The Federal HIRE Act: It Can Pay To Hire The Unemployed

The following EBG Client Alert should be of interest to all Florida employers.


By Peter M. Panken, Susan Gross Sholinksy, Scott M. Drago and Steven Swirsky

On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment Act (the "HIRE Act") PL111-147—a possible precursor to other legislation in the pipeline to decrease unemployment.

In brief, under the HIRE Act, an employer that hires a new "qualified employee" will be able to save on certain payroll taxes for each such new hire who:

1. Begins employment after February 3, 2010, and before January 1, 2011;

2. Certifies, by a signed affidavit, that he or she has not been employed for more than 40 hours during the 60-day period prior to the beginning of employment; and

3. Is not hired to replace another employee (unless that former employee voluntarily quit or was fired for cause).

If an employer (other than a governmental employer) hires a qualified employee who commences employment on or after February 4, 2010, and not later than December 31, 2010, the employer need not pay the employer's portion of the FICA (Social Security) tax (6.2 percent of the first $106,800 of earnings per year) during the employment period after April 1, 2010, and until January 1, 2011. From the period of February 4, 2010, through March 31, 2010, an employer must continue to pay its portion of the FICA tax on wages paid to a qualified employee. Such payments, however, will be credited against the employer's portion of the FICA tax due in the second quarter relating to all of its employees.

It is also important to note that employers will still need to withhold the employee's portion of the FICA tax. Further, the employer and employee share of Medicare taxes will still be due on all wages paid to qualified employees.

In addition, if the qualified employee is retained for at least 52 consecutive weeks, the employer may be entitled to an additional tax credit of the lesser of $1,000 or 6.2 percent of the wages paid to the individual during the 52-week period. But to qualify for this credit, the employee's wages for the last 26 weeks must equal at least 80 percent of his/her wages during the first 26 weeks of the 52-week period. This tax credit would be taken on the employer's 2011 tax return.

What the HIRE Act Means to Employers

The HIRE Act is intended to encourage employers to hire the unemployed, and the savings can be significant. An employer who hires a qualified new hire can save thousands of dollars in taxes. Assume that a qualified employee is hired effective April 1, 2010, at a salary of $60,000 per annum. Between April 1, 2010, and January 1, 2011, the employee's earnings will be $45,000 and the employer will save 6.2 percent of $45,000 in FICA contributions (or $2,790). In addition, if the employee remains steadily employed with the employer after April 1, 2011 (a full year), the employer will be entitled to an additional $1,000 credit against payroll taxes.

What Should Employers Do Now?

1. Ascertain whether any new hire who starts work on or after February 4, 2010, had been out of work more than 60 days prior to employment and/or was not employed for more than 40 hours during that period;

2. Have the employee sign an affidavit to that effect;

3. Confirm that the new employee did not replace an employee who was terminated "without cause" or otherwise involuntarily left their position; and

4. Alert your Payroll Department or payroll service to take the following actions with respect to qualified new hires:

a) do not to pay the employer-paid portion of FICA with respect to each such new hire for the period April 1, 2010, through December 31, 2010; and
b) take a credit for the employer-paid portion of FICA paid for the period February 4, 2010, through March 31, 2010, in the second quarter of 2010.

We fully expect that there will be future guidance that interprets the HIRE Act, but employers should begin to document their qualification for these credits and benefits, and perhaps consider whether they are able to structure their hiring needs to take advantage of these incentives.

Florida Law Changes Reemployment Rights of National Guard Members Returning from State Active Duty

Florida's military affairs law (Section 250.482) protects the reemployment rights of National Guard members returning from state active duty. The law has been amended, effective July 1, 2009, to provide greater protection to National Guard members by, among other things, prohibiting an employer from discharging a returning member for the one-year period following the date the member returns to work, except for cause. At the same time, however, the amended law provides certain exceptions under which employers are not required to allow such members to return to work.

Florida employers should be aware that Section 250.482 applies where the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) does not apply. This client alert reviews employers' obligations under USERRA, and under the amended Florida law.


USERRA is intended to minimize the disadvantages to an individual that occur when that person needs to be absent from his or her civilian employment to serve in this country's uniformed services. The Act applies to persons who perform duty, voluntarily or involuntarily, in the "uniformed services," which include the Army, Navy, Marine Corps, Air Force, Coast Guard, and Public Health Service commissioned corps, as well as the reserve components of each of these services. USERRA applies to virtually all U.S. employers, regardless of size.

