Under the Act, when an employer hires a “qualified employee” the employer is excused from paying the normal Social Security match of 6.2% of the wages in 2010. What is a qualified employee you ask? A qualifying employee is one who

• is hired after Feb. 3, 2010 and before Jan. 1, 2011;
• is not hired to replace another employee;
• is not related to the employer;
• and certifies under penalty of perjury that he or she has not been employed for more than 40 hours during the 60-day period ending on the date that employment begins with the new employer.

This incentive can save the employer over $6,000 annually for each qualified employee that is hired. Under certain circumstances, the employer who hires a new employee, and retains their services for 52 weeks, may also be able to receive an additional tax credit available on the 2011 tax return equal to the lesser of $1,000 or 6.2% of the wages paid to an employee for those 52 weeks.

These tax incentives are meant to spur job creation, especially for small businesses who are undecided about whether to begin to ramp up expansion efforts in light of recent economic challenges.

Here is the press release from the Ways & Means Committee Chair describing this bill.

In its lawsuit against Sears, the EEOC had alleged that Sears maintained an inflexible workers’ compensation leave exhaustion policy and terminated employees instead of providing them with reasonable accommodations for their disabilities, in violation of the ADA.

This large settlement reminds employers that if employees are out on some form of statutory leave, like the workers’ compensation leave at issue in the Sears matter, and the employee exhausts the leave but is still experiencing a medical condition that qualifies under the ADA or California’s Fair Employment and Housing Act (FEHA), the employer must engage in the “interactive process” to determine if a reasonable accommodation (including a possible extension of the employee’s leave) is available and can be provided to the employee without creating an undue hardship on the employer.  Otherwise, strict application of leave policies that result in the termination of an employee who fails to return to work at the exhaustion of such leave may result in significant liability for the employer.

Recently, however, the government signed the Defense Department’s 2010 appropriations bill (“2010 DOD Act”) that will allow laid-off workers to receive subsidized COBRA premiums for up to 15 months, which previously expired after 9 months.

The Department of Labor’s Employee Benefits Security Administration (EBSA) has released a fact sheet explaining how the 2010 DOD Act extends the COBRA subsidy enacted during the earlier economic stimulus package. In general, the 2010 DOD Act extended the COBRA premium reduction eligibility period for two months, through February 28, 2010 and increased the maximum period for receiving the subsidy from 9 to 15 months.

Also, the fact sheet reviews the eligibility requirements for the subsidy, the new period of coverage, and notice requirements that plan administrators must provide. The fact sheet explains that plan administrators are now required to provide notice about the changes made to the COBRA premium subsidy provisions to individuals who have already been provided a COBRA election notice, unless the election notice included the updated premium reduction information. The notices must be given to eligible individuals by February 17, 2010. Individuals who have been terminated on or after October 31, 2009 and will lose health coverage must be provided this notice “within the normal timeframes for providing continuation coverage notices.” Those who had reached the end of the reduced premium period before the legislation extended it to 15 months must be provided this notice within 60 days of the last day they were eligible to receive COBRA premium assistance under the old rules.

Section 14 of IWC Wage Order 7 (entitled “Seats”), which is typical of several other industry specific wage orders, requires that (a) all workers shall be provided with suitable seating when the nature of the work reasonably permits it; and (b) when the nature of the work requires standing, the employer must provide reasonable seating in proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.  However, Section 14 does not contain its own penalty provision and does not address seating claims.

The new class action claims assert that employers who fail to comply with Wage Order seating requirements violate Section 1198 of the Labor Code, which makes it illegal to employ an employee under conditions that are prohibited by an IWC Wage Order.  These new seating claims have been brought under the Private Attorneys General Action of 2004 (“PAGA”), which allows recovery for violations of all provisions of the Labor Code except those for which a civil penalty is specifically provided.  PAGA penalties consist of $100 for each aggrieved employee per pay period for the first violation, and $200 for each aggrieved employee per pay period for each subsequent violation.

Prior to the decision in Curie-White v. Blockbuster, the only court opinion to address a seating claim was in Hamilton v. SF Hilton and the decision there weighed heavily in favor of the employer.   However, In Curie-White, the court significantly undermined several of the key defenses that had succeeded in the Hamilton case.  Most significantly, the court ruled that plaintiffs may seek civil penalties under PAGA because the penalty provision of the Wage Order “does not provide a penalty for the violation…specifically a failure to provide seats for employees.”

Given the conflict between the Hamilton and Curie-White decisions, it is likely that the issue will continue to be litigated in the more recent seating claims cases.  The ultimate resolution in those cases will likely determine whether the these seating claims form a new fad in class action litigation.

WHAT TO DO:

• Document any efforts that have been made to determine whether seats are necessary;

• Review and analyze current job descriptions and customer service standards to determine whether they clearly identify jobs where continual mobility and standing are essential functions of the job, and incorporate those standards into the job descriptions;

• Provide an adequate number of suitable seats in a nearby break room and allow employees to use the seats when it does not interfere with the performance of their duties.

