Employment & Labor Law

Employment Law Activity Heats Up

There has been a lot of activity in the employment law field in recent weeks, including numerous Supreme Court decisions, and a new employment discrimination federal statute. Since much of this activity is unlikely to have a direct impact upon you, we provide the following summary on only a few noteworthy items, along with a brief word of advice on avoiding problems in these areas.

U.S. Supreme Court Decisions:

Age Discrimination:

A new area of age discrimination claims, long accepted for other types of employment discrimination claims, called “disparate impact,” involves claims that an employer, without intending to discriminate, put in place a policy or practice that had a disproportionately negative effect on older employees. While such claims can be scary to employers given that employees do not have to prove an intent to discriminate, the good news is that employers can defend such age discrimination claims by showing that their actions were based on a reasonable factor other than age (e.g., cost, performance). In a second decision on this subject the Court, not surprisingly, has now reminded employers that they (rather than employees) bear the burden of proving that they had a reasonable basis other than age for an action that hits older employees harder than younger employees. Meachem v. Knolls Atomic Power Lab., – U.S. – (2008).

This serves as another good general reminder for employers to always make sure to act on the basis of legitimate business interests and to be able to show how their actions advance those interests. Discrimination claims, both involving this disparate impact method and the common so-called “intentional” discrimination, do not require direct proof of discrimination but can be made by inference where an employer’s explanations for its actions do not appear credible (to a judge, jury, or the EEOC). This is a key area where advance consultation with counsel before taking action can save a lot of time and expense.

Employee Benefit Plan Administration:

The Supreme Court has ruled that, when an employer (or other entity) administering an employee benefit plan serves a dual role in deciding whether to grant employee claims (e.g., short-term disability income benefits) and pays those benefits out of its own funds, a conflict of interest exists. This conflict does not automatically create an ERISA violation but is now a factor that a court can consider in evaluating whether the employer abused its discretion in denying or limiting benefits. Metropolitan Life Ins. Co. v. Glenn, – U.S. – (2008).

This decision also serves as a reminder to employers to have a good basis for making and explaining any benefit determination decisions. The ability of employees to challenge such decisions has now been increased slightly.

New Federal Law:

Genetic Information Nondiscrimination Act of 2008:

This law prohibits employers and health care insurers from discriminating on the basis of genetic information. Not much attention has been given to this law because few employers use genetic testing. But, there are some provisions in this new law that open up employers to claims even when genetic testing is not involved. The law prevents employers from discriminating not only on the basis of genetic testing but also on the basis of genetic information which includes the “manifestation of a disease or disorder in [the employee’s] family members." This means an employer that innocently becomes aware that an employee’s parent, sibling or child has a medical condition associated with a genetic defect could be subject to discrimination claims in the event of adverse action against that employee. The same methods of proof (i.e., allowing indirect or circumstantial proof) and procedures (i.e., using the EEOC) from Title VII of the 1964 Civil Rights Act (prohibiting discrimination on the basis of race, color, religion, sex, or national origin) apply to genetic discrimination claims. In this regard, timing is a factor that can be considered (i.e., did an employer take action against an employee soon after learning of a genetically-related disease in his family). There will, no doubt, be claims of this type which, unlike disability discrimination claims, will not require the employee to prove that the impairment involved actually was or was regarded as substantial (note that changes to liberalize the protections of the Americans with Disabilities Act are progressing through Congress). The good news is that this law does not go into effect until November 2009. In the meantime, the EEOC is to issue regulations implementing this law within the next year, so stay tuned.

This serves as notice for employers to be careful to segregate and limit the access to medical insurance claims processing and information in order to increase the ability of supervisors and managers making employment decisions to say they were unaware of medical claims/diagnoses regarding an employee or his/her family members. We can’t prevent employees from telling supervisors this information, but we can limit employer requests for and handling of this information to only times when the supervisor/manager needs to know it to perform his/her job.

Minimum Wage Increase for Small Employers in Pennsylvania:

The higher of the federal or state minimum wage applies. Pennsylvania’s minimum wage, currently at $7.15/hour for all but small employers, has been higher than the federal minimum wage for a year and a-half now and will remain higher until July 24, 2009 when the federal minimum wage increases to $7.25/hour. But small employers in Pennsylvania, with ten or less full-time employees, have been governed by a lower minimum wage which increases today, July 1, 2008, from $6.65/hour to the same $7.15/hour already applicable to larger Pennsylvania employers. A lower training wage is also available for employees under age twenty but only during their first sixty calendar days of employment. Those located in other states should also follow state as well as federal minimum law because the minimum wage rates of many states are higher than the federal law.

Even if you don’t have any employees paid at the minimum wage, this is just another sad reminder of how complicated wage and hour law has become. As if federal wage and hour law is not complicated and convoluted enough, there are various differences between federal and many states’ laws that can also create problems. A periodic review or audit of your policies and practices in this area is advised, including whether you are properly classifying individuals as exempt from overtime pay.