USERRA does not apply to "state" military duty or governor call-ups of National Guard members. USERRA would not apply, for example, to state call-ups of the National Guard for disaster relief, riots, or the like.

USERRA, which was signed into law on October 13, 1994, clarifies and strengthens the Veterans' Reemployment Rights (VRR) Statute. The Act itself can be found in the United States Code at Chapter 43, Part III, Title 38.

Under USERRA, an employer must, subject to certain exceptions discussed below, reemploy service members returning from a period of service in the uniformed services if those service members meet the following criteria: (1) the person must have held a civilian job; (2) the person must have given notice to the employer that he or she was leaving the job for service in the uniformed services, unless giving notice was precluded by military necessity or otherwise impossible or unreasonable; (3) the cumulative period of service must not have exceeded five years; (4) the person must not have been released from service under dishonorable or other punitive conditions; and (5) the person must have reported back to the civilian job in a timely manner or have submitted a timely application for reemployment.

The exceptions to the criteria above are provided in Section 4312(d). That section provides that if the employer's circumstances have so changed as to make such reemployment impossible or unreasonable, or where such reemployment would impose an undue hardship on the employer, the employer is not required to reemploy a returning service member. In addition, if the employment from which the person leaves to serve in the uniformed services is for a brief, nonrecurrent period and there is no reasonable expectation that such employment will continue indefinitely or for a significant period, the employer is also not required to reemploy the returning member.

Florida Law

Florida's military affairs law (Section 250.482) applies to both private and public employers. As previously stated, Section 250.482 applies to National Guard members returning from "state active duty."  Section 250.01(21) defines "state active duty" as follows:

[F]ull-time duty in active military service of the State of Florida when ordered by the Governor or Adjutant General in accordance with s. 250.06, s. 250.10, or s. 250.28 to preserve the public peace, execute the laws of the state, suppress insurrection, repel invasion, enhance security and respond to terrorist threats or attacks, respond to an emergency as defined in s. 252.34 or to imminent danger of an emergency, enforce the law, carry out counter-drug operations, provide training, provide for the security of the rights or lives of the public, protect property, or conduct ceremonies. The term includes the duties of officers or enlisted personnel who are employed under the order of the Governor in recruiting; making tours of instruction; inspecting troops, armories, storehouses, campsites, rifle ranges, or military property; sitting on general or special courts-martial, boards of examination, courts of inquiry, or boards of officers; or making or assisting in physical examinations.

The amended law requires a National Guard member, upon the completion of state active duty, to notify the employer of his or her intention to return to work.

Pursuant to the amended law, the returning National Guard member is now entitled to:

(1) The seniority that the member had at his or her place of employment on the date of the commencement of his or her state active duty and any other rights and benefits that inure to the member as a result of such seniority; and

(2) Any additional seniority that the member would have attained at his or her place of employment if he or she had remained continuously employed and the rights and benefits that inure to the member as a result of such seniority.

Also pursuant to the amended law, an employer may not require the returning member to use vacation, annual, compensatory, or similar leave for the period during which he or she was ordered into state active duty. However, the returning member, upon his or her request, must be permitted to use, for the period during which the member was ordered into state active duty, any vacation, annual, compensatory, or similar leave with pay accrued by the member prior to the commencement of his or her state active duty service.

While the above additions provide greater protection to National Guard members returning from state active duty, the amended law also provides the following exceptions under which employers are not required to allow such members to return to work:

(1) The employer's circumstances have so changed as to make employment impossible or unreasonable;

(2) Employment would impose an undue hardship on the employer;

(3) The employment from which the member of the National Guard leaves to serve in state active duty is for a brief, nonrecurrent period and there is no reasonable expectation that such employment will continue indefinitely or for a significant period; or

(4) The employer had legally sufficient cause to terminate the member of the National Guard at the time he or she left for state active duty.

§ 250.482 (2)(b). These "exceptions" are similar to those found in the federal law at Section 4312(d).

Finally, the amended law provides that a person found in violation of the protections provided under the law may be liable for a civil penalty of up to $1,000 per violation.

As demonstrated above, the amended law changes the reemployment rights of National Guard members returning from state active duty. The effect of these changes, however, is limited by the fact that Section 250.482 applies only to National Guard members returning from "state active duty," as defined above. While employers will not likely see a large influx of employees seeking reinstatement in the immediate future, employers should be aware of the changes as we enter the 2009 hurricane season, and the possibility of a governor call-up of National Guard members increases.

