WORKERS' COMPENSATION: Collection and Jurisdiction in Multistate Workers' Compensation Cases

Posted by Anne B. Hemenway on Wed, Jul 8, 2015 @ 13:07 PM

The Lawletter Vol 40 No 5

Anne Hemenway, Senior Attorney, National Legal Research Group

     Workers' compensation claims are often straightforward where the worker has suffered a clear work-related injury in the jurisdiction in which the employer is located. Where a worker has been injured in a work-related accident while traveling in a different state for work, however, different jurisdictions impose specific jurisdictional restrictions notwithstanding the workers' compensation insurance contract. See McIlvaine Trucking, Inc. v. Workers' Comp. Appeal Bd. (States), 810 A.2d 1280 (Pa. 2002) (holding that where a worker who regularly traveled to other states for work was injured in Pennsylvania, the parties' agreement to be bound only by the West Virginia Workers' Compensation Act was unenforceable as against Pennsylvania public policy, which requires in-state workers' injuries to be governed only by the Pennsylvania workers' compensation laws).

     Most states also hold that when a workers' compensation accident occurs outside the forum jurisdiction, the court's jurisdiction is determined by where the employment contract was formed, not by where the accident and injury occurred. See Franco-Lopez v. Martinez, 433 S.W.3d 454 (Mo. Ct. App. 2014); see also  Fed. Ins. Co. v. Workers' Comp. Appeals Bd., 165 Cal. Rptr. 3d 288 (Ct. App. 2013) (holding that the place of the employment relationship is the most realistic place for determining which workers' compensation law to apply).

     There are also instances where an injured worker will have a choice of multiple jurisdictions in which to file a workers' compensation action, but only where the different states have a causal interest in the case. Garcia v. Am. Airlines, Inc., 12 F.3d 308 (1st Cir. 1993); Fed. Ins. Co., 165 Cal. Rptr. 3d 288.

     Finally, a workers' compensation claimant who receives benefits from one state may file to recover benefits in another state as long as there is no possibility of a double recovery for the same injury. Williams v. Johnson Custom Homes, 288 S.W.3d 607 (Ark. 2008); Eadie v. Complete Co., 142 S.W.3d 288 (Tenn. 2004).

Topics: jurisdiction, workers' compensation, Anne Hemenway, jurisdictional restrictions, claims

CIVIL RIGHTS: Employment Discrimination—Same-Actor Inference

Posted by Dora S. Vivaz on Wed, Mar 18, 2015 @ 15:03 PM

Dora Vivaz, Senior Attorney, National Legal Research Group

     Inferences have always played an important role in the analysis of discrimination cases, because direct evidence of discrimination is rare, and such cases, therefore, most often depend on circumstantial evidence. Accordingly, a plaintiff may establish a prima facie case of discrimination by showing circumstantial evidence sufficient to support an inference of discrimination. By the same token, the evidence may allow inferences that benefit the defendant.

     In the employment discrimination context, one such inference is the "same actor inference," which allows the factfinder to infer that when the person who took the adverse employment action against the plaintiff is the same person who hired the plaintiff, the adverse action was probably not based on unlawful discrimination. As the court noted in a recent case, there is a split amongst the circuits as to whether the inference is mandatory or permissive and as to whether it may be relied upon as a basis for summary judgment. See, e.g., Garrett v. Sw. Med. Clinic PC, No. 1:13-cv-634, 2014 WL 7330947 (W.D. Mich. Dec. 19, 2014) (text available only on Westlaw).

     Garrett argued that the inference is not mandatory and that it cannot compel summary judgment, in any case. In addressing these issues, the court referenced an earlier case, Wexler v. White's Fine Furniture, Inc., 2003 FED App. 0029P, 317 F.3d 564, 573-74 (6th Cir.). In Wexler, the Sixth Circuit had noted that some Circuits (Fourth, Eighth, and Ninth) find the inference sufficient to support summary judgment, while others (Third and Fifth) merely allow the inference but do not require it; Wexler had sided with the latter courts. The Sixth Circuit had reasoned that a mandatory inference was inconsistent with Supreme Court cases holding that at the summary judgment stage, all inferences must be resolved in favor of the nonmoving party. Therefore, although the factfinder can draw a same-actor inference, the inference is insufficient to support summary judgment for the defendant when the plaintiff has otherwise raised a genuine issue of fact. Following the Sixth Circuit, the court stated that the courts may choose whether to apply the inference on summary judgment. The court stated that although not mandatory, the inference does weaken a plaintiff's evidence of discrimination, requiring a strong showing on the issue of pretext in order to prove discrimination.