Here is a link to Wage Order 7, which contains the relevant Seating Requirements at Section 14

Is there a new wave of Class Action cases coming in California?]]> http://reddingbusinessandemploymentlawblog.com/2009/12/is-there-a-new-wave-of-class-action-cases-coming-in-california/feed/ 0 http://reddingbusinessandemploymentlawblog.com/2009/12/make-sure-your-supervisors-are-implementing-employees-accommodations/ http://reddingbusinessandemploymentlawblog.com/2009/12/make-sure-your-supervisors-are-implementing-employees-accommodations/#comments Thu, 17 Dec 2009 19:15:40 +0000 Shawn McCammon http://reddingbusinessandemploymentlawblog.com/?p=142 In September 2009, the First Appellate District of the California Court of Appeal affirmed a Marin County trial court decision awarding an Albertson’s employee $200,000 in damages for a FEHA violation (CA Gov’t Code Sections 12900-12996).

The employee, a cashier, sued Albertson’s for failure to provide her with reasonable accommodations for her disability.   She had notified Albertson’s about one year prior to the event, due to side effects from her chemotherapy treatment, she needed to drink water constantly and, consequently, had to urinate frequently.   Albertson’s normally did not allow its employees to have beverages at the check-stand.  However, when she told the managers what she needed, she was told it was not a problem and that she was to let the duty-managers know when she needed to go to the bathroom and they would cover for her.

In February 2005, while the employee was on duty at the check-stand, only one manager was in the store, along with a courtesy clerk.  The employee called several times to the back of the store requesting a bathroom break, but was denied because the manager was too busy.   Eventually the employee, unable to control the urinary urge, and unable to leave the check-stand, urinated on herself in front of customers.  The employee left the store in tears and subsequently underwent a major depression and hallucinations of continuing body odor.  She entered a psychiatric hospital.  There is no evidence that the employee mentioned her accommodation to the on-duty manager that day, or that the on-duty manager was aware of the accommodation granted to the employee.

The jury heard evidence of the employee’s susceptibility to emotional distress.  She had grown up in El Salvador during a period of civil war, had seen people killed, had been robbed at gunpoint, and underwent a myriad of other stressful experiences.  Albertson’s position was that the employee was unusually susceptible to depression, contending that the February 2005 incident triggered a shift from general anxiety disorder to a more severe psychotic disorder.  The jury disagreed.

Albertson’s had a written procedure for processing employee requests for reasonable accommodation, and decisions about such accommodation were made by Albertson’s HR mangers for the Northern California district, not by store managers.  If a store manager granted an ongoing accommodation to an employee, a record of such should be made to pass along to a new manager, but sometimes no record was made.  None was used in the employee’s case.

Under the FEHA, an employer that fails to make reasonable accommodation for an employee’s known physical disability engages in an unlawful employment practice.  It is also an unlawful employment practice for an employer to fail to engage in a good faith interactive process with the employee to determine an effective reasonable accommodation if an employee requests one.  These two aspects are separate.  Albertson’s argued that the employee had a continuing duty to notify managers of her disability and agreed-upon accommodation.  The Court found otherwise.  Once a reasonable accommodation has been granted, then the employer has a duty to provide it.

Employers need to make sure they are providing reasonable accommodations that do not pose an undue hardship to the employer. And as this case highlights, it is also important to continue engaging in the good faith interactive process to determine whether the accommodation is working and whether your supervisory personnel are properly implementing the accommodation.

Title II of GINA, which prohibits genetic information discrimination in employment, took effect on November 21, 2009. The regulation applies to employers with more than 15 employees. Under Title II it is illegal to discriminate against employees or applicants because of genetic information. Title II of GINA prohibits the use of genetic information in making employment decisions, restricts acquisition of genetic information by employers and other entities covered by Title II, and strictly limits the disclosure of genetic information.

The EEOC enforces Title II of GINA (dealing with genetic discrimination in employment). The Departments of Labor, Health and Human Services and the Treasury have responsibility for issuing regulations for Title I of GINA, which addresses the use of genetic information in health insurance.

Internal Revenue Service Will Conduct Thousands of Random Employer Audits Beginning in 2010 Internal Revenue Service (IRS) officials recently stated that the IRS will randomly audit approximately 6,000 U.S. employers for employment tax compliance and proper worker classification. According to reports, the audits will begin in February 2010 and are expected to be completed within three years.1

The IRS intends to audit employers of all sizes and types, including non-profit organizations. The audits are part of the IRS’ National Research Program and have a two-fold purpose, (1) to generate revenue from non-compliant employers and (2) to serve as a statistical sample of employers that are in compliance while identifying areas of non-compliance and techniques used to avoid employment taxes.

