Legal Briefs Issues That Matter To Employers August 2004

Welcome to Legal Briefs for HR! This information on issues that
matter to employers is provided as a service of the SHRM Texas State Council, which I serve as Co-Director of Legislative Action.

1. Give Me a Break - On July 16, the D.C. Cir. Court of Appeals nixed the hours of work/rest rules which the Federal Motor Carrier Safety Administration (FMCSA) put in place on 1-4-04. The new rule had increased the permissible amount of driving time per day from 10 to 11 hours, but cut the overall work day from 15 to 14 hours. Since the Motor Carrier Act requires the FMCSA to ensure that commercial motor vehicle operation does not have a negative effect on drivers and the change in rules showed no consideration of that factor, the Court agreed that the change had been arbitrary and capricious. Effect? The rule will be reconsidered by the FMCSA, which has 45 days to act. The current rules remain in place, during the interim.
2. Give Me a Raise - Count Florida among the states that are not waiting for an increase in the federal minimum wage ($5.15/hour since 9-97) and will put it to the voters this November. The ballot will include a proposed $1 increase (to $6.15/hour), effective six months after enactment with annual adjustments tied to the inflation rate. For a map of where each state and U.S. territory currently stands and detailed info on local "living wage" ordinances, go to www.dol.gov/esa/minwage/america.htm. And no hanging chad jokes, please!
3. Did You Notice? - The Federal Trade Commission negotiated a $325,00.00 settlement, as a penalty for an employer's failure to provide Fair Credit Reporting Act (FCRA) notices to casino applicants who were not hired, based wholly or in part on their pre-employment credit reports. In addition to the written authorization and disclosure which must occur before the check is performed, there is a two-part disclosure that occurs after the employer receives the results and decides to take an adverse employment action. First, the employer provides the applicant with a copy of the report and a description of the individual's rights under the FCRA, before taking adverse employment action. After taking the action, the second disclosure includes [1] notice of the action (e.g,, not being hired, conditional offer rescinded); [2] name, address & phone # of the consumer reporting agency (CRA) which supplied the report; [3] statement that the CRA did not make the decision & cannot provide the reason for the decision; [4] notice of the individual's right to get a free copy of the report within 60 days; and [5] notice of the individual's right to dispute the info contained in the report. Go to www.ftc.gov/os/statutes/fcrajump.htm for info on the FCRA's very technical rules.
4. Take a Number - First, Morgan Stanley settled its sex discrimination lawsuit for $54 million plus an array of compliance initiatives, arising from failure-to-promote charges filed by female officers and women eligible for promotion to officer in the company's equity division. Then came the end of a four-year dispute between Boeing Co. and 29,000 female employees via a $72.5 million settlement, arising from claims of gender discrimination in pay, promotions, overtime, bonuses and more. Both settlements involve 3-year consent decrees, during which the companies will conduct management and employee training, disparate impact analyses on employment processes and, as needed, revise job descriptions, job classifications (exempt vs. nonexempt), performance review processes, how overtime is assigned, complaint procedures and the processes for interviewing, promoting and testing individuals. Sounds like HR will be very busy.
5. The "Discretion and Independent Judgment" Bugaboo - Once more, an employer is on the losing end of the FLSA's administrative exemption because the subject employees (in this case, auto insurance claims adjustors) do not exercise discretion and independent judgment. Robinson-Smith v. GEICO (D.DC 2004). What's interesting is that similar work was found to be exempt in 1978 (Usery v. GEICO), but the job has been modified so that adjustors now write estimates relying heavily on software installed on their laptops. The court observed that they apply "well-established techniques, procedures or specific standards" and the computer program aids in adhering to those standards. Next step? Discovery schedule to determine unpaid overtime and liquidated damages for the 280+ plaintiffs.
6. Fraud Busters - A House bill (H.R. 3463) will now go to the Senate, in hopes of plugging up the drain on unemployment insurance (UI) funds in two ways. First, the bill plans to stop employers who shift employees to shell companies in order to hide the high number of UI claims made by former employees, thereby lowering the applicable UI tax rate. Second, state agencies who handle UI, such as the Texas Workforce Commission, would be able to access the DHHS new hire lists, in order to identify and cut off anyone who's working AND collecting a UI check.
7. IM Could Spell Trouble with a Capital "T" - The American Management Association and ePolicy Institute have partnered on an interesting survey of employers' email and instant messaging experiences. Of note, 13% of the 840 respondents have defended lawsuits caused by employee's email and 20% have produced email in response to a subpoena. And while 79% have email policies, only 20% have amended them to address instant messaging (IM), which can be rife with inappropriate jokes, disparaging remarks, disclosed confidential info and pornographic content. For a free copy of the 8-page survey summary, go to www.amanet.org/research/pdfs/IM_2004_Summary.pdf.
8. Oops - Many states have rather dusty "day of rest" laws which prevent employers from working employees for seven consecutive days, or, as in the case of VA, gave nonmanagement employees the right to take off either Saturday or Sunday of every week as their Sabbath. The effect of these laws is often blunted by a lack of enforcement or the addition of exemptions for specific types of work. The VA legislature decided to do a little housekeeping on their law but inadvertently negated the business exemptions, while repealing bans of work in certain industries on Sundays. A circuit court provided a temporary fix via a 90-day injunction blocking the new law, and a special legislative session finished the job, by re-enacting the business exemptions. This is a good example of keeping your eye on what's happening at the state level, as well as the federal law and regulations. A good time to recheck you compliance in light of possible changes in the law is with an annual review of your employee handbook policies.
9. To Your Health - H.R. 1818, if passed, will expand the tax credit enjoyed by employers who offer on-site gyms to their workers, by extending the tax break to smaller employers who support their employees' health and fitness in less costly ways, such as subsidizing health club memberships. It would be a boon to employees, too, who could enjoy such memberships on a tax-free basis. Under current law, employer assistance toward club fees is treated as taxable income to the employee. The Senate sponsor of the bill is Texas' own John Cornyn!
10. Road Warriors - New Jersey and Washington D.C. have new laws, banning the use of handheld cell phones while driving. Recent studies report that the distraction is caused by talking, not holding the phone, so such bans do not go far enough. If you have employees who regularly drive in the course and scope of their employment, you may want to get ahead of the curve on this one and ban the use of phones, PDAs, laptops and any other activity that interferes with focusing on the task at hand -- being a safe and responsible driver.
11. FMLA on Ice - Revised FMLA regulations, reflecting court decisions such as Ragsdale v. Wolverine, Inc., were due in June, but have been pushed back to March 2005. DOL says the push to finish the revised FLSA "white collar" regulations is to blame.
12. Remember the Alamo - And don't forget to sign up for the TAB Employment Law Symposium, to be held on July 29 and 30 in San Antonio! SHRM members may attend at the TAB member rate of $295, a $100 discount. A summary is attached and full details can be found at www.txbiz.org. For those who have a special interest in all things legislative, we've added a session from 1:30 to 3:30 on Friday, led by yours truly, to identify the hot legislative issues in D.C. and Austin and set up our game plan to advocate effectively on behalf of Texas employers. Hope to see you there!

Until next time,

Authored by Audrey E. Mross
Labor and Employment Attorney
Haynes and Boone, LLP.
phone: 214.651.5577
fax: 214.200.0549
email: audrey.mross@haynesboone.com
website: www.haynesboone.com

This information is provided as a service and does not constitute legal advisement.