August 2009

Employers are experiencing most active HR Public Policy Agenda in 30 years

Six months into the Democratic controlled 111th Congress and Obama administration, employers are experiencing the most active HR public policy agenda in 30 years. The Lilly Ledbetter Fair Pay Act was the first piece of legislation passed by the new Congress and signed by the president, and new COBRA subsidies were a key part of the Obama administration's stimulus bill.

Observers expect the 111th Congress to continue its focus on employment issues, including health care reform, union organizing rules, paid parental leave, employment eligibility and job creation. The Democratic administration is also expected to step up federal regulatory activity. And, with one vacancy on the Supreme Court already announced, and others expected, employment issues are likely to be in the forefront of judicial hearings as well.

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Lilly Ledbetter Fair Pay Act

Signed into law by President Obama in January 2009, the Lilly Ledbetter Fair Pay Act as written left employers and others in the dark as to how broadly it would be interpreted by courts and what would be considered a "discriminatory compensation decision or other practice." The Fair Pay Act overruled the Supreme Court's decision in Ledbetter v. Goodyear Tire and Rubber Co., 550 U.S. 618 (2007), which held that the time period for bringing a compensation-related charge with the EEOC begins to run on the date the discriminatory decision was made and not with each paycheck received by an employee. In response to this decision, Congress enacted the Fair Pay Act, which now permits employees to bring claims that would have been untimely under the Court's ruling.

Under the Fair Pay Act, an unlawful employment practice occurs when: (1) the discriminatory pay decision is made; (2) "an individual" becomes subject to the discriminatory pay decision; or (3) "an individual is affected by the discriminatory compensation decision or other practice." The Act is ambiguous in that it does not define "other practice."

Courts around the country, however, have recently begun interpreting the Act and the meaning of what constitutes a "discriminatory compensation decision or other practice." In a recent opinion from the Southern District of Mississippi, an employee filed suit against her employer alleging she was denied tenure and a related salary increase because of her gender in violation of Title VII. See Gentry v. Jackson State University (S.D. Miss. April 17, 2009). Her employer sought summary judgment because the denial occurred in 2004 and the employee did not file her charge of discrimination with the EEOC until 2006, well after the 180 days provided by Title VII for the timely filing of a charge of discrimination.

The court acknowledged that the tenure denial itself was a discrete act of which the employee obviously was aware because the denial of tenure also meant that she was denied a salary increase. However, the court denied the employer's motion for summary judgment, finding that the denial of tenure, which the plaintiff claimed negatively affected her compensation, qualified as a "compensation decision" or "other practice" affecting compensation within the Fair Pay Act.

In reaching its decision, the court relied in part on an opinion from the Eastern District of New York, which similarly found that an employee's EEOC charge against his employer for a refusal to propose the plaintiff for appointment to associate or full-time professor with tenure two years earlier was timely. See Rehman v. State University of New York at Stony Brook, (E.D. N.Y. 2009). The court also cited a decision from the District of Delaware, which held that under the Fair Pay Act a plaintiff's failure to promote claim was timely. See Shockley v. Minner (D. Del. March 31, 2009). Additionally, the court cited a decision from the Middle District of Florida, which held that plaintiffs' complaints about demotions and pay reductions that occurred sixteen years before an EEOC charge was filed were timely under the Fair Pay Act. See Bush v. Orange County Corrections Dept. (M.D. Fla. 2009).

If these decisions are any indication of how other courts are likely to rule, many cases that would have once been deemed to be untimely will be considered timely, and as a result, claims will be made years after the alleged discriminatory pay decision was made. Further, it is becoming clearer now how courts may interpret "other practice" under the Act.

81.2 percent of the respondents indicated that the current recession is having no impact on their decision to outsource.

The American Payroll Association (APA) conducted a survey on outsourcing in April 2009 and quantified the opinions of more that 1500 HR and payroll professionals. Some of the more interesting results involved the propensity to outsource, which continues to run very high, and respondents' recognition of numerous outsourcing benefits.