Senate Democrats Progress on EFCA Compromise

United States SenateThe following is a reprint of a client alert recently authored by my partners Steven Swirsky and Jay Krupin.  It should be of interest to all Florida employers in the private sector. 

The past several days have brought potentially significant developments with respect to Senate Democrats' efforts to enact labor law reform and bring the Employee Free Choice Act to a vote on the Senate floor. Reports have circulated that a consensus has begun to emerge among Senate Democrats for a bill that would remove EFCA's controversial provisions eliminating secret ballot elections where a union has obtained signatures from more than 50 percent of the employees in the proposed bargaining unit, and instead would provide for significantly faster NLRB-conducted elections, within five to ten days of the filing of a representation petition. The bill would also provide for greater access to employees and to employer property during the campaign period. Presently, NLRB-conducted elections are typically held an average of 45 days after the union files a petition. Along with faster elections, the reported compromise would include increased access by unions to employer premises to campaign among employees, as well as increased restrictions on employer campaign rights. EFCA's other most controversial component, compulsory binding arbitration of the economic and other terms of initial collective bargaining agreements where the parties do not quickly reach agreement, is reported to remain a part of the compromise bill.

While the Democrats reached 60 votes in the Senate when Arlen Specter of Pennsylvania switched his party affiliation from Republican to Democrat and Al Franken was finally declared the victor over Norm Coleman in Minnesota, the fact is that there remain a substantial block of Democratic senators who have expressed doubt about EFCA's card check language and who have indicated that they are not prepared to support a bill that would eliminate secret ballot elections. The compromise language is intended to draw their support, while fulfilling the Democrats' commitment to change the law to make it easier for unions to organize.

This past Friday, The New York Times reported that a number of key Democratic Senators, including supporters of the card check bill, had indicated their willingness to compromise on an alternate form of EFCA that preserved secret ballot elections. A number of union leaders have indicated that such a compromise bill would still, from their perspective, represent an "important victory" because it would lead to faster elections and make it easier for workers to unionize. That compromise would eliminate EFCA's provisions calling for recognition on the basis of a card check and preserve NLRB-conducted secret ballot elections but would significantly change the procedures surrounding elections in a number of ways that would make it easier for unions to win and much more difficult for employers to ensure that employees were fully informed and able to weigh all of the facts before casting their votes.

  • First, it is reported that the proposed amendments to EFCA would require that representation elections take place within five and ten calendar days of the union's filing a petition for an election.
  • The compromise legislation would include "access," meaning that employers would be required to permit a union trying to organize to come onto its property to seek signatures on cards (which unions would still use as evidence of a showing of interest to secure an election), to hold meetings at which it would be able to campaign with the employees during the days preceding the election and to counter any messages the employer might seek to convey.
  • Under the current law, employers have the right to require their employees to attend meetings (so long as they are not held during the last 24 hours before the voting begins) where the employer may present its views to the employees about why they would be better off voting against union representation. Organized labor has dubbed these meetings and the remarks presented at them as "captive audience speeches" because the employer is able to require employees to attend—the unions claim the employees are held captive. One proposed amendment to EFCA would make it unlawful for employers to require employees to attend meetings where the employer presents its point of view.
  • The compromise also reportedly calls for increased use of voting by mail in representation elections. While the NLRB has long used mail ballots where it deems them necessary, they have generally been viewed as less reliable and have been disfavored and only used in a small percentage of elections today.

Significantly, the compromise bill would continue to include the other most controversial provision of EFCA, that is, the requirement of government-conducted binding interest arbitration to set the terms of a first collective bargaining agreement where the parties do not reach quick agreement. Under EFCA, an arbitrator would set the terms of an initial two-year contract. EFCA does not provide any real detail as to what limitations or direction would apply to the arbitrator in doing so.

From an employer's perspective, the reported compromise continues to represent a serious concern and in many respects is not significantly better than the original version of the EFCA bill. While it would preserve the concept of a secret ballot election, the call for a very short, five to ten day time span between the filing of a petition and the NLRB conducting the vote means, realistically, that employers will not have any meaningful opportunity to put together a campaign and present the important counter arguments to the promises that the union will have made while it has been collecting signatures on cards. Such fast elections would follow the lines of the model followed in Canada under the various provincial labor relations laws. This means that the resolution of such critical issues, such as the determination of what is the appropriate unit for bargaining, which employees are supervisors and/or managers and thus who is actually eligible to vote and take part in the election and organizing campaign would not be addressed and resolved until after the election is held.

