WHAT HAPPENED IN EMPLOYMENT LAW IN 2010; WHAT'S COMING IN 2011

1. PRINCE WILLIAM SHRM January 5, 2011 WHAT HAPPENED IN EMPLOYMENT LAW IN 2010; WHAT'S COMING IN 2011 Tyler A. Brown Jackson Lewis LLP 10701 Parkridge Blvd, Suite 300 Reston, VA 20191 Phone: 703-483-8300 E-mail: brownt@jacksonlewis.com

2. BRIEF OVERVIEW OF FEDERAL LAW DEVELOPMENTS IN 2010 • HEALTH CARE REFORM • PENDING EMPLOYEE MISCLASSIFICATIONS PREVENTION ACTION • USDOL RULE’S ON UNPAID INTERNSHIPS • EEOC’s SUPER AGGRESSIVE SYSTEMIC DISCRIMINATION INITIATIVE • BREASTFEEDING RIGHTS/FLSA AMENDMENT • FMLA • GINA

3. Newly Enacted and Pending State Laws and Regulations

4. Employee Misclassification Prevention Act

5. Employee Misclassification Prevention Act • Target abuses of independent contractor classification introduced in both houses of Congress on April 22, 2010. • Aimed at ensuring that workers who are considered “employees” under the FLSA are properly classified by their employers • Making them eligible for minimum wage, overtime and other statutory employee protections • Providing tax revenue to the government employer withholdings and payments

6. Provisions of the Misclassification Bill • The Bill provides: • Employers must keep records reflecting the correct status of each worker as an employee or nonemployee; • Employers must state expressly that they violate the FLSA when they misclassify workers; • Civil fines of $1,100/employee for repeat or willful violators; • Double liquidated damages for failing to accurately classify an individual as an employee and violate the minimum wage or maximum hour provisions of FLSA;

7. Practical Solutions for Addressing Misclassification Issues • Conduct an Audit of All Positions • Involve counsel with the audit • Preserve attorney-client privilege • Change Job Titles for Independent Contractors • Ensure that, where possible, contractors have titles that employees do not have

8. President Obama’s Message to Employers

9. President Obama’s Message to Employers (cont’d) • You will pay for misclassifying independent contractors: • “As part of the 2011 budget, the Departments of Labor and Treasury are pursuing a joint proposal that eliminates incentives in law for employers to misclassify their employees; enhances the ability of both agencies to penalize employers who misclassify; and restores protections to employees who have been denied them because of their improper classification. This proposal would increase Treasury receipts by more than $7 billion over 10 years. The 2011 budget for [the Department of Labor] includes an additional$25 million to target misclassification with 100 additional enforcement personnel and competitive grants to boost States’ incentives and capacity to address this problem.”

10. President Obama’s Message to Employers (cont’d) • The IRS is to conduct 6,000 audits of companies for compliance in the next three years. • The most misclassified workers are truck drivers, construction workers, home health care aids, and high-tech engineers. • A misclassified employee is not entitled to the same protections of the discrimination laws and cannot form unions. • Furthering the push for more aggressive enforcement is the Labor Department’s new top law enforcement official, M. Patricia Smith, formerly New York’s Labor Commissioner, who has a reputation for cracking down on misclassification.

11. Unpaid Internships

12. Unpaid Internships Under FLSA • Department of Labor released new Fact Sheet on April 21, 2010 regarding unpaid internships in the “for profit” private sector • New Guidelines: • If the intern is engaged in the operations of employer or performing other productive work (i.e., assisting customers, filing, etc.), then they are NOT exempt from the FLSA’s minimum wage and overtime requirements • This applies even if they are receiving benefits in the form of a “new skill or improved work habits”

13. Next Steps for Employers • Before considering offering an unpaid internship, carefully evaluate whether each of the following factors are met: • The internship is similar to the training provided in an academic or vocational setting • The unpaid intern does not displace regular paid workers • The employer does not receive an “immediate advantage” from the intern’s work • If any of these factors are not met, the intern MUST be paid minimum wage and overtime in order to comply with the FLSA

14. Patient Protection & Affordable Care Act

15. Patient Protection & Affordable Care Act • Amends FLSA: employers must furnish “reasonable” breaks to mothers to express milk for infants up to 1 year old • Time is unpaid • FLSA mandates paid breaks if ≤ 20 minutes • Employer must furnish a private space, other than a restroom, for lactation • Employer ≥ 50 employees. Smaller employers excluded only if can prove undue hardship

