Legal Briefs

Welcome to Legal Briefs for HR! This email update on issues that matter to employers is provided as a service of the SHRM Texas State Council (“TSC”), which I serve as Co-Director of Legislative Action. Feel free to forward this email to anyone who might benefit . . . all are welcome to join this email group of 2500+ subscribers!

I’ll preface this edition with some personal news . . . I have joined the law firm of DavisMunck as their newest shareholder and head of the labor and employment practice group. I leave behind good friends and fond memories of Haynes and Boone, and look forward to building a practice here that is responsive to the needs of the HR community. This firm is very supportive of my volunteer activities, so Legal Briefs for HR will continue to pop up in your email about once a month, and I’ll be available to speak at your chapter meetings. And if you find yourself in or near the Galleria in Dallas, pop in on me! I’m in Tower 3, the 9th floor.

Here's what's up:

1. Minimum Effort – The latest effort to increase the federal minimum wage is in play. Companion bills, filed in the Senate (by Sen. Ted Kennedy of Mass.) and the House (by Rep. George Miller of Calif.) would increase the amount from $5.15/hour to $5.85/hour within 60 days of enactment, then to $6.55 twelve months later, then to $7.25 two years later. Earlier in the month, Sen. Kennedy re-introduced a failed bill from last year, which would require employers of 15+ employees to provide at least seven paid sick days per year for each full-time worker. The paid time off could be used for personal illness or injury, medical appointments, or to care for an ill or injured family member. The threshold is purposely set lower than the trigger for FMLA, to provide job-protected (and paid) time off for workers of smaller employers who do not qualify for FMLA.
2. OK to Dock the Doc – A recent DOL Opinion Letter explains that a licensed or certificated lawyer or doctor, including medical residents and interns, can be subject to docking of pay for partial day absences (even outside of an intermittent FMLA leave scenario), without negating their exempt status. The exception language can be found in the “new” regulations at 29 CFR sec. 541.304(d).
3. Ditching Employee Documents? – Then be aware of a FACT Act amendment to the FCRA which takes effect on June 1 and sets new rules for disposing of “consumer report information,” whether in hard copy or electronic form. A summary of the requirements, penned by yours truly, will appear in the Summer issue of HR Matters magazine, which will be mailed in June to all SHRM members in Texas. You can also pull up the reg at www.ftc.gov, by clicking on “Fair Credit Reporting Act,” then “FTC Issues Final Regulation on Consumer Information and Records Disposal,” then click on “69 FR 68690.”
4. Time’s Up . . . Not! – The U.S. Treasury Department has relaxed the “use it or lose it” limits on medical and dependent flex spending accounts (“FSAs”), so that employers can offer employees an extra 2.5 months to use available funds before they are forfeited. Notice 2005-2 was published on May 18 and takes effect immediately. So, if an employer adopts the new rule, employees would have until March 15, 2006 (instead of December 31, 2005) to spend their pre-tax FSA funds. This approach goes further than S. 309 (discussed in Legal Briefs for HR #1-2005) which applied only to medical FSAs and allowed up to $500 to be either rolled into the next plan year or moved to an HSA.
5. Dying for a COLI – The 10th Circuit has held that corporations cannot purchase corporate owned life insurance (“COLI” aka dead peasants’ insurance) policies on all employees, naming the company as the beneficiary. Why? The beneficiary must have an insurable interest in the insured’s life, which may be the case when insuring a key employee, but is not true of every employee. Further, the money expended to recruit, train and retain workers is seen as the cost of doing business, and is not the “substantial economic interest” required to create an insurable interest. Tillman v. Camelot Music Inc. (10th Cir. May 2005).
6. New Tools for Employers on Border Patrol – House subcommittee hearings were held May 12 on H.R. 98, a bill designed to discourage illegal immigrants from seeking work in the U.S. With easy access to fake documents that seem to establish identity and eligibility to work, the cure may be [1] improved social security cards containing a magnetic strip and digitized photo; and [2] a Dept. of Homeland Security-maintained database against which employers could verify each person prior to hire, via a 1-800 phone call or a card reader linked to the DHS database. H.R. 98 also calls for increased hiring of enforcement staff and increased penalties against employers who hire illegal aliens. The fine would increase from $10,000 to $50,000 and the potential prison time from six months to five years, per occurrence. The new SS card would replace the 94 possible combinations of documents that satisfy the I-9 requirements, and serve as the sole means of verifying identity and eligibility to work. If you’d like to see the full text of the bill, go to http://thomas.loc.gov and put HR98 in the search box.