As noted, the proposed compromise bill would also not only take away such communications tools as mandatory all employee meetings, the revised legislation appears likely to also provide unions and organizers with access to employers' facilities, such as meeting rooms, email systems, and the like to conduct their campaigns.

It is worth noting that, under existing law, the NLRB already has held that in some cases employers must allow unions such access as "special remedies" where the Board finds that employer unfair labor practices have seriously interfered with its election processes and employees' rights under the Act. The courts have affirmed the Board has the authority to grant such relief and thus it should be noted that an "Obama Board" might well seek to expand the use of such remedies even before or without Congressional action on EFCA.

Given all of the above, if EFCA were to be enacted in the modified form described above or in some similar form, employers would clearly be facing a significantly altered organizing landscape, one in which unions would have many tools and tactical advantages that they do not have today. This will likely be true regardless of whether card check is ultimately included in EFCA or other labor law reform legislation. Employers need to face the reality that union organizing will likely move deeper underground and that by the time that an employer receives notice that a representation petition has been filed with the NLRB and that an election will be held within the following week, it will often be too late to begin the process of convincing the employees why they are better off without representation.



Would the Paycheck Fairness Act Close the Gender Pay Gap?

A few weeks ago I was quoted in Cindy Goodman's column in the Miami Herald on the issue of the gender pay gap.  There is a significant pay gap -- on average, women earn about 78% of what men earn.  But is the cause of the pay gap gender-based pay discrimination, i.e. women earning less than equally qualified men for the same work?  Or are other factors primarily responsible? I argued that women's choices -- the majors they choose in college, the jobs they apply for, and later, the child rearing choices they make -- are far more important than pay discrimination in creating the pay gap .

I caught some flak for my politically incorrect comments. But my comments were not off-the-cuff opinions -- they were based on the conclusions of numerous studies on the issue.  For example, take a look at the American Association of University Women's 2007 study, "Behind the Pay Gap," which is available online.  The study explains that women tend to go into fields like education, psychology and the humanities, which typically pay less than the fields men tend to go into, such as engineering, math and business. Women are also more likely than men to work for nonprofit groups and local governments. And, many women choose to leave the workforce or go part-time to raise families. When they re-enter the workforce in a full time capacity, they don't earn as much as men who continued working full-time all along.  The study concludes that only a small portion of the pay gap might be attributable to discrimination.

Still not persuaded that the pay gap is mostly the product of choices women and men make?  Read this article from Reason Magazine, in which Harvard economist Claudia Goldin is quoted as saying that there isn't evidence of systemic pay discrimination. "There are certainly instances of discrimination, she says, but most of the gap is the result of different choices. Other hard-to-measure factors, Goldin thinks, largely account for the remaining gap -- 'probably not all, but most of it.'"

Which brings us to the Paycheck Fairness Act.  The PFA would amend the Equal Pay Act to  "provide more effective remedies to victims of discrimination in the payment of wages on the basis of sex," according to this summary of the bill from GovTrack.  One of the ways the PFA would accomplish this is to revise the "any factor other than sex" defense.  The summary states that the PFA:

Revises the exception to the prohibition for a wage rate differential based on any other factor other than sex. Limits such factors to bona fide factors, such as education, training, or experience.

States that the bona fide factor defense shall apply only if the employer demonstrates that such factor: (1) is not based upon or derived from a sex-based differential in compensation; (2) is job-related with respect to the position in question; and (3) is consistent with business necessity. Avers that such defense shall not apply where the employee demonstrates that: (1) an alternative employment practice exists that would serve the same business purpose without producing such differential; and (2) the employer has refused to adopt such alternative practice.

It's not clear how these new legal standards would play out in practice.  One thing is clear, though:  Employers would have a more difficult time defending cases of alleged pay discrimination brought under the Equal Pay Act.  

Proponents of the PFA argue that new legislation is necessary to close the pay gap. But because the pay gap is, for the most part, not the product of pay discrimination, the legislation would not close the gap significantly. Besides, Title VII and the current version of the Equal Pay Act, as well as state and local laws, already prohibit gender-based pay discrimination and impose significant penalties against employers that are found liable.  So it's hard to see why the PFA is necessary. 