16. What’s Happening at the EEOC

17. What’s Happening at the EEOC?

18. What’s Happening at the EEOC? • “The near-historic level of total discrimination charge filings may be due to multiple factors, including greater accessibility of the EEOC to the public, economic conditions, increased diversity and demographic shifts in the labor force, employees’ greater awareness of their rights under the law, and changes to the agency’s intake practices that cut down on the steps needed for an individual to file a charge.” --EEOC Press Release (Jan. 2010)

19. FY 2009 Charges By TypeRetaliation Becomes the Most Popular Type of Charge Filed, Edging Out Race for the First Time

20. What’s Happening at the EEOC? • Most frequent charges brought by employees in 2009 were race discrimination (33,579 charges), retaliation (33,613) and sex discrimination ( 28,028). • Age remains a substantial charge with 22,778 filings although this was a decline from 24,582 the prior year • One area where we see significant increase from 2008 is disability discrimination charges, which rose 10.6% from 19,453 to 21,451 filings

21. What’s Happening at the EEOC? • The total number of filings in which the EEOC issued a “no reasonable cause” finding increased from 47,152 (58.2% of all resolutions) to 52,363 (60.9%). • Total monetary relief recovered by the EEOC in 2009 through enforcement, mediation and litigation equaled $376 million. • The EEOC predicts it will receive over 101,000 charges in FY 2010, the largest number ever filed.

22. What’s Happening at the EEOC? • The EEOC received a funding increase of $23 million in its FY2010 budget; the Obama Administration requested an additional $18 million increase for FY2011 • In late March, President Obama announced four EEOC recess appointments, including Jacqueline Berrien, who was serving as Associate Director-Counsel of the NAACP Legal Defense and Educational Fund, to become EEOC Chair

23. What’s Happening at the EEOC? • Systemic Discrimination Initiative: • The EEOC defines systemic discrimination as “a pattern or practice, policy, or class case where the alleged discrimination has a broad impact on an industry, profession, company or geographic area.”

24. What’s Happening at the EEOC? • Systemic Discrimination Initiative: The EEOC defines systemic discrimination as “a pattern or practice, policy, or class case where the alleged discrimination has a broad impact on an industry, profession, company or geographic area.” • BEST PRACTICE TIP: • Review Your Policies For Job-Relatedness and Ensure Consistent With Business Necessity • Make Certain You Use Validated Tests • Consider Conducting Periodic disparate impact analysis or selection or promotion criteria

25. FMLA Regulations

26. DOL Administrator’s Interpretation No. 2010-3 (June 22, 2010): FMLA regulations define in loco parentis as those “with day-to-day responsibilities to care for and financially support a child.” The Interpretation states that an individual can establish in loco parentis as someone with day-to-day care OR financial support. Consider: Grandparents, godparents, uncles, stepparents. . . Employer may require reasonable documentation of family relationship Don’t automatically discount cases involving care of, or by, a non-parent. What the 2009 FMLA Regulations Mean for Litigation; Traps to Avoid: “In Loco Parentis”

27. GINA

28. The Genetic Information Nondiscrimination Act • Developed to address concerns that genetic testing may result in loss of health insurance coverage or employment. • Designed to encourage people to use genetic testing to gain insight into potential illnesses. • Genetic information is: • Individual’s Genetic Tests • Family Members’ Genetic Tests • Manifestation of a Disease or Disorder in Family Members of the Individual • Genetic Services & Genetic Research

29. The Genetic Information Nondiscrimination Act • GINA prohibits: • Discrimination against employees in the terms and conditions of employment • Fail to Hire, Discharge, Discriminate in terms of compensation, terms, conditions, privileges, of employment • Limit, Segregate, or Classify Employees in any way that would deprive any employee of employment opportunities or otherwise adversely affect the employee’s status • Acquiring Genetic Information • Unlawful to Request, Require, or Purchase Genetic Information About an Employee or the Employee’s Family Member • Disclosing Genetic Information

30. The Genetic Information Nondiscrimination Act • 6 exceptions to the prohibition on acquisition: • Inadvertent Requests: The “Water Cooler” Exception • Health or Genetic Services • Family and Medical Leave Act • Commercially and Publicly Available Information • Genetic Monitoring • DNA Testing For Law Enforcement