7. Drum Roll, Please – The U.S. Dep’t of Labor plans to issue the long-awaited FMLA regulation revisions at the end of May, along with the final rule explaining employer obligations under the military leave law, USERRA. The main reason behind the FMLA update is to incorporate court decisions, such as the U.S. Supreme Court’s ruling in Ragsdale v. Wolverine Worldwide, Inc. As the publication date neared, special interests lobbied for their pet changes, including a narrowing of the definition of a “serious health condition” (“SHC”) and using intermittent leave in four-hour chunks (vs. in the smallest unit of time the employer’s time-keeping system tracks). On the other hand, labor-led interests want FMLA to apply to more companies (i.e., drop the threshold to 25 employees) and to more situations (i.e., time off to care for grandparents, siblings and domestic partners with SHC’s). In other news, the OFCCP plans to issue a final rule on the definition of an applicant (limited to Internet-based applications) in July.
8. Temper, Temper – You rarely hear about an employer successfully suing an employee, so this one had to be passed along. A fired network administrator who deliberately damaged her employer’s computer system after being discharged from employment was convicted under a MI statute that makes it a crime to fraudulently access and do damage to a computer system. The sentence was 183 days in jail, $36,591 in restitution to the employer, and three years’ probation.
9. Dirty Laundry – In a novel case, a NJ appellate gives new life to a wrongful death case seeking damages for the death of a welder’s wife, from an asbestos-related lung condition. The welder had occupational exposure to asbestos and his wife would launder his work clothes daily, in the basement of their home. The lower court held that the employer had no duty of care to the welder’s wife because she was not on the employer’s premises when her exposure occurred. The appellate court disagreed, however, saying the employer was in the best position to warn the welder of the risk and take steps, such as providing uniforms and at-work showers and changing facilities, to prevent the foreseeable harm to his spouse. Olivo v. ExxonMobil Corp. (N.J. App. Div. May 2005).
10. Wardrobe Malfunction – A retail clothing employer is paying $2.2 million to settle claims that it forced its employees to buy and wear store merchandise, as a condition of employment. CA state law prohibits requiring employees to wear uniforms and then failing to provide them. A separate statute prohibits coercion of applicants or employees to purchase merchandise from the employer. Texas also prohibits coercion of employee trade, at TEXAS LABOR CODE ANN sec. 52.041. You may have a great logo and branding campaign, but don’t go overboard, OK?
11. Got Milk? - A bill has been introduced to amend Title VII to protect women from workplace discrimination for expressing milk or breast-feeding at work, during meal or rest periods. It would also provide businesses with tax breaks to offset the cost of setting up private lactation areas. Regulation of such activities is primarily addressed by state law, including a Texas state law that allows a business to designate itself as “mother friendly” if it has a policy of providing flexible scheduling, private space, and hygienic means to clean pumping equipment and store milk. TEXAS HEALTH & SAFETY CODE ANN. Sec. 165.003.
12. Keep It Simple, Silly (the KISS rule) – A former employee may proceed with his age discrimination claim even though he signed a waiver of claims because the release form was not plainly written. One of the requirements of the OWBPA amendments to the ADEA is that a release be written in a manner calculated to be understood. If legal terms of art are going to be used, they should be carefully explained in the document. In this case, interchangeable use of “release” and “covenant not to sue” created ambiguity which negated the release entirely. Thomforde v. IBM Corp. (8th Cir. May 2005).
13. Lunch Anyone? – There are going to be a LOT of HR professionals from Texas at the SHRM Conference in San Diego! So let’s plan a Texas round-up, by having all Texans meet for lunch in the Exhibition Hall (box lunches will be served) at noon on Monday, June 20. We can’t identify a specific meeting spot until we get there, but let’s plan on gathering somewhere around the perimeter of the room. You will find us by looking for [1] a Texas flag on display; [2] our TSC banner on display; and [3] folks wearing flashing Texas-shaped lapel pins. We will have a supply of the pins on hand, to give to those who don’t have one yet, including those who asked for one in response to last month's Legal Briefs. The pins are a great way to show your Texas pride and to find fellow Texans in the crowd (but do turn them off in meeting rooms, as they tend to distract . . . southern hospitality and good manners, you know!). Safe travels, everyone, and I’ll see you there!
    

Until Next Time,

Audrey E. Mross
Labor & Employment Attorney
Davis Munck
972.628.3661 (direct)
972.628.3616 (fax)
amross@davismunck.com
www.davismunck.com