     In the case before it, the Garrett court found that there was no factual issue on whether the person who made the decision to fire the plaintiff was also the sole decisionmaker in hiring her, such that the inference was applicable. It further found, however, that the inference was not mandatory or dispositive in the defendant's favor. Nevertheless, the court granted summary judgment in the defendant's favor because it concluded that Garrett's evidence of pretext was insufficient to create a genuine issue of fact on that question, highlighting again the heavy burden that discrimination plaintiffs are required to satisfy.

Topics: employment discrimination, Civil Rights Act, same-actor inference

CONSTITUTIONAL LAW: Supreme Court Holds 2012 Recess Appointments to NLRB Invalid

Posted by Gale Burns on Tue, Aug 12, 2014 @ 13:08 PM

The Lawletter Vol 39 No 6

John Buckley, Senior Attorney, National Legal Research Group

     On June 26, 2014, the Supreme Court held that the President lacked authority under the Constitution to fill three of the five seats on the National Labor Relations Board ("NLRB" or "Board") through "recess appointments" made on January 4, 2012, during a three-day break between two pro forma sessions of the Senate. NLRB v. Noel Canning, 134 S. Ct. 2550 (2014)
(Breyer, J., joined by Kennedy, Ginsburg, Sotomayor, and Kagan, JJ.; Scalia, J., concurring in the judgment, joined by Roberts, C.J., and Thomas and Alito, JJ.). The case turned on the precise definition of the term "recess" within the meaning of the Constitution's Recess Appointments Clause ("Clause"). Although the Court acknowledged that the term includes both inter- and intrasession recesses and can apply to vacancies that occur before a recess commences, the January 2012 appointments were nevertheless invalid. The Court explained that the three-day period was too short to constitute a "recess" within the meaning of the Clause, and the pro forma sessions could not be construed as recesses, thereby lengthening the period.  Because of the unconstitutionality of the appointment of the three Board members, the NLRB lacked a quorum when it rendered its decision in the case on appeal.

     The controversy arose after three seats on the Board became vacant between 2010 and 2012.  The President filled all three seats on January 4, 2012, during a three-day break between pro forma sessions of the Senate covering the period December 2, 2011 through January 23, 2012. The corporate employer, Noel Canning, received an adverse ruling from the NLRB after the three seats were filled. On appeal to the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit"), the employer argued that a quorum of three members did not exist on the date the Board rendered the adverse decision.  A quorum was lacking because only one member voting for the decision had been confirmed by the Senate; the other two owed their positions on the Board to the challenged recess appointments.  (The Supreme Court had previously held in a 2010 decision, New Process Steel, L.P. v. NLRB, 560 U.S. 674 (2010), that the NLRB cannot act without a quorum of three members.)  The D.C. Circuit agreed with Noel Canning, holding that the challenged recess appointments were invalid under the Clause and, therefore, that the NLRB had indeed lacked a quorum when it rendered the ruling against the employer.  Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013).  The Supreme Court granted review.

     The Clause provides that "[t]he President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."  U.S. Const. art. II, § 2, cl. 3. The D.C. Circuit had concluded that the phrase "the Recess" refers only to intersession recesses (i.e., breaks between formal sessions of the Senate).  The NLRB argued that "the Recess" also includes intrasession recesses (i.e., breaks in the midst of a formal session), noting that the U.S. Court of Appeals for the Eleventh Circuit had interpreted the language in this fashion. See Evans v. Stephens, 387 F.3d 1220 (11th Cir. 2004) (en banc).  Examining both the language of the Clause and historical practice, the Supreme Court determined that the phrase "the recess of the Senate" refers to both intersession recesses and intrasession recesses of substantial length. Specifically, a Senate recess of more than 3, but less than 10, days is presumptively too short to fall within the ambit of the Clause, but this presumption leaves open the possibility that some very unusual circumstance—such as a national catastrophe that renders the Senate unavailable but calls for an urgent response—could demand the exercise of the recess appointment power during a shorter break.

