New Employment Law Info: NLRB Delays, The IRS in Sheep’s Clothing, and Medical Marijuana
WELCOME to the MONTHLY EMPLOYMENT LAW LEGAL BRIEF FOR HR. HERE ARE SOME “TRICKS and TREATS” in STORE for EMPLOYERS:
- No Need to Post . . . Yet – The National Labor Relations Board (NLRB) has delayed the deadline for posting a new employee rights poster, from November 14 to January 31, 2012. The Board’s announcement says the reason is to provide more time for employer education about the requirement. Others say it has more to do with several pending lawsuits that question the legality of the posting requirement. Stay tuned.
- All Together Now – The U.S. Dep’t of Labor (DOL), the Internal Revenue Service (IRS) and eleven state agencies in CT, MD, MA, MN, MO, UT and WA entered into a Memorandum of Understanding (MOU) to pool their resources in order to ferret out employers who misclassify workers as independent contractors rather than employees. The announcement was light on details as to how they will achieve the desired result of ensuring that workers get minimum wage, overtime, unemployment comp and workers comp benefits while the government gets a more reliable income stream from taxes.
- Wolf in Sheep’s Clothing? – On September 21, IRS announced its Voluntary Classification Settlement Program (VCSP) which allows eligible employers who misclassified workers as independent contractors to enjoy a sort of amnesty for their prior mistake, by simply reclassifying the affected class of workers, treating them as employees going forward and paying 10% of the taxes owed for the most recent tax year. Sounds simple, but consider  how will you define the affected “class” of employees;  the amnesty applies to IRS liability but provides no shield against related claims from other federal and state agencies;  you just admitted to an error that will be of interest to those other agencies; and  per the MOU mentioned above, a lot of these agencies are now working closely together and sharing information, upping the likelihood that one or more of them will come a callin’. For details, see Announcement 2011-64 and/or IR-2011-95 at www.irs.gov.
- More Misclassification Misery – California Governor Brown is expected to sign Senate Bill 459 any day, triggering a costly penalty to any person who willfully misclassifies a worker as an independent contractor. The underlined language is troubling since it appears that not just the employer but individuals, such as managers or HR staff with responsibility for classifications, could be found personally liable for the civil penalty of between $5000 and $15,000 per misclassification (sweetened to the $10,000 to $25,000 range, per violation, if a pattern or practice of violations is found). Also troubling is the broad definition of a “willful misclassification” as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”
- Cell-abration – The IRS provided many employers with a sigh of relief via September 14 guidance on the tax treatment of employer-provided cell phones. The nagging question has been whether employees needed to keep detailed records of business vs personal use of their Company-issued phones, in order to satisfy the record keeping requirements for nontaxable fringe benefits. The new guidance explains that the phones are excludable from the employee’s income as a working condition fringe benefit when provided primarily for non-compensatory business reasons, such as when the phone is provided  because of the employer’s need to contact the employee at all times for work-related emergencies;  the employer requires that the employee be available to speak to clients at times when the employee is away from the office; and  the employee needs to speak with clients located in other time zones at times outside the employee’s normal work day. Reasons that won’t fly are if the phone is a “perk” of the job, such as to attract and retain employees, to promote morale or good will or as a type of added compensation. See IRS Notice 2011-72 for full text of the guidance, at www.irs.gov.
- The Greta Garbo Accommodation – “I want to be alone.” That was the requested accommodation of an employee with post-heart surgery severe depression, under the Americans With Disabilities Act (ADA). Specifically, he asked that he be allowed to work from home for two months and have “no direct person to person contact and definitely none with [my] previous co-workers” in particular his two supervisors. The court held the request was not reasonable. No bossectomy for you! Thelig v. United Tech Corporation, Pratt & Whitney Division (2nd Cir. 3-11).
- Protect Your Good Name – A new domain (.xxx) is coming to Internet for use by the adult entertainment industry and if you don’t want your organization’s name to be tied to that genre, you need to step quickly to block use of your registered marks. Opt-out applications are being accepted from non-members of the Adult Sponsored Community from Sept. 7 to Oct. 28 and the new .xxx marks will be available on a first-come, first-served basis on December 6. If you don’t mind your company’s name being followed by an “XXX” and taking the user to an, ahem, adult site then never mind.
- Spam Blocker – Here is an interesting use of the Computer Fraud and Abuse Act (CFAA) which has been mentioned in prioreditions of LB4HR. In this case, a peeved labor union, LIUNA, encouraged its members to inundate an employer’s email and voicemail with thousands of messages relating to recently discharged employees. The employer sued under the CFAA, which prohibits knowing transmission of a program, information, code or command which as a result of such conduct intentionally causes damage, without authorization, to a protected computer. The lower court said “no violation” but the appeals court said both damages and intent were established. The company was damaged because the tsunami of messages gridlocked their communications capacity resulting in “diminished ability” and the intent to damage the company was clear in the union’s call to arms, even if it was unaware of the consequences of its act. Pulte Homes v. Laborers Int’l Union of North America (6th Cir. Aug. 2011).
Stated Differently – Here are some hot topics for you multi-state employers
- Delaware – The Delaware Workplace Fraud Act already imposes penalties on employers who misclassify workers as contractors in the construction services industry. Two bills are pending to  expand the scope to all employers in the state and make individual business owners jointly and severally liable for violations (HB 221); and  to allow the Delaware DOL to publish a list of violators (HB 222).
- Illinois – Effective August 26, 2011, IL amended its Human Rights Act to add pregnancy, childbirth or related medical conditions as protected categories under this nondiscrimination in employment law.
- Seattle, Washington – The City Council mandated paid sick leave for employers of five or more employees, beginning Sept. 1, 2012. There are three tiers of accrual rates, tied to the size of the business, with provisions for carry-over of unused days and caps. Employees are eligible to accrue upon hire but may not use accrued days until after 180 days on the job. There is no cash-out upon termination of employment. Sick leave can be used for personal illness, illness of a family member or time off related to domestic violence. Other cities with paid sick leave mandates are San Francisco, Washington DC and Milwaukee, WI. Denver voters will decide on a similar initiative, this November.
- California – Employers may force use of employees’ PTO for end-of-year shutdowns, such as for retooling manufacturing facilities, but only if affected employees were given the greater of 90 days or a fiscal quarter of advance notice. If the requisite notice is not given timely, employers can allow the use of PTO during shutdowns but cannot force it
- Colorado – An appeals court sided with an employer who fired an employee and protested the employee’s eligibility for unemployment comp benefits, where the reason for discharge was a positive drug test for marijuana during working hours. The employee countered that he was approved for “medical marijuana” and that such use was protected by state law. The lower court agreed with the former employee, but the appeals court sided with the employer noting that the state law protects individuals from criminal prosecution for marijuana possession and use but does not preclude them from being denied unemployment benefits based on a separation from employment for testing positive for marijuana in violation of the employer’s drug policy. Beinor v. Industrial Claim Appeals Office ( Colo. Ct. App. Aug. 2011).
Legal Update for HR is provided to alert recipients to new developments in the law and with the understanding that it is guidance and not a legal or professional opinion on specific facts or matters. For answers to your specific questions, please consult with counsel.