What's the status of the PFA?  It passed the House in January and is currently pending in the Senate. If if it passes the Senate, there is little doubt that President Obama will sign it.  Stay tuned.


President Obama Signs The Lilly Ledbetter Fair Pay Act Into Law

President Obama and Lilly LedbetterThe following is a reprint of a client alert authored by EBG attorneys Daniel J. Schuch  and A. Martin Wickliff, Jr.

On January 29, 2009, President Barack Obama signed his first article of legislation into law: the Lilly Ledbetter Fair Pay Act of 2009. With namesake Lilly Ledbetter standing at his side, the President remarked, "[i]t is fitting that with the very first bill I sign—the Lilly Ledbetter Fair Pay Restoration Act—we are upholding one of this nation's first principles: that we are all created equal and each deserve a chance to pursue our own version of happiness." From an administration whose ascension was marked by the promise of "change," the Act provides a clear indication of the President’s commitment to his promise in the area of employment law.

The Act overturns a controversial decision issued by the U.S. Supreme Court which significantly impaired employees’ opportunity to file suit for pay discrimination. According to the Court’s ruling, the statute of limitations, within which employees were required to file suit, began to run when the underlying pay decision was made, not from the point at which the employee received the paycheck being challenged.

The decision was quickly met by outrage from employee advocate groups and a large contingent of Congress. Those in opposition to the Court’s ruling argued employees typically do not learn of pay disparities until significant periods of time pass, often beyond the statute of limitations period applicable to discrimination claims.

The Lilly Ledbetter Fair Pay Act effectively reverses the Supreme Court’s ruling, and amends Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA) and the Rehabilitation Act, stating the Act would allow pay discrimination claims to be filed within 180/300 days of the issuance of the last discriminatory paycheck, regardless of how long ago the actual compensation decision was made.

 While the Act remains in its infancy, there is no doubt that claims of pay discrimination will increase under the pro-employee law. Companies will have to devise comprehensive recordkeeping policies and practices to counter potential claims of pay discrimination.

I. Background

a. Ledbetter’s Employment at Goodyear

Lilly Ledbetter worked for Goodyear Tire and Rubber Company in Gadsen, Alabama, between 1979 and 1998. She spent the majority of her years with the company working as an area manager, a position primarily occupied by men. As a manager, Ledbetter’s performance was annually evaluated by her superiors. These evaluations served as the basis for her being awarded, or denied, annual raises. Over the years, poor performance evaluations led to Ledbetter being paid significantly less than her male counterparts. When she learned of the disparities in pay (an anonymous note left in her locker), Ledbetter filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC), thus beginning her crusade for equal pay.

b. The U.S. Supreme Court

Nearly 10 years after Ledbetter filed her charge with the EEOC, the lawsuit ultimately reached the U.S. Supreme Court. On May 29, 2007, the Court issued its 5-4 ruling in Ledbetter v. Goodyear Tire and Rubber Co. Writing on behalf of the Court’s majority, Justice Samuel Alito held "the later effects of past discrimination do not restart the clock for filing an EEOC charge." In support of the holding, Justice Alito made the now well-known statement, "current effects alone cannot breathe new life into prior, uncharged discrimination."

In her dissenting opinion, and on behalf of Justices John Paul Stevens, David Souter and Stephen Breyer, Justice Ruth Bader Ginsburg labeled the majority’s opinion a "cramped interpretation of Title VII," and challenged Congress to "correct this Court’s parsimonious reading of Title VII." Justice Ginsburg stated the statute of limitations should not begin until an employee learns of the discriminatory pay practices because "[p]ay disparities often occur, as they did in Ledbetter's case, in small increments; cause to suspect that discrimination is at work develops only over time."

c. Ledbetter on Capitol Hill

Within 24 days of the Supreme Court’s decision, Representative George Miller of California garnered enough support to introduce the Lilly Ledbetter Fair Pay Act of 2007

in the House of Representatives on June 22, 2007. In just over a month, the House passed the bill by a vote of 225-199. The bill was eventually blocked in the Senate when it failed to receive the necessary votes to overcome a Republican filibuster.

However, as we now know, Ledbetter’s crusade did not end in defeat. Armed with the support of key legislators, including then-Senator Obama, the bill was resurrected in the House of Representatives on January 6, 2009. Three days later, the bill again passed in the House, this time by a vote of 247-171. On January 22, 2009, two days after President Obama was inaugurated, the bill passed in the Senate by a vote of 61-36. The President signed the bill into law one week later. The law is retroactive to May 28, 2007 (the day prior to the Supreme Court’s ruling), and will apply to all claims filed under Title VII, the ADEA, the ADA and the Rehabilitation Act since the effective date.