     The D.C. Circuit had also held that the vacancies on the Board did not "happen" during the recess of the Senate within the meaning of the Clause.  It was undisputed that the three vacancies had occurred on August 27, 2010, August 27, 2011, and January 3, 2012. The Supreme Court concluded, however, that the word "happen" in the Clause refers not only to vacancies that first come into existence during a recess, but also to vacancies that arise prior to a recess but continue to exist during the recess. This broader interpretation ensures that offices needing to be filled can actually be filled, whereas the narrower interpretation would prevent a President from making any recess appointment to fill a vacancy that arose before a recess, no matter who the official, how dire the need, how uncontroversial the appointment, and how late in the session the office fell vacant.

     Lastly, the D.C. Circuit had held that the Senate was not in recess during its pro forma sessions in December 2011 to January 2012. The Supreme Court agreed, declaring that for purposes of the Clause, the Senate is in session when it says it is, provided that under its own rules it retains the capacity to transact Senate business. In this case, the Senate had said it was in session, and its rules made clear that it retained the power to conduct business. The Court noted that the Senate could have conducted business simply by passing a unanimous consent agreement. Because the Senate was not in recess during its pro forma sessions, the challenged appointments to the NLRB had been made during a recess of only three days—a time period too short to constitute a "recess" within the meaning of the Clause. Therefore, the appointments of January 4, 2012 were invalid, and the Board lacked a quorum when it entered the ruling in the employer's case. The judgment of the D.C. Circuit was affirmed.

     Notably, the Court did not address the legality of the actions taken by the Board when its quorum was made up of members whose appointments were declared invalid, but the actions can be presumed to be invalid as well. Because a number of the actions were reconsidered after the Board gained a full complement of members whose appointments were properly ratified by the Senate, however, the impact of the Court's decision will not be as great as it would have been without the subsequent Senate ratification and Board reconsideration. As for other presumptively invalid Board decisions, the NLRB's Office of Public Affairs has reported that more than 100 legal challenges to the January 2012 recess-appointee Board were pending before the Court's decision. (For a list of pending cases, visit Master List of Pending January 2012 Recess Appointee Cases (May 16, 2014), available at http://op.bna.com/dlrcases.nsf/r?Open=kerl-9l5kel.) Many—if not all—of these cases will likely be returned to the NLRB for reconsideration.

Topics: legal research, John Buckley, NLRB, constitutional law, Recess Appointments Clause, NLRB v. Canning, no presidential authority, includes intersession and intrasession recesses

EMPLOYMENT LAW UPDATE: NLRB Proposed Rule for Notice Postings

Posted by Gale Burns on Mon, Feb 3, 2014 @ 12:02 PM

Dora Vivaz, Senior Attorney, National Legal Research Group

      As a number of sources have recently reported, see, e.g., Lawrence E. Dubé, NLRB Won't Pursue Notice-Posting Requirement for Most Private Sector Employees (last visited Jan. 13, 2014); NLRB, Notice Posting Rule, Jan. 6, 2014; Dave Jamieson, Employers Won't Have to Tell Workers Their Labor Rights After All, the National Labor Relations Board ("NLRB") has abandoned any plans it may have had to seek review from the U.S. Supreme Court of two federal circuit court of appeals decisions invalidating the NLRB's proposed rule for posting notices of employee rights in the workplace. The proposed rule would have required most private employers to post a prescribed notice of employee rights under the National Labor Relations Act (the "Act") at the workplace—more specifically, of their rights to act and bargain collectively, to unionize, or to refrain from collective action. Under the proposed rule, failure to comply with the notice requirement would itself have constituted an unfair labor practice.

      Not surprisingly, business groups opposed the rule and sought to have it struck down, maintaining that it upset the intended role of the NLRB for dispute resolution, turning it into an advocate for union rights. Two circuit courts did, in fact, invalidate the rule. The District of  Columbia Circuit concluded that the rule violated the rights of employers by forcing them to disseminate a message that they did not create, on penalty of being charged with an unfair labor practice that could be used as evidence of anti-union animus. Nat'l Ass'n of Mfrs. v. NLRB, 717 F.3d 947 (D.C. Cir. 2013), reh’g en banc denied (Sept. 4, 2013).