The survey found that almost one quarter (24 percent) of those taking it were employees of companies who outsourced more today than in the past. The growing number of companies using outsourcing as a way to gain a strategic advantage in the marketplace is another indicator of the widespread recognition of its value. In fact, survey participants identified a variety of outsourcing benefits, including:

• Minimizes risk
• Increases productivity
• Saves money
• Leverages integrated solutions
• Improves service and employee satisfaction
  

The clear benefits from outsourcing have convinced more and more companies to pursue the outsourcing option, particularly for HR-related activities. "Perhaps equally striking was the overwhelming majority of respondents who told us their decisions to outsource were not being impacted by the current economy or recent legislative changes."

According to the Trendline Survey a startling 81.2 percent of the respondents indicated that the current recession is having no impact on their decision to outsource. Similarly, 83.3 percent indicated that significant legislative changes also appeared to have little impact on their decision on whether or not to outsource. The large majority on both questions is a leading indicator of the overall interest in and perceived value of outsourcing.

If your company is seeking to outsource payroll, benefits administration, tax filing or any other aspects of its human resources management function, you are not alone. The APA-conducted Trendline Survey clearly indicates more and more companies recognize the value of and are moving forward with their outsourcing plans.

The American Payroll Association (APA) is a company providing in payroll education, publications, and training.

Small businesses are becoming more efficient in recession – What are you doing?

Small business owners say the recession is pushing them to be more efficient, innovative, and cultivate stronger teams, according to a survey from Network Solutions LLC and the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business.

Two-thirds (66 percent) of small businesses are finding new ways to operate more efficiently during the economic downturn

Based on a survey of 500 private small business owners with less than 100 employees, 42 percent think the economy has caused their company to become a better team and the same percentage are offering new products and services to help customers.

This is the time to really look at the team you have in place.  Some great questions to be asking yourself as a manager or

1. If I know everything I know now – would I hire them tomorrow?
2. Do they show initiative on a regular basis?
3. Do they have a positive impact on our environment and our efforts?
4. Are they looking for ways to improve their area and work flow?  Are they sharing those ideas with the Company?
5. Are they apart of the team? 
6. Will they go the extra mile? 
7. Are the interested in our success or are they just holding on?
   

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And “Those taking actions to become more efficient in what they do and getting better at working in teams are also the ones who are externally focused on their customer base to introduce new products and services that benefit their customers,” said P.K. Kannan, director of the Center for Excellence in Service at the Robert H. Smith School of Business.

As tattoos, piercings and other forms of body art have become increasingly prevalent, Companies are grappling with how to deal with this trend. While many younger workers proudly display their body art, older workers have exhibited a variety of responses. Some are offended, some have embraced the fad, while still others seem unfazed.

The Prevalence Of Tattoos And Piercings Has Exploded
A recent Pew Research Center poll reported that 36% of 18- to 25-year-olds and 40% of 26- to 40-year olds have at least one tattoo. In those same age groups, 30% and 22% respectively have a piercing somewhere other than their ears. The same survey found that even in the 40 to 60 year old age group, over 10% had tattoos or piercings outside of their ears, with these numbers expected to grow as the demand for tattoos and piercings – so-called "body art" – becomes even more mainstream.
The growth in popularity of body art provides challenges for employers in every industry and profession. Many employers have responded by implementing dress and grooming policies seeking to limit or prohibit employees' open display of tattoos and piercings while at work. In 2006, for example, San Bernardino County, California, began requiring its public employees to cover any tattoos and remove visible facial piercings while at work. Since last year, Los Angeles city firefighters have been required to cover all tattoos while on the job, and for the past five years, the Los Angeles Police Department has had a requirement that all officers cover any visible tattoos.