II. Ledbetter’s Effect on Employers

The Lilly Ledbetter Fair Pay Act essentially eliminates the statute of limitations applicable to claims of pay discrimination. Under the Act, employees have the opportunity to file a claim for pay discrimination years after the alleged underlying discriminatory decision occurred, so long as the charge is filed within 180/300 days of the issuance of the last discriminatory paycheck received by the charging party. Essentially, the statute of limitations starts each time the employee receives a paycheck. For that reason, many employers will be forced to contend with stale claims sometimes without the benefit of documentation, which may have been destroyed, or witnesses, who are no longer available or do not recall key information.

The Act also provides an avenue for retired employees to sue their former employers years after separation for their lost pensions. In theory, each time a former employee receives a pension check, the amount of which may have been determined as the result of past discriminatory pay practices, a new statute of limitations period begins to run. These potential plaintiffs would have the right to have their pension benefits recalculated if they were determined in a discriminatory fashion. Accordingly, companies may face the threat of litigation from former employees whose employment relationship ended years ago.

The back pay recovery period is capped at two years from the filing of the charge of discrimination.

The EEOC receives approximately 5,000 wage bias charge filings each year, and it has warned employers that the agency will now increase enforcement of pay discrimination claims.

III. Recommendations for Employers

Employers are strongly encouraged to immediately revisit their pay practices to ensure lawful systems are in effect. Comprehensive employment audits should be conducted to assess employee wage structures and corresponding job descriptions to identify discrepancies between pay and job duties. Existing disparities should be reviewed to ensure they are the result of legitimate, nondiscriminatory factors.

IV. Conclusion

Passage of the Lilly Ledbetter Fair Pay Act leaves no room to doubt the Obama administration’s commitment to pro-employee legislation. This law will be the first of many employers will be forced to address under the Obama administration. As your company’s goals, objectives, and timeframes are established for the new year, particular care should be committed to assessing your current pay practices and document retention policies to defend against the implications of this new law.

Litigation to Rise With New NLRB Rules, Employee Free Choice Act

The following is a reprint of a client alert recently authored by my partners Steven Swirsky and Kara Maciel.  It should be of interest to all Florida employers in the private sector. 

Litigation to Rise With New NLRB Rules, Employee Free Choice Act

Recent changes to the National Labor Relations Board ("the Board") procedures and the looming threat of passage of the Employee Free Choice Act ("EFCA") could significantly impact employers defending their termination decisions of employees in the face of union activity. It is increasingly likely that the Board will challenge, and employers will be forced to litigate, an appropriate back-pay damage award to an employee.

In 2007, the Board issued its decision in St. George Warehouse, 351 NLRB No. 42 (2007), which, for the first time, shifted part of the burden of proof from the employer to the Board regarding the issue of whether a terminated worker failed to adequately mitigate back-pay damages by searching for a substantially equivalent job, which would reduce the amount of back-pay owed. Earlier this month, the Board’s General Counsel issued a Guideline Memorandum to its regional attorneys which sets forth and further explains the Board’s new burden of proof and how presentation of evidence should be allocated in a compliance proceeding.

Prior to St. George Warehouse, when the Board alleged that an employer’s decision to terminate a worker violated the National Labor Relations Act, the Board initially bore the burden of demonstrating the amount of back-pay damages (i.e. what the worker would have earned but for the illegal discrimination) that the worker was owed from the employer. The employer then had an opportunity to present an affirmative defense, arguing that the worker did not properly mitigate post-employment damages by failing to adequately search for interim employment. To prove failure to mitigate, the employer had to present evidence that substantially equivalent jobs were available in the relevant geographic area during the relevant time period, and that the employee had failed to apply for these jobs. Employers challenged the employee’s failure to accept a slightly lower paying or skilled position as unreasonable efforts in the mitigation of damages. Equally important, the employer demanded records concerning an employee’s job search and proof of registrations with state and/or private employment services. Often, employers hired an expert to challenge an employee’s efforts with statistics and numbers.

