employers are falling asleep behind the wheel. There are dramatically different very effective actions an employer can take now to stay non-union than after the EFCA in some form passes. While it seem that the cards are stacking up against the bill passing "as is," bubbles of compromise discussion have continued to surface, and even those who have said "no" to the bill, have typically qualified their "no" by specifying they are opposed to the current version of the bill.

Impact of the Employee Free Choice Act
  1. Gets rid of secret ballot elections in union campaigns. Under EFCA, your company can be forced to bargain with a union if a majority of employees secretly sign authorization cards in favor of a union (this is known as a “card-check”). As union organizers secretly penetrate your firm, your employees become victim to high-pressure and intimidation tactics to get cards signed and you will never know what is happening.
  2. Severe monetary penalties for employers. The “Free Choice” Act also changes the current “make whole” remedies for employer unfair labor practices into severe “punitive” damages, including things like double back-pay and $20,000 fines (per incident). These penalties could easily devastate a small employer.
  3. Mandatory arbitration to impose a union contract. The most shocking part of the “Free Choice” Act is its mandatory arbitration provision. If you don’t reach a “fast track” contract with a union then government-appointed arbitrators - with no special knowledge of your business - are required to force you into a labor contract even if it could put a company out of business.
Big Labor mogul Andy Stern, head of the Service Employees International Union (SEIU), is a political scrapper with Congress right now for the EFCA and vows that the bill will pass. Check him out on Wikipedia: He has recently reached an agreement with a rival union to split the proceeds of hospital organizing (nurses to service staff) in the State of Florida. He is also calling for Kenneth Lewis’s (CEO and Chairman of Bank of America) head on a platter. Why would a union be after Lewis? Big Labor is trying to capitalize on the controversy and consumer anger that the $$$ billions in government funding has created, to push their agenda for labor law change, specifically the Employee Free Choice Act. These attacks are all about card check. By accusing a major company of abusing consumers and workers, Big Labor stands to gain support in Congress for changes they are trying to push through.

Practical Counsel: Big Labor will not rest - there will be labor law change, whether it comes via one "big" bill like EFCA, a compromise bill, or a group of smaller actions. It will become much more difficult and very risky for businesses to overcome organizing attempts in the near future, and more businesses will be susceptible to secret union organizing campaigns than ever before. They must prepare now, or they will pay the price for their procrastination in the very near future. Step to Take Now to “Immunize” Your Company Against A Secret Union Organizing Attack:
  • Update you solicitation-distribution policy in your employee handbook
  • Conduct EFCA Awareness Training and Coaching Training for your Supervisors
  • Conduct Employee Surveys to uncover what needs to be corrected
  • Do work team round tables to identify problems and employee attitudes
  • Be transparent with your financial picture in employee meetings
  • Focus Groups across broad sections of your workforce to involve your employees
  • Encourage employee action committees out of focus group problem solving
Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at 

Sunday, April 19, 2009

Ledbetter Complaints

Pay Discrimination: Are You Protected Against Ledbetter Complaints?
Reprint - Opelika & Auburn News, Sunday, April 19

Being able to prove that your compensation practices do not discriminate based on gender, race, age, or another protected characteristic is more important than ever. The recently enacted Lilly Ledbetter Fair Pay Act has amended Title VII, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Rehabilitation Act to clarify that a discriminatory compensation action occurs each time a discriminatory paycheck is issued.
With more legal challenges being brought based upon pay discrimination, it is time to review/audit your company's compensation practices to: (1) identify pay differences between similarly situated individuals of a different gender, (2) then to identify whether the reason for the disparity is based on a valid business reason, and (3) to adopt a written Comprehensive Compensation Plan to show how you objectively support the difference.
The Ledbetter EffectUnder the Act, the Fair Pay Act (EPA) has a retroactive effective date of May 28, 2007, and applies to claims of discriminatory compensation pending on or after that date. There is already an increase in litigation in the form of class action litigation. Post-Ledbetter there is a longer time period to aggregate employees who might be affected and there is an opportunity to get greater class litigation. A claim that was typically filed under the Equal Pay Act (EPA) is now more attractive under Title VII because compensatory and punitive damages are now available, and there are attorney's fees available, which really seems to attract plaintiff's attorneys. Also, we are seeing an increase in news stories of gender wage disparity.
What are Lawful Differences In Pay?According to the U.S. Census Bureau, in 2007 (the latest figures released), for every dollar a man earns, a woman earns 78 cents. The law before Ledbetter and the law after Ledbetter does not require that you pay people the same wage. If you have a department of all men, you are not going to pay them the same as each other, and if you have a department of all women, you're not going to pay them all the same as each other. The fact that you have men and women working side by side does not mean they all have to get paid the same for the same job. The EPA, for example, permits employers to pay wages to employees at a rate less than the rate at which the opposite sex is paid for comparable work if the employer can prove the difference in the rate of pay is based on any of the following:
  1. Seniority system
  2. A merit system
  3. A system that measures earnings by quantity and quality of production: or
  4. A differential based on any factor other than gender (e.g., an individual's experience, salary history, or salary negotiations during the hiring process; market conditions; the salary of other new hires that year).
The Department of Labor’s Women’s Bureau suggests employers ask these questions:
  1. Industry competitiveness.
    Do you have a method to determine the market rate for any given position?
    How do you ensure that market rates are applied consistently?
  2. New hires.At what grades or positions do men, women, and minorities typically enter your company?
    Within those grades and positions, are salaries consistent, or do men, women, and minorities enter at different pay levels?
    How does negotiation affect entry-level salaries? Are men able to negotiate higher starting salaries than women or minorities?
    How do new hires compare in salary to those already working in the company in the same grades or positions?
  3. Commissions, bonuses, and employee performance.Are employees assigned projects or clients with high commission potential on an objective basis?
    Are employees with similar levels of performance awarded bonuses on a consistent basis? Do they receive bonuses of similar monetary values?
    Is there a consistent method of evaluating performance for all employees?
    Do employees receive consistent raises based on similar performance standards? (i.e., Are all workers with outstanding evaluations awarded the same percentage increases? If not, what are the reasons for the difference?
  4. Employee training, development, and promotion opportunities.How are employees selected for participation in training opportunities or special projects that lead to advancement?
    Is it possible that a reasonable jury could conclude that selection criteria are based on race, gender, national origin, age, or other protected characteristic?
Practical Counsel: All compensation plans should be reviewed/audited to avoid being caught in the “Ledbetter Effect”.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at 