      The Fourth Circuit, going even further, found that the rule was beyond the authority granted to the NLRB by Congress, reasoning that specific authority is required under the Act before a rule may be promulgated. U.S. Chamber of Commerce v. NLRB, 721 F.3d 152 (4th Cir. 2013). Agreeing with the Chamber of Commerce, the court explained:

Because the Board is nowhere charged with informing employees of their rights under the NLRA, we find no indication in the plain language of the Act that Congress intended to grant the Board the authority to promulgate such a requirement.

Id. at 160-61. Not only did the court find nothing in the Act to indicate that Congress intended to grant any authority to issue such a proactive posting rule—it concluded that Congress affirmatively intended that the Board act only as a reactive entity, confining its role to conducting representation elections and resolving unfair labor practices charges.

       The NLRB has stated that it will continue to work to inform employees of their rights under the federal statute and has noted on its website that employers are still free to voluntarily post the notice.

Topics: Dora Vivaz, legal research, employment law, NLRB, posting notice rule, abandoned, board's purpose is dispute resolution, 4th Cir., U.S. Chamber of Commerce v. NLRB, DC Cir., Nat'l Ass'n of Mfrs. v. NLRB

CIVIL RIGHTS: Does Title VII Permit Claims Against Supervisory Individuals in Their Official Capacities?

Posted by Gale Burns on Wed, Nov 6, 2013 @ 12:11 PM

The Lawletter Vol 38 No 8

Dora Vivaz, Senior Attorney, National Legal Research Group

     It appears to be well settled—in fact, there appears to be uniform consensus in the circuits—that Title VII can be applied to impose liability only on "employers," not on individuals, supervisory or otherwise, who are not themselves employers. What appears to remain unsettled, however, is whether Title VII claims may be brought against individual supervisory employees "in their official capacities" when the employer is a governmental entity, as is generally possible under 42 U.S.C. § 1983.  In general, suing a public official or employee in his or her "official" capacity is tantamount to suing the governmental entity itself.

     The court addressed this exact question in a very recent case.  Stallone v. Camden County Tech. Schs. Bd. of Educ., Civ. No. 12-7356 (RBK/JS), 2013 WL 5178728 (D.N.J. Sept. 13, 2013) (not for publication).  The court started with the language of Title VII, which imposes on employers, as defined, and on any agent of an employer the prohibition against discrimination.  The court noted that it is settled that Title VII does not subject individual supervisory employees to personal liability but that the issue of whether Title VII permits claims against such employees in their official capacities remains unsettled.  Not only are the circuits split on the issue, but the courts within the Third Circuit are also split.

     The court noted that the Third Circuit has stated, in dicta and in the context of qualified immunity, that the doctrine of qualified immunity is inapplicable under Title VII—even though there was no Title VII claim before it—since public officials may be held liable only in their official capacities.  After reviewing cases that had involved Title VII claims, the Stallone court found the reasoning of those cases holding that official capacity claims against individuals are not permitted was the more persuasive. 

     The court explained that Title VII provides for the liability of employers, not supervisors.  It further explained that, therefore, naming a supervisor in his or her official capacity would be redundant, particularly where the employer has already been named as a defendant.  Finally, the court explained that disallowing an official capacity claim in such a circumstance does not in any way prejudice the plaintiff.  The question left unanswered is whether a claim brought against a public official in his or her official capacity should be dismissed even when the governmental employer is not named as a defendant.  Clearly, the better practice would appear to be to name only the governmental employer as a defendant.

Topics: Dora Vivaz, legal research, The Lawletter Vol 38 No 8, civil rights law, Title VII, liability on employers, claims on supervisory employee when government is, Stallone v. Camden County Tech. Schools. Bd. of Ed, DNJ, official capacity when government entity is not a, split in circuits

EMPLOYMENT LAW: Comprehensive Employment Policies: A Necessary Tool to Avoiding Damages and Liability

Posted by Gale Burns on Wed, Sep 4, 2013 @ 11:09 AM

The Lawletter Vol 38 No 6

John Buckley, Senior Attorney, National Legal Research Group

The increasingly complex statutory and regulatory requirements imposed upon employers require that written policies be promulgated and maintained in order to avoid fines for noncompliance, exposure to liability from lawsuits, and punitive damages.  Many federal laws, and an increasing number of state laws, require that employers promulgate and maintain written policies.  Furthermore, it is no longer sufficient to simply pass out cookie‑cutter policies; to be effective, workplace policies must be precisely tailored and contain specific provisions required by the location of the workplace, the type of business involved, the number of individuals employed, and a host of other considerations. 