Under the current law, in light of the Board’s St. George Warehouse decision, employers no longer carry the difficult burden of proving whether an employee conducted a diligent job search. Once an employer has proved that there were substantially equivalent jobs available to the worker, the burden then shifts to the Board to prove that the worker took reasonable steps to seek those jobs. While the ultimate burden of proof remains with the employer as to whether the employee failed to mitigate damages, the Board must now take certain steps in its investigation and prosecution of the case. For example, the Board attorneys must instruct employees to begin their search for work within a short time-frame following termination and to maintain careful records of their employment search. Additionally, workers will be directed to register with state and private employment services and check newspapers and internet advisements, and the Board attorneys will conduct their own investigation regarding the availability of jobs. Further, the General Counsel suggests that regional attorneys defend an employee’s failure to secure a job by arguing that the employee’s age, health, education, job skills, employment history, physical disability or lack of access to a car prevents the employee from finding a new position.

This change to Board procedures increases the likelihood that the Board attorneys seeking back-pay for workers will have to litigate whether the workers conducted a reasonable search for work, making it more costly for employers to defend such cases and more likely that they will seek a resolution without having to present evidence at a compliance proceeding.

The issue will become even more difficult for employers in the event that the Employee Free Choice Act becomes law in 2009. Under the current version of the bill, in addition to injunctive relief, the EFCA will increase the amount of monetary fines and back-pay imposed on employers that terminate workers during union organizing campaigns. Thus, if an employer terminates a union activist, under the EFCA, the worker could seek three-times the amount of back-pay otherwise owed to the employee, as a penalty to the employer. The increased financial exposure to employers under the EFCA will certainly encourage employers to challenge whether the worker had appropriately mitigated damages following employment, making the new burdens under St. George Warehouse even more important for employers.

With Board procedures changing and the EFCA looming, employers should be ready to put forth a strong defense to alleged unfair labor practices that result in a worker’s termination. It will become financially imperative for employers to take the time and pay the cost to adequately defend these cases in order to reduce the increased monetary fines and back-pay awards that the Board will be seeking.

More Thoughts on the ADA Amendments Act of 2008

 A client alert on the ADAAA was released today by my firm, Epstein Becker & Green.  The alert predicts that the ADAAA will:

expand the coverage of the ADA to many more individuals, even those whose impairments have little or no actual impact on their major life activities due to mitigating measures. It will also substantially ease the burden for ADA plaintiffs. A rise in the number of ADA lawsuits against employers is likely and defending such lawsuits will be more challenging. Employers will necessarily face the duty to engage in the interactive process far more frequently and be forced to assess whether various accommodations are reasonable or if they are undue hardships. This will be particularly true for impairments affecting mental processes including concentrating and thinking.

The alert offers a few points of sound advice to employers on how to comply with the ADAAA:

  • To ensure that requests for accommodations are properly handled and to minimize litigation exposure, employers should carefully review their ADA policies and how they handle ADA issues.  Make sure that the company's policies are not inconsistent with the new legislation.
  • Conduct supervisory training to alert the company's managers about the expanded scope of the ADA under the new legislation.
  • Review job descriptions to ensure that they accurately identify all essential job functions. Given the expanded scope of the ADA and the increased number of employees who will be deemed disabled, accurate job descriptions are more critical than ever in evaluating requests for accommodations from disabled employees.



A Couple of Questions for Obama about the Fair Pay Act

If you could ask ask the Presidential and Vice Presidential candidates one question about employment law, what would it be?  Dan Schwartz, the author of the Connecticut Employment Law Blog, came up with this idea, as well as some excellent questions for the candidates.

I haven't researched all of the candidates' positions on employment law issues (does Palin have any?).  Still, I would want to ask Obama this: 

"You've said that you support the Fair Pay Act of 2007, which would give the EEOC the task of ensuring that men and women are paid equally for "equivalent" jobs. "Equivalent jobs," according to the legislation, "means jobs that may be dissimilar, but whose requirements are equivalent, when viewed as a composite of skills, effort, responsibility and working conditions." Isn't the Fair Pay Act of 2007 really an attempt to revive the concept of "comparable worth?" And do you really believe that the federal government is better than the free market in determining what a job is worth?"