Sunday, April 12, 2009

New COBRA Notices

New COBRA Notices-Send Now to Avoid Fines
Reprint - Opelika & Auburn News, Sunday, April 12.

The IRS and DOL (Department of Labor) have recently issued guidance relating to section 3001 of the American Recovery and Reinvestment Act of 2009 (ARRA), enacted February 17, 2009, relating to premium assistance for COBRA continuation coverage. ARRA provides for a 65 percent reduction in the premium otherwise payable by certain involuntarily terminated individuals and their families who elect COBRA continuation health coverage. New notices must be postmarked no later than April 17, 2009 to avoid substantial fines of $110 a day and attorney fee claims. Examine all your employee terminations since beginning Sept 1, 2008 and determine if you are need to take action today.

DOL Guidance:

IRS Guidance:$File/IRS_Notice_2009-27_PremAsstCOBRABenes033109.pdf

Under the new provision, an assistance eligible individual is generally an individual (1) who is a qualified beneficiary as the result of an involuntary termination during the period from September 1, 2008, through December 31, 2009, (2) who is eligible for COBRA continuation coverage at any time during that period, and (3) who elects the coverage. Group health plans must generally treat assistance eligible individuals who pay 35 percent of the premium otherwise payable for COBRA continuation coverage as having paid the full amount of the premium. The employer is reimbursed for the other 65 percent of the premium that is not paid by the assistance eligible individual through a credit against its federal payroll taxes. I have received a number of client questions for which this IRS 58 Q&A topical guidance was most helpful. A sample is as follows:

Q-1. What circumstances constitute an involuntary termination for purposes of the definition of an assistance eligible individual?
A-1. An involuntary termination means a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee's implicit or explicit request, where the employee was willing and able to continue performing services. An involuntary termination may include the employer's failure to renew a contract at the time the contract expires, if the employee was willing and able to execute a new contract providing terms and conditions similar to those in the expiring contract and to continue providing the services. In addition, an employee-initiated termination from employment constitutes an involuntary termination from employment for purposes of the premium reduction if the termination from employment constitutes a termination for good reason due to employer action that causes a material negative change in the employment relationship for the employee. Involuntary termination is the involuntary termination of employment, not the involuntary termination of health coverage. *** The determination of whether a termination is involuntary is based on all the facts and circumstances. For example, if a termination is designated as voluntary or as a resignation, but the facts and circumstances indicate that, absent such voluntary termination, the employer would have terminated the employee's services, and that the employee had knowledge that the employee would be terminated, the termination is involuntary.

Q-2. Does an involuntary termination include a lay-off period with a right of recall or a temporary furlough period?
A-2. Yes. An involuntary reduction to zero hours, such as a lay-off, furlough, or other suspension of employment, resulting in a loss of health coverage is an involuntary termination for purposes of the premium reduction.

Q-4. Does involuntary termination include an employer's action to end an individual's employment while the individual is absent from work due to illness or disability?
A-4. Yes. Involuntary termination occurs when the employer takes action to end the individual's employment status (but mere absence from work due to illness or disability before the employer has taken action to end the individual's employment status is not an involuntary termination).

Q-5. Does involuntary termination include involuntary termination for cause?
A-5. Yes. However, for purposes of Federal COBRA, if the termination of employment is due to gross misconduct of the employee, the termination is not a qualifying event and the employee and other family members losing health coverage by reason of the employee's termination of employment are not eligible for COBRA continuation coverage. (This is a very dangerous issue that must be documented correctly)

Q-6. Does an involuntary termination include a resignation as the result of a
material change in the geographic location of employment for the employee?
A-6. Yes.
DOL Guidance Sample Q&A of 27 topics:
Q7: Has the DOL developed model notices?
A7. Yes. The Department of Labor has developed model notices that are available.

Practical Counsel: All DOL model notices and forms must be modified for use with your group health plan by inserting specific information and deleting inapplicable provisions. ARRA is highly complicated as this DOL and IRS guidance shows. Doing nothing, or guessing wrong, can be expensive.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at