A properly drafted and implemented written policy can be a valuable tool for employers.  For
example, in EEOC v. AutoZone, Inc., 707 F.3d 824 (7th Cir. 2013), the court noted the rule that an employer may avoid liability for punitive damages based on the actions of managerial employees by simply showing that it had implemented an antidiscrimination policy.  Because the employer in that case had not made the modest investment in an adequate antidiscrimination policy, the court upheld an award of $200,000 in punitive damages. See also Dunlap v. Spec Pro, Inc., No. 11‑cv‑02451‑PAB‑MJW, 2013 WL 1397294 (D. Colo. Apr. 5, 2013) (to avail itself of the good‑faith compliance standard, and avoid vicarious liability for punitive damages in a Title VII action, an employer must (1) adopt antidiscrimination policies; (2) make a good-faith effort to educate its employees about these policies and the statutory prohibitions; and (3) make good-faith efforts to enforce an antidiscrimination policy).  

In addition to insulating employers from potentially devastating punitive damages, properly drafted policies can help employers avoid liability entirely.  In the following cases, employers were able to avoid liability for discrimination claims:  Zakrzewska v. New School, 598 F. Supp. 2d 426 (S.D.N.Y. 2009); Chaloult v. Interstate Brands Corp., 540 F.3d 64, 74 (1st Cir. 2008); McPherson v. City of Waukegan, 379 F.3d 430 (7th Cir. 2004); Salazar v. U.S. Dep't of Justice, 98 F. App'x 623 (9th Cir. 2004); Talamantes v. Berkeley County Sch. Dist., 340 F. Supp. 2d 684 (D.S.C. 2004).  In each of these cases, the employers had properly drafted, written policies prohibiting discrimination and setting out grievance procedures for resolving discrimination claims.  Although a properly drafted policy can enable an employer, in many cases, to obtain summary judgment in its favor, a deficient policy may negate certain defenses and enable a plaintiff to survive summary judgment.  Smith v. First Union Nat'l Bank, 202 F.3d 234, 245 (4th Cir. 2000).

In addition to policies prohibiting discrimination and harassment, employers should have written policies that include provisions covering wages and hours, benefits, leave, workplace safety, workplace conduct, and discipline.  Most employers should also consider policies covering Internet and email use, recordkeeping, drug and alcohol use, and immigration law compliance.

Do your clients have appropriate and effective employment policies?  The National Legal Research Group will provide a complimentary review and consultation regarding an existing employment policy, or an assessment to determine what policies are needed for your clients. To take advantage of this offer, you may contact us by email at jbuckley@nlrg.com or by phone at 1‑800‑727‑6574.  You can also fax an existing policy to us at 434‑817‑6570.  You will receive a complimentary initial consultation with John F. Buckley IV, a nationally known author and authority on Human Resources and Employment Law.

Topics: legal research, John Buckley, The Lawletter Vol 38 No 6, written employment policies, tailored with specific provisions, good-faith compliance standard includes antidiscri, antiharassment, and statutory provisions, grievance procedures, wages and hours, benefits, leave, workplace safety and conduct, discipline

EMPLOYMENT LAW: Florida Court Treats Independent Contractor as Employee for Purposes of Enforcing Covenant Not to Compete

Posted by Gale Burns on Tue, Apr 2, 2013 @ 16:04 PM

The Lawletter Vol 38 No 1

Charlene Hicks, Senior Attorney, National Legal Research Group

One of the legal arenas in which individual rights are pitted directly against business interests comes into play when an individual employee signs an employment contract containing a covenant not to compete.  Not surprisingly, state courts are often called upon to referee disputes concerning the enforceability of such contracts.  In a recent proemployer decision, a Florida appellate court ruled that an individual's change in status from an "employee" to an "independent contractor" did not affect the terms of the noncompete agreement that the individual had previously signed.

