LABOR AND EMPLOYMENT ALERT    April 2010

The Hire Act of 2010 is Passed by Congress and Signed into Law

The U.S. Congress has passed new legislation that was recently signed into law by the President providing that any private employer hiring a new employee between the present and January 1, 2011 is exempt from paying the employer’s share of the new employee’s payroll tax effective with the employee's first paycheck.  However, the employee must (1) certify by signed affidavit that he or she has not been employed for more than 40 hours during the previous 60-day period ending on the date the individual begins employment; and (2) must not be hired to replace another employee of the employer unless the prior employee left voluntarily or was terminated cause.  A copy of the form affidavit is available at: http://www.irs.gov/pub/irs-pdf/fw11.pdf .

Florida Commission on Human Relations Issues Annual Report

The Florida Commission on Human Relations, the State of Florida’s Fair Employment Practices Agency, has released its annual report. (http://fchr.state.fl.us/publications/annual_reports ). According to the FCHR, the top 5 sectors against which charges of discrimination were filed during FY 2008-09 are: (1) Service; (2) Hospitality; (3) Retail; (4) Industry; and (5) State Government. The FCHR also reported the percentage of charges filed by claim, as follows: Retaliation (22%); Race (21%); Disability (19%); Sex (16%) and Age (11%). Given the spike in retaliation claims nationwide, it is not surprising that claims of retaliation led all protected classes. We expect this trend to continue throughout 2010.

COBRA Premium Subsidy Program Extended Again

Congress has passed, and the President has signed, the Continuing Extension Act of 2010 (CEA), which once against extends the COBRA Premium Subsidy Program created by the American Recover and Reinvestment Act of 2009 (ARRA).  As amended by two previous acts, ARRA provided a COBRA premium subsidy for certain employees and their families involuntarily terminated between September 1, 2008 and March 31, 2010.  CEA extends this period for two additional months, through May 31, 2010.

Although the CEA’s date of enactment is April 15, 2010, the date it was signed by President Obama, it is retroactively effective.  Therefore, individuals who were terminated from April 1 through April 14 may be retroactively entitled to premium subsidy rights and must receive notice of those rights. 

Because of its retroactive effectiveness, COBRA administrators must send revised notices to inform individuals experiencing qualified events after April 1 of their possible premium subsidy rights.  Although some of these individuals may have already been furnished with election notices, because those notices did not reflect the extension, a second notice will need to be sent.

Further, the United States Department of Labor has posted on its webpage frequently asked questions (FAQs) about healthcare reform and COBRA (http://www.dol.gov/ebsa/faqs/faq-PPACA.html ).  Three of the four questions ask about specific COBRA issues (1) was the COBRA premium subsidy extended by health care reform, (2) was the 18 month COBRA maximum coverage period extended by health care reform, and (3) was COBRA eliminated or changed by health care reform.  The answer to all of these questions is “No.”  The fourth FAQ addresses how health care reform affects an individual’s group health plan coverage.  The Department of Labor explains generally that the health care reform legislation makes many changes to employer-sponsored group health plans, and further provides resources where more information about the health care reform changes may be found. 

 Class Action Suit against Wal-Mart Based on Gender Discrimination to Continue

The Ninth Circuit Court of Appeals, sitting en banc, recently upheld a lower court’s decision to allow certification of a class of female employees of Wal-Mart in a lawsuit filed alleging that Wal-Mart had a policy of paying women less than men for the same jobs and giving them fewer promotions.  The size of the class of affected plaintiffs could be as many as one million, counting all current female employees of Wal-Mart since 2001, and could rise as high as two and a half million if former employees are allowed to be included within the class.  The plaintiffs claim that an analysis of salary and personnel data revealed that women were paid less than men in every region of the country; that the pay disparity existed in most of the different Wal-Mart job categories; and that it took women longer to enter management jobs than men.  Wal-Mart has denied the allegations, and argued that the class should not have been certified because each worker’s situation may differ.  Wal-Mart also argued its due process rights were violated by forcing it to defend the suit with such a class.

The case is styled Dukes v. Wal-Mart Stores, Inc., and the Court’s decision is available at: http://www.ca9.uscourts.gov/datastore/opinions/2010/04/26/04-16688.pdf

U.S. Department of Labor Takes Position on Unpaid Interns

The U.S. Department of Labor has recently taken a public position on the issue of pay for unpaid interns. The DOL has indicated that it intends to renew its focus on Companies which offer unpaid internships to young workers or students.  The DOL has cautioned state agencies that in order for internships to be unpaid, they must meet six criteria: (1) the training must be similar to what would be given in school or at an academic institution; (2) the training must be for the benefit of the trainees; (3) the trainees must not take the place of regular employees, and must work under close observation; (4) the employer may not derive an immediate advantage from the trainees; (5) the trainees should not be entitled to a job at the end of the training; and (6) the trainees are not entitled to wages for the time spent training.  Given the DOL’s renewed focus, employers are well advised to take appropriate steps to ensure they are properly classifying interns, trainees and summer clerks. 

Supreme Court to Review “Cat’s Paw” Case

This month, the United States Supreme Court granted certiorari in Staub v. Proctor Hospital, a case originating in the Seventh Circuit Court of Appeals.  The issue in Staub is: “In what circumstances may an employer be held liable based on the unlawful intent of officials who caused or influenced but did not make the ultimate employment decision?”

Staub sued his employer, alleging that he was discharged in violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA).  Staub prevailed after a jury trial, but the Seventh Circuit reversed.  At trial, Staub proceeded under the “cat’s paw” theory, which holds that the discriminatory animus of a non-decision maker is imputed to the decision maker where the former has singular influence over the latter and uses that influence to cause an adverse employment action. 