31. The Genetic Information Nondiscrimination Act • No requests for genetic information as part of post-offer medical exam allowed by ADA • Reasonable accommodations are not covered if the request was lawful • GINA does not apply to information received as part of a fitness for duty test • Exemption: Voluntary Wellness Programs • Requesting entire medical file in response to a request for leave

32. The Genetic Information Nondiscrimination Act • Best Practices: • Do not discriminate on the basis of genetic information no matter how the information was obtained • Make sure employer’s and insurer’s forms do not request family medical history • Consider including express statement not to provide family medical history • Be careful of broad requests for medical files • Update handbook policies • New “Equal Employment Opportunity Is The Law” poster • Train HR and supervisors

33. The Genetic Information Nondiscrimination Act • Best Practices Continued: • Be careful what you say in response to an employee’s disclosure of genetic information • Be careful what you tell others about an employee’s genetic information • Ensure all adverse action is well-documented to avoid problems after inadvertent disclosure of genetic information

34. Supreme Court Review

35. Supreme Court Cases Decided in 2010

36. Stolt-Nielsen v. AnimalFeeds559 U.S. __ (2010) Decided April 27, 2010 • Case arose in context of a commercial dispute involving maritime law • No clause in arbitration agreement authorizing class-wide arbitration • Arbitration panel held class action could go forward • After issuance of award, defendant moved to vacate the award under the Federal Arbitration Act • District Court granted motion but Second Circuit reversed

37. Stolt-Nielsen v. AnimalFeeds559 U.S. __ (2010) Decided April 27, 2010 • Sup. Ct. noted arbitration under the FAA is a matter of consent, not coercion, and that private agreements need to be enforced according to terms • Parties are free to structure their arbitration agreements • Sup. Ct. held that it was error to order parties’ dispute to proceed with a class arbitration because the parties had not agreed in advance to do so • Lesson: Address issue of class arbitration in arbitration agreement!

38. City of Ontario v. Quon130 S.Ct. 2619 Decided June 17, 2010 • Facts: • City issued 2-way pagers to SWAT Team • Had Electronics Communication Policy, but silent as to pagers • Had “No Expectation of Privacy” provision • Conveyed in meeting and told about audit • Excessive Overage Usage • Decided to review text messages • Got transcripts from wireless service provider • Didn’t search off-duty hours texts • Only a representative sample of each employee’s texts was viewed • Quon sent 456 messages during work hours in August ’02 - only 57 were work related; sent as many as 80 a day; received as many as 28 a shift - only 3 work related; some to his wife & some to mistress • Quon sent sexually explicit messages on the clock

39. City of Ontario v. Quon130 S.Ct. 2619 Decided June 17, 2010 • Unanimous decision • Court reversed and concluded that City’s review of employee’s pager messages was: • Legitimate • Reasonably related to work purpose • Did not intrude on privacy expectation or 4th Amendment rights • Court intentionally avoided determining whether privacy expectation actually existed • Limited decision to facts of case, due to “rapid changes in the dynamics of communication and information transmission” and societal acceptance of the same

40. New Process Steel v. NLRB560 U.S. ___ (2010) Decided June 17, 2010 • Facts: • NLRB had 4 members in ’07 • Knew terms were expiring • Delegated authority to three-member panel • Panel member term expired, so went down to two members in early ‘08 • 600 decisions issued from 1/08 to 3/10 • Court held that while it was an “understandable desire to keep its doors open despite vacancies”… • The NLRA does not “authorize the Board to create a tail that would not only wag the dog, but would continue to wag after the dog had died” • Lots of rubber stamping of decisions going on now

41. Rent-A-Center v. Jackson130 S.Ct. 2772 Decided June 21, 2010 • Jackson filed employment discrimination suit • Rent-A-Center moved to dismiss and compel arbitration • Jackson opposed • Arbitration agreement he signed was unenforceable because unconscionable under Nevada contract law • Company argued unconscionability was issue for arbitrator • Lower court ruled in favor of company, but 9th Cir. Reversed • 9th Cir. held where “party challenges an arbitration agreement as unconscionable, and thus asserts that he could not meaningfully assent to the agreement, the threshold question of unconscionability is for the court”