Protecting Employers' Legitimate Interests
Although some employers, particularly in traditionally creative fields, may encourage employee displays of body art as a form of self-expression, many others worry that their employees' visible body piercings and tattoos may be off-putting or even offensive to customers, investors, and the public at large. With the growing popularity of body art, particularly among younger employees, what is a business to do?
Those with too-stringent grooming and dress code requirements risk driving off talented employees and hurting employee morale, while at the same time, an employer such as a hospital may have legitimate concerns that an employee's mode of self-expression will alienate or offend patients or patients' families. As explained below, this issue also raises some potential legal considerations.

Employers have wide latitude to establish dress and grooming policies under the law, but it also makes sense to consider the underlying reasons for appearance requirements before implementing a strict policy. Obviously, not all positions require traditional business dress, and not all positions involve interactions with customers or the public either. This means that strict grooming and dress policies, which prohibit all displays of tattoos and piercings, may be unnecessary and even demoralizing to a growing segment of employees.

Developing An Effective Policy
Even employers that permit piercings or tattoos may still find it necessary to set some limits. A detailed dress code and grooming policy should clearly spell out what is permitted. For example, if you permit the display of tattoos, you may prohibit the display of sexually graphic, violent, or otherwise offensive tattoos, or may require that employees limit the number of visible tattoos.

To ensure employee support of and compliance with dress and grooming policies, employers will probably want to consider involving workers in the development of dress and grooming policies. They should also be prepared to make a business case for any restrictive policy decisions. At minimum, this will help employees understand the business need for the policies. Having had the opportunity to provide input, employees are more likely to support a dress and grooming policy, even one they do not entirely agree with.

Dealing With Religious Issues
Companies must also consider how to respond if an employee asserts a right to a particular tattoo, jewelry or hairstyle on religious grounds. You cannot treat employees or applicants more or less favorably because of religious beliefs or practices. In fact, you must accommodate employees' sincerely held religious practices, unless doing so would impose an undue hardship. According to the EEOC, modification of grooming requirements is an accommodation that may be required. But you are not required to accommodate religious beliefs or practices if doing so would impose an undue hardship on legitimate business interests.

The standard for demonstrating an undue hardship is not high, but employers must be prepared to show that they, indeed, considered the request for accommodation, as opposed to simply dismissing it out of hand.

As is so often the case, the most important factor may be proving that you have acted consistently. Employers may not place more restrictions on religious expression than on other forms of expression that have comparable effect on the workplace. Some employers have already learned the hard way that if a ball cap or flamboyant hairstyle does not pose an undue hardship, neither does a turban or a head scarf that is based upon sincerely-held religious convictions. The key, as always, is consistent and even-handed treatment of all such requests. This is another situation where supervisory training is critical. Supervisors and managers must be trained to consult with human resources when facing these situations.

Fear that other employees may be upset by or "uncomfortable" with a religious expression is very unlikely to constitute an undue hardship. On the other hand, you can establish an undue hardship by showing that the accommodation diminishes efficiency in other jobs, impairs safety or requires more than ordinary administrative costs.
Finally, no matter how your hospital or clinic deals with these issues, applicable policies should be clearly stated in writing and readily available to all employees.

Conclusion
Like it or not, traditional dress code and appearance standards are being challenged today more than ever. While employers still retain wide latitude, practical, social and legal factors are requiring more careful consideration of requests that might have been readily (and safely) dismissed several years ago. As last year's experience in Texas demonstrated, it is advisable to seek employee input before making major changes to employee appearance standards. Failure to do so could result in unpleasant surprises.

Supreme Court Upholds Arbitration Of Discrimination Claims

On April 1, 2009, the Supreme Court upheld the enforceability of arbitration provisions in collective bargaining agreements, which require employees to arbitrate claims under federal anti-discrimination law. While it marks a sharp departure from the established law in much of the country, for employers, it is welcome news. 14 Penn Plaza v. Pyett.

Background
Employers often choose to arbitrate employee grievances rather than let them go before a jury. This has always been the traditional way of dealing with grievances regarding the terms of a collective bargaining agreement, such as claims for wages or benefits.

