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Q&A: Emerging Issues in Employment Law Part 1*

Kathy:  Every year brings new legislation that impacts American employers and employees.  Are there any game-changing laws that have been passed or that are on the horizon for 2013?

Jeremy:  Obviously, much of the country is still reacting to the Supreme Court’s decision rendering the Defense of Marriage Act (DOMA) unconstitutional.  Many employers are now wondering what impact, if any, this decision will have on them and their workforce.  Looking to capitalize on the momentum from the decision, the Senate Committee on Health, Education, Labor, and Pensions (HELP) is now considering a bill that would prohibit employment discrimination based on sexual orientation.  The Employment Non-Discrimination Act (ENDA) of 2013 would entitle homosexual applicants and employees to the same protections and remedies afforded under Title VII of the Civil Rights Act that are currently available to victims of race, gender, age, and disability discrimination, to name a few.  Should ENDA become law, employers will need to immediately train decision-makers and human resources staff in the Act’s intricacies in order to remain Equal Employment Opportunity compliant – something that good counsel can help with.

Although experts have always disagreed about the effects of a federal minimum wage increase, the Senate HELP Committee is also considering a bill that would raise the federal minimum wage from $7.25 to $10.10, in $.95 increments, over a three-year period. Although a Republican controlled House likely spells doom for the proposed increase, the debate highlights an important issue – federal and state laws require, very simply, that all employees be compensated for all hours worked.  Employers that don’t pay their employees correctly stand to face not only regulatory penalties, but also civil liability.  Aside from hefty legal bills, judgments in these cases can be staggering because provisions of the FLSA and the Act’s state law counterparts allow for liquidated (double) and even treble (triple) damages.  Because of the prohibitive impact of failing to comply, employers should, in conjunction with counsel, conduct regular audits of their workforce to ensure that employees are correctly classified as exempt or non-exempt and are being properly compensated for all wages – regular or overtime – earned.

Kathy:  Now that we have talked about legislation, what about case law?  Have there been any decisions that have or will affect workplace relations?

Jeremy:  Although DOMA is the hot topic right now, most employers and employees are likely to be more practically impacted by two other Supreme Court decisions.  During its most recent term, the Court ruled in a landmark case, American Express v. Italian Colors, that under the Federal Arbitration Act, courts cannot invalidate a class action waiver on the ground that the cost of individually arbitrating a claim exceeds the potential recovery.  Practically speaking, this decision significantly and universally bolsters the strength of class action waivers and mandatory arbitration provisions in employment, credit card, and service provider contracts.  Large and small business owners who have yet to revise the contracts, terms, conditions, and agreements entered into with third parties in order to include arbitration clauses and class action waivers are unnecessarily exposing themselves to significant liability.  If your attorney has not already done so or, at very least, suggested this course, you need to immediately contact counsel that is willing to help protect your interests.

In Vance v. Ball State University, the Supreme Court held that an employee is a supervisor for purposes of vicarious liability under Title VII only if he is empowered by the employer to take tangible employment actions against the victim.  In plain English, supervisors can now only be held personally liable for discriminatory conduct if their employer has given them authority to hire, fire, demote, or suspend the victim of alleged discrimination.  Although this case is great for employers in Virginia, the Virginia Supreme Court in Van Buren v. Grubb recently held that state law claims for wrongful termination against public policy can be brought against individual supervisors.  Thus, employers need to be prepared for state law claims to be brought against individual managers, but, most importantly, both cases shows that employers need to audit their workforce by reviewing the responsibilities given to each employee in order to be best prepared for future litigation.

Kathy:  Jeremy, tell us a little bit about the changes in healthcare.  What is your take on how health care reform will impact employers?

Jeremy:  To the delight of many confused employers, the Administration recently extended the deadline for employers to comply with the Affordable Care Act to 2014.  That said, employers still have a new, comprehensive, and difficult regulatory scheme that they are eventually going to have to follow.  In the face of severe penalties for non-compliance, many employers are scrambling to figure out what kind and how much coverage they need to offer their employees under the ACA’s mandate.  Employers are asking me whether the ACA even applies to their businesses, whether it applies to all or just some of their employees, what exactly constitutes a full time employee under the Act, and, ultimately, what coverage must they offer and how much of the premiums must they pay.  These questions highlight the public’s general lack of knowledge of the specific requirements of the ACA, but also show that employers need guidance this year in order to ensure that they are best equipped to navigate the law’s potential minefields.

Kathy:  How about how healthcare changes will affect workers?

Jeremy:  It remains to be seen whether premiums will indeed go down for average Americans.  If they do, workers could save more than $1,000 each year in healthcare costs.  However, what will ultimately affect workers most is how employers plan to comply with the law.  For example, mega-employers like Wal-Mart or Target, who already employ a significant number of part time employees, are likely to cull their rosters to bring even more employees below the ACA mandate’s definition of full time employee.  Practically speaking, a full time employee could see their hours reduced from 40 to less than 30 so that their employer does not have to offer them health insurance.  Thus, some employees are going to lose twice – less hours AND no health insurance.  Sadly, others may simply be let go.

For many employers, though, such a drastic course could have far reaching implications for their public image.  Because of the potential for negative publicity, many employers will find it beneficial to offer ACA-compliant coverage, rather than attempting to avoid doing so by reducing hours or laying off workers en masse.  In that case, employers need knowledgeable counsel that can distill the ACA into its baseline options.  Indeed, a decision to offer employees coverage may also help a company’s bottom line.  Many employers may be pleased to learn that the minimum level of coverage required by the ACA is likely cheaper than what they currently offer their employees.

*This interview was conducted by Kathy Long and originally published in the Fall, 2013 edition of the Belmont News, the Belmont County Club Community Association Magazine.

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