In Anarkali Boutique, Inc. v. Ortiz, 104 So. 3d 1202 (Fla. Dist. Ct. App. 2012), the Anarkali Boutique ("Boutique") sought a temporary injunction against Nahomi Ortiz for violating a noncompete agreement that Ortiz had signed when she began employment in 2008.  This agreement stated, in relevant part:

In consideration for my at-will employment or continued at-will employment by [the company] and the compensation now and hereafter paid to me, I hereby agree as follows:

. . . .

I will not either during my employment with the Company or for a period of two (2) years after I am no longer employed by the Company, engage, as an employee, independent contractor, officer, director, or shareholder, in any employment, business, or activity that in any way competes with the business of the Company within a one-hundred (100) mile radius of any store, office, or facility of the Company. . . .

. . . .

Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.

Id. at 1203.

In 2009, the Boutique began treating Ortiz as an independent contractor so that she would have the opportunity to earn more money through sales commissions.  In 2011, Ortiz left the Boutique and began operating her own business, performing the same services, within the restricted area.  In response, the Boutique filed a complaint for injunctive relief and a motion for temporary injunction against Ortiz.

As a defense against the motion, Ortiz argued that when the Boutique changed her status from employee to independent contractor in 2009, she ceased to be employed by the Boutique and the two-year restricted period set forth in the covenant not to compete began to run at that time.  The trial court agreed with Ortiz and denied the Boutique's motion for temporary injunction.

On appeal, the appellate court reversed.  In so doing, the appeals court relied upon the principle of contract construction that requires a court to examine the contract as a whole and to attempt to give effect to every provision.  According to the appeals court, the trial court contravened this principle by failing to give effect to the final sentence of the noncompete agreement quoted above.

Under the circumstances, the Boutique's change of Ortiz's status from employee to independent contractor had the practical effect of changing her "duties, salary or compensation" in the manner contemplated by this final sentence.  Id. at 1205.  In order to give effect to this sentence of the contract, the appeals court ruled that the "mere changing of the worker's status from an employee to an independent contractor did not cause the two-year non-compete period to begin running.  Instead, the two-year non-compete provision did not begin running until the worker left the company."  Id.

Ultimately, the appeals court remanded the case back to the trial court to determine whether the Boutique had satisfied its burden of establishing the statutory requirements for the issuance of a temporary injunction.  Even so, the decision represents a clear victory for the Boutique as an employer.  Although the law carefully differentiates between an "employee" and an "independent contractor" in other contexts, the court did not allow such distinctions to subvert the contractually agreed-upon covenant not to compete.  Because the covenant not to compete by nature favors the employer's business interests over the employee's right to pursue his or her livelihood, the decision indicates that Florida courts may tend to weigh the balance of interests in favor of the employer in any close case.

Topics: legal research, employment law, The Lawletter Vol 38 No 1, Charlene Hicks, covenant not to compete, balance of interests, employee becomes independent contractor, status does not change terms of initial contract, enforceability, Anarkali Boutique, Inc. v. Ortiz, FL Dist. Ct. App., applying principles of contract construction

EMPLOYMENT LAW: The American Taxpayer Relief Act of 2012

Posted by Gale Burns on Mon, Jan 28, 2013 @ 13:01 PM

The Lawletter Vol 37 No 11

John Buckley, Senior Attorney, National Legal Research Group

In a major development affecting all employers, the House of Representatives on January 1, 2013 approved the American Taxpayer Relief Act of 2012 ("the Act"), H.R. 8, Pub. L. No. 112-240, 126 Stat. 2313, passed by the Senate earlier in the day.  The President signed the Act on January 3, 2013.  The Act made permanent the "Bush era" tax cuts for most Americans.  Although the tax cuts technically expired just after midnight on December 31, 2012, the legislation was made retroactive. Significantly, the legislation did not extend the 2% reduction in the employee portion of the Social Security tax that had been in place for the past two years under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and subsequent legislation.

The Act permanently extended the Bush‑era tax rates for all incomes up to $400,000 for individuals and $450,000 for joint filers.  The tax rates that applied to incomes above those levels expired.  Specifically, the top rate rose from 35% to 39.6%.  The legislation also permanently adjusted the income exemption levels