42. Rent-A-Center v. Jackson130 S.Ct. 2772 Decided June 21, 2010 • Does the court have jurisdiction to decide if an agreement to arbitrate is unconscionable, even when the parties to the contract have clearly and unmistakably assigned this “gateway” determination to the arbitrator? • 5-4 decision • Court reversed 9th Cir. • Arbitration is a matter of contract • Court held that when the entire contract (e.g. employment agreement as a whole) is challenged, issue of enforceability is decided by arbitrator – e.g. fraudulent inducement • But…when the challenge is to the enforceability/validity of the arbitration provision itself, issue is for the court

43. This Term’s Preview • Cases Being Argued in 2010

44. Nelson v. NASA Argued on October 5, 2010 • ISSUE: Whether NASA’s background investigations violate federal contract employees’ constitutional right of information privacy? • FACTS: 28 scientists/engineers asked on questionnaire about treatment/counseling for illegal drug use in last year. References asked same questions. Responses used only for employment, protected by Privacy Act. • HELD: District Court denied injunction. 9th Cir reversed: Gov’t – no legitimate state interest in asking for drug treatment – inquiry not narrowly tailored

45. Nelson v. NASAArgued on October 5, 2010 • SIGNIFICANCE • Question is extent to which government may protect the safety/security of federal facilities • No court has held that applicants have constitutional right to privacy of information disclosed by their references • S Ct – has held that applicants have no legitimate expectation of privacy of information they voluntarily disclose • No court has held a gov’t EE to have a constitutionally-protected right to privacy not to disclose illegal drug use • DISSENT: Court of Appeals’ Panel decision “opens the door for lawsuits against employers who perform standard reference checks”

46. Kasten v. Saint-GobainArgued on October 13, 2010 • ISSUE: Whether an employee’s verbal, not written, complaints of violations of the FLSA constitute “protected activity” to establish basis for retaliation claim? • FACTS: Kasten was required to use timecard at Kronos time clock, which he contended was unlawfully placed and did not permit employees to account for time “donning” and “doffing” protective equipment. • Progressively disciplined & terminated, Kaston argued that he was terminated in retaliation for “filing” a complaint re: FLSA violation • Dist Ct – granted MSJ for the Company

47. Kasten v. Saint-GobainArgued on October 13, 2010 • HELD: 7th Circuit sustained the lower court: • FLSA & ADEA forbid retaliation against employee who has “opposed any practice” unlawful under the statutes. • FLSA non-retaliation provision does encompass internal complaints. • “Filing” a complaint means in writing – “to file” is not the same as “to submit.” • SIGNIFICANCE: Title VII & ADEA forbids retaliation against employee who “has opposed any practice” - broader language. • 4th Circuit - FLSA prohibits retaliation, but NOT for employee “voicing” a position on working conditions in opposition to an employer.

48. Staub v. Proctor HospitalArgued on November 2, 2010 • ISSUE: “Cat’s Paw” theory or liability – can an employer be found liable for unlawful intent of a supervisor who influenced, but did not make the decision? • FACTS: • Staub – angio tech for hospital • Army Reservist – weekend drills and 2-weeks • Supervisor Mulally – interfered, gave him grief, scheduled him weekends, bad-mouthed him • Military duties – “bullshit”, “Army Reserve bullshit”, “bunch of smoking & joking” • Progressive discipline – suspension & termination • VP HR Buck = decision-maker – reviewed the file, relied on other factors (attitude, flirting with med students)

49. Staub v. Proctor Hospital Argued on November 2, 2010 • FACTS: • Jury trial - $57K for Staub • HELD: • Overruled the jury verdict – trial court erred in not making finding of “singular influence” before giving case to jury • Buck need not be “paragon of independence” • Sufficient if “not wholly dependent on a single source of information and conducts her own investigation into the facts” • Trial Court erred in not making initial determination • SIGNIFICANCE: • Factual issue of “singular influence” will be tried to judge – not jury.

50. AT&T Mobility v. ConcepcionArgued on November 9, 2010 • ISSUE: Does an arbitration agreement waiving class actions control over California state law? [Not employment] • FACTS: • AT&T Mobility offered “free” phones with new service • Plaintiffs sued for non-compliance with the offer • AT&T moved to compel individual arbitrations • Plaintiffs argued under Calif. Law, the arbitration clause and class-action waiver was unconscionable and unenforceable • HELD: 1) Contract of adhesion? 2) Small amounts involved? 3) Scheme to cheat? - Yes - waiver unconscionable under Calif. Law • SIGN: Workplace arbitration agreements may be • at risk