In reversing, the Seventh Circuit held that, prior to admitting evidence of non-decision maker animus, a trial court “should determine whether a reasonable jury could find singular influence on the evidence to be presented.”  The court reasoned, “Allowing the jury to entertain the cat’s paw theory and decide whether there was singular influence, but only upon a prior determination that there is sufficient evidence of such a finding, is consistent with Federal Rule of Evidence 104(b).”  The Seventh Circuit concluded that the trial court erred in neglecting to make this primary determination, and found that there existed insufficient evidence of singular influence to allow evidence of non-decision maker animus to be presented to the jury. 

Possible Expansion of Anti-Discrimination Protections in Leon County

On Tuesday April 27, 2010, the Leon County Board of Commissioners decided in a 4 to 3 vote to allow the Proposed Ordinance Amending Chapter 9 of the Code of Laws of Leon County to move forward to public hearing. The proposed revisions to the county’s human-rights ordinance would extend protections against discrimination in housing, public access, and employment to gay, lesbian, bisexual, and transgender groups. The public hearing is scheduled for May 11, 2010.

Guidance on Small Employer Tax Credit for Providing Health Care Coverage

As part of the Patient Protection and Affordable Care Act (PPACA) signed into law in March 2010, small businesses and tax-exempt organizations that provide health care coverage to for their employees may qualify for tax credits. Recently the IRS issued guidance on the eligibility and structure of these new tax benefits which come into effect in the 2010 tax year.  The amount of tax credit available to small employers is determined by the number of employees, average employee salaries, and amount of health premiums paid. The IRS’s frequently asked questions on these new tax credits are available at: http://www.irs.gov/newsroom/article/0,,id=220839,00.html

Administrative and Executive Exemptions under the FLSA

In the case of Bond v. Ripa & Associates, LLC, 2010 WL 457324 (M.D. Fla.), the Middle District of Florida recently discussed the requirements for administrative and executive exemptions under the FLSA in a case where the defendant employer sought summary judgment on plaintiff’s claims of failure to pay overtime.

To qualify for the executive exemption, the court noted that an employee must: (1) be compensated on a salary basis at a rate of not less than $455 per week; (2) be an employee whose “primary duty” is management of the enterprise that employs him, or a customarily recognized department or subdivision thereof; (3) customarily and regularly direct the work of two or more other employees; and (4) have the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or other change of status of other employees are given “particular weight.”  29 C.F.R. Section 541.100(a). 

To qualify for an administrative exemption, the court set out the necessary qualifications; namely, that an employee must (1) be compensated on a salary basis at a rate of not less than $455 per week; (2) be an employee whose primary duty is the performance of office or non-manual labor directly related to the management or general business operation of the employer or its customers; and (3) be an employee whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 29 C.F.R. Section 541.200(a). 

Based on plaintiff’s deposition testimony that he spent 80% of his time in non-managerial duties and had few non-managerial type duties, and that he was afforded little discretion, the court held that there was a genuine issue concerning whether he was properly classified as exempt from the FLSA’s minimum wage and overtime requirements under the executive or administrative exemptions, and therefore denied the defendant’s motion for summary judgment on the plaintiff’s overtime claim.

Legislation Update: Sovereign Immunity Caps in Florida

On Tuesday, April 27, 2010, Florida Governor Charlie Crist signed SB 2060 into law.  The law changes the statutory limits of liability for the State of Florida and its agencies and subdivisions under Section 768.28, Florida Statutes.  Prior to SB 2060, sovereign immunity caps in cases involving tort claims were $100,000 for claims and judgments by any one person and $200,000 for collective claims arising out of the same incident or occurrence.  With the enactment of SB 2060, the caps have now been increased to $200,000/$300,000.  The increased caps will apply to claims arising on or after October 1, 2011.

Sources: The Jacksonville Observer ; The Palm Beach Post

The full text of SB 2060 and other related information is available at the following link: Senate Bill 2060 .

Firm News

Sniffen & Spellman Sponsors 2010 Tallahassee Book Fair

Sniffen & Spellman, P.A. is proud to serve as the main sponsor of the 2010 Tallahassee Book Fair, which will take place on Saturday, May 15, 2010.  This year marks the second anniversary of the event, which is held by the LeRoy Collins Leon County Library System and the Tallahassee Downtown Improvement Authority.  The Book Fair this year will feature book vendors, writers, authors, and literacy advocacy groups in conjunction with the Saturday Market Place in beautiful downtown Ponce de Leon Park. The headline speaker this year will be John Heilemann, who with Mark Halperin, co-authored “Game Change,” the best seller which chronicles the 2008 election campaign.

Sniffen Elected as Vice-Chair of Florida Commission on Ethics

Robert J. Sniffen was recently elected as Vice-Chair of the Florida Commission on Ethics. The Florida Commission on Ethics is a nine-member Commission, with a staff of approximately twenty employees located in Tallahassee, that serves as the guardian of the standards of conduct for officers and employees of Florida and its political subdivisions and functions as an independent commission responsible for investigating and issuing public reports on complaints of breaches of the public trust by public officers and employees. The Commission also renders legally binding advisory opinions interpreting the ethics laws and implements the State's financial disclosure laws.

Spellman Reappointed to University of Florida Alumni Association Board of Directors

Michael P. Spellman has been reappointed to a two-year term to the University Of Florida Alumni Association Board Of Directors. The UFAA is comprised of over 330,000 alumni throughout the United States and over 100 countries.  The UFAA is responsible for a network of nearly 100 Gator Clubs® in Florida, across the U.S. and internationally. These clubs are composed of alumni and friends who represent UF in their communities. The UFAA also recruits superior students to attend the University with financial assistance programs in the form of scholarships sponsored by the Gator Clubs®.

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