But until today, the Supreme Court had not decided whether a union contract could bind employees to arbitrate discrimination claims arising under federal law. In a 1974 case, Alexander v. Gardner-Denver, the Supreme Court held that union-negotiated arbitration agreements regarding federal rights are unenforceable. Later, in Gilmer v. Interstate/Johnson Lane, the Court held that individual arbitration agreements are enforceable as long as their terms are "clear and unmistakable."

The Supreme Court's lack of clarity on the matter has caused a great deal of confusion among the lower courts. While some courts will enforce the arbitration provision of a union contract as long as its terms are "clear and unmistakable," the majority of lower courts have held that provisions requiring an employee to arbitrate discrimination claims under federal law are always unenforceable. The resulting uncertainty created a situation tailor-made for the Supreme Court to step in and impose a uniform standard.

Two Bites At The Apple
Stephen Pyett, Thomas O'Connell, and Michael Phillips worked as night watchmen at 14 Penn Plaza. They were members of Local 32BJ of the Service Employees International Union and were subject to a collective bargaining agreement which provided that all claims made under Title VII, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA) were subject to binding arbitration. The arbitration provision itself had been heavily negotiated throughout the bargaining process, and came about only after the employer conceded a sizable wage increase and benefit enhancements. Furthermore, the provision provided employees a union attorney at no cost, or, alternatively, a private attorney of the employee's choosing at cost.

In an effort to increase the building's security, the Company hired additional night watchmen. Pyett, O'Connell and Phillips were reassigned to different locations throughout the building. The employees, unhappy with their reassignments, utilized the arbitration process, claiming that the Company had violated the collective bargaining agreement and had discriminated against them on the basis of their age. Prior to the arbitration hearing, the Union withdrew the claim for age discrimination without protest from either the employees or their attorneys. After a four-day hearing, the arbitrator denied all of the employees' remaining claims.

The employees then filed a lawsuit in federal district court alleging that their reassignment violated the ADEA. Thinking that the issue had already been resolved through arbitration, the Company asked the court to dismiss the lawsuit or, in the alternative, to refer the case back to arbitration to resolve the employees' federal claims of age discrimination.

The court did neither. Instead, it held that the Company's arbitration provision violated the employees' rights to pursue their claims in a federal courtroom. On appeal, the U.S. Court of Appeals for the Second Circuit, which includes New York, Connecticut, and Vermont, agreed, stating flatly, "[A] union negotiated mandatory arbitration agreement purporting to waive a covered worker's right to a federal forum with respect to statutory rights is unenforceable."

The Supreme Court's Decision
In a 5-4 decision, the Supreme Court has reversed the Second Circuit and held that a collective bargaining agreement that requires employees to arbitrate discrimination claims is enforceable. Chief Justice Roberts and Justices Alito, Kennedy, and Scalia, joined in Justice Thomas' majority opinion. Justices Breyer, Ginsburg, Souter, and Stevens dissented.

As Justice Thomas explained, an arbitration provision is clearly a "condition of employment" that is a mandatory subject of bargaining. "As in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective bargaining agreement in return for other concessions from the employer. Courts generally may not interfere in this bargained for exchange."

Federal antidiscrimination laws do not change this basic premise. Although Title VII, the ADA, and the ADEA protect important substantive rights, they do not prohibit employees from pursuing these rights in arbitration. That means that a union may agree to submit employees' discrimination claims to binding arbitration.

Conclusion
The Supreme Court's decision is welcome news to employers. The quicker and more cost-efficient resolution generally provided through arbitration almost always outweighs the risks of going before a jury.

And the Court's ruling provides an additional benefit. Under the prior law, employers would often find themselves in the difficult position of having to defend a single claim in two arenas. Take, for example, the case in 14 Penn Plaza v. Pyett. There, the employer was forced to defend the employees' reassignment in front of the arbitrator as well as in federal court. Obviously, this imposed a significant burden on the company with regards to both resources and management time.

Now, in being able to negotiate an enforceable arbitration provision that encompasses grievances under both the CBA and federal statutory law, employers can defend employee grievances in a single forum – a forum that does not involve the costs and unpredictability of a jury proceeding.