The IRS expects to test how much of the estimated $15 billion “tax gap” attributed to employment taxes actually exists and may be closed.2 Also, the IRS expects the statistical evidence will help determine whether legislative or enforcement changes are necessary to address common employment tax evasion techniques.3 As a result, the audits are expected to be exhaustive and will concentrate on five employment tax issues:

1. worker classification,
2. fringe benefits,
3. non-filers,
4. officers’ compensation and
5. employee expense reimbursements.4

While the audits will begin with the examination of federal employment tax returns (Forms 941), the process will involve many other documents that pertain to the employers’ practices in these five areas.

A major focus of the audit will be on employers that have improperly classified their workers as independent contractors instead of employees. There are many temptations to misclassify workers: (a) shifting the cost of employment taxes to workers, (b) avoiding employee benefit costs, and (c) eliminating responsibilities under employment laws, such as civil rights or wage and hour laws. However, employers who misclassify their workers as independent contractors risk significant tax liabilities upon detection by the IRS, even if the employee paid the employment taxes due.5

Other issues that may be raised include proper treatment of (i) fringe benefits and per diems as tax-free, rather than as compensation subject to income and employment taxes, (ii) employee expense reimbursements that must comply with accountable plan rules for exclusion from employees’ gross income and (iii) executive compensation as reasonable in amount. The wide-ranging audit program is part of a trend to crack down on employment tax non-compliance, which includes heightened enforcement at the federal level6 and an increasing number of states sharing information with the IRS regarding questionable tax practices.7 Employers of every size and type should realize that their compliance with federal employment tax obligations may be scrutinized, and that they should review their compliance programs with their tax advisors before the audits begin.

For the full article with footnotes, click here.

For tax withholding changes that were effective November 1st – check this post too.

For help with compliance check out this post on hiring outsourced general counsel.

Small and mid size companies often have smaller budgets and cannot afford to hire an in-house attorney, and instead rely on expensive outside counsel to handle the day-to-day legal needs of the business. Not only is this expensive, but also inefficient – outside counsel rarely have the intimate understanding needed to carry out the company’s vision.  Some firms or attorneys, however, will partner with your company to ensure affordable yet continuous contact with your business, the best way to truly understand your needs and protect your interests.

Often these arrangements take the form of what is often called “outsourced general counsel services”, where the attorney may work from the firm’s offices, or provide your company with an experienced general counsel who can office at your location on a part time basis. The fees are usually billed at a discounted rate commensurate with the value provided to the client.

Often times, without sufficient legal counseling, other members of your team spend time dealing with legal matters instead of their particular area of expertise. These matters can be delegated to your outsourced general counsel, whose sole purpose and expertise is to navigate these matters.

Having an attorney that knows your business and who can offer the following type of services on a fixed monthly fee provides a competitive advantage over the competition:

• Contract Review and Negotiation
• Employment Advice and Counseling
• Human Resources Advice and Counseling
• Insurance Review and Risk Analysis
• Lease Drafting and Review
• Non-Disclosure/Licensing Agreements
• Entity Formation, Governance and Record Maintenance
• State and Federal Compliance Review
• Dispute Resolution
• Day-to-Day Legal Advice
• Day-to-Day Business Counseling
• Legal Alerts and Updates

In today’s tough economy, you need a firm that understands how important it is for clients to receive practical and effective legal counseling in a manner that delivers real value.  Instead of paying high legal fees for individual services on an hourly basis, these outsourced general counsel arrangements often provide a flat monthly fee that is less expensive than the typical hourly rates offered by more traditional firms .  The fees are based on the value and quality of service clients receive, instead of just billable hours or time spent preparing the necessary documents or legal work.  The law firm should actually consult with you to determine what value the services have in your operation.

Here are some firms offering this type of service to its customers:

Liberty Law, A.P.C. (Northern California) – (disclaimer: Liberty Law authors this blog)

Shepherd Law Group (Boston, MA)

Lancaster Helling (Austin/Dallas, TX)

Hortin CC (Atlanta, GA)

Linsey Krolik (Campbell, CA)

California Labor Code section 2802 provides that “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”  And Section 2804 further provides that “Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void.”

The Court addressed the question of what happens when an employee does not report the expense according to company policy, and held, in effect, that the requirements of the statute must override any internal reimbursement rules set by the employer. California employees have a right to be reimbursed for their work related expenses, such as business travel, equipment, materials, and training, when the employer knows or has reason to know that the employee has incurred the expense, even when the employee fails to follow internal reimbursement protocol established by the employer.

Employers should continue to create policies and procedures for expense reimbursement; however, they should also recognize that they remain liable to reimburse the employee’s expenses even when the employee fails to adhere to the exact terms of the reimbursement policy. Case law now provides that the employee’s failure to follow company reimbursement protocol will be an unlikely defense for employers who fail to make a valid reimbursement required under Labor Code 2802.