Okay, that's two questions.  But they're important.  This article from Fortune Magazine explains why the Fair Pay Act of 2007 is based on unfounded assumptions about the reasons that women earn less than men.  (Hint: for the most part, the disparity is not caused by employment discrimination.)  The article also explains how intrusive the EEOC would have to be to enforce the Fair Pay Act : 

Under [the Fair Pay Act's] provisions, the Equal Employment Opportunity Commission (EEOC) would create criteria determining whether a given job is dominated by one sex; employers would have to send the EEOC every year a listing of each job classification, the race and sex of those holding such jobs; how much they are paid; and how such pay was determined. The goal of all this is to ensure that people in "equivalent" jobs are paid similar wages. "The term, 'equivalent jobs', according to the legislation, "means jobs that may be dissimilar, but whose requirements are equivalent, when viewed as a composite of skills, effort, responsibility and working conditions." And who would decide what is equivalent? The federal government, of course. Forget the price signal: Congress is on the job! 

If you think employers are already burdened by government's regulation of the workplace, just wait for an Obama administration.  You ain't seen nothin' yet. 

What Would an Obama Victory Mean for Florida Employers?

Recent poll numbers showing Barack Obama with a substantial lead over John McCain have got me thinking about what an Obama victory would mean for Florida employers. 

The Employee Free Choice Act, which Obama touts in this campaign speech,

could have a major impact on Florida employers if enacted into law.  Currently most Florida employers in the private sector are union-free, in large part because Florida is a right-to-work state.  In particular, Article I, Section 6 of the Florida Constitution provides in part that "[t]he right of persons to work shall not be denied or abridged on account of membership or non-membership in any labor union or labor organization."

The EFCA would not change Florida's status as a right-to-work state. But it would jump-start the growth of unions by amending the National Labor Relations Act to eliminate an employer's right to demand a secret ballot election in cases in which a majority of employees have signed union authorization cards and there is no evidence of illegal coercion. Under the EFCA, a secret ballot election would be held only if more than 30%, but less than a majority of employees sign union authorization cards.  The bill provides that "[i]f the National Labor Relations Boad finds that a majority of the employees in a unit appropriate for bargaining has signed valid authorizations designating the individual or labor organization specified in the petition as their bargaining representative and that no other individual or labor organization is currently certified or recognized as the exclusive representative of any of the employees in the unit, the Board shall not direct an election but shall certify the individual or labor organization as the representative...." (emphasis supplied). 

Not surprisingly, the AFL-CIO supports the EFCA and summarizes the bill favorably on its web site.  But the Heritage Foundation argues that under the EFCA, "[w]orkers would never have the option of voting against union membership, and millions of workers could be forced into a union without ever getting the chance to vote on the matter." 

Another law that may be amended to be more employee-friendly under an Obama administration (if not sooner) is the Americans with Disabilities Act.  The Connecticut Employment Law Blog reports on proposed amendments to the ADA here

Stay tuned for further developments.


Bill Would Require Florida Employers to Allow Leave for Victims of Sexual Violence

Last year I wrote about a new law that requires Florida employers with 50 or more employees to provide three days of leave to any employee who has been employed by the employer for three or more months, if that employee or a member of that employee’s family or household has been a victim of domestic violence.

That law, now codified at section 741.313, Florida Statutes, will be amended to include leave for "sexual violence" effective July  1, 2008 under House Bill 289 unless Governor Crist vetoes the bill.  A veto seems highly unlikely, as the new legislation is already being touted in this "Domestic Violence Digest" published by the Florida Department of Children & Families

The bill defines  "sexual violence" as that term is defined in section 784.046, Florida Statutes, "or any crime the underlying factual basis of which has been found by a court to include an act of sexual violence."  Section 784.046 defines "sexual violence" as "any one incident of:

1. Sexual battery, as defined in chapter 794;

2. A lewd or lascivious act, as defined in chapter 800, committed upon or in the presence of a person younger than 16 years of age;

3. Luring or enticing a child, as described in chapter 787;

4. Sexual performance by a child, as described in chapter 827; or

5. Any other forcible felony wherein a sexual act is committed or attempted, regardless of whether criminal charges based on the incident were filed, reduced, or dismissed by the state attorney."

In contrast, the existing statute defines "domestic violence" by reference to section 741.28, which defines "domestic violence" as  "any assault, aggravated assault, battery, aggravated battery, sexual assault, sexual battery, stalking, aggravated stalking, kidnapping, false imprisonment, or any criminal offense resulting in physical injury or death of one family or household member by another family or household member." (emphasis added).

In other words, one key distinction between "domestic violence" and "sexual violence" is that the latter need not be committed by a family or household member.

Apart from adding victims of sexual violence as protected persons, the provisions of section 741.313 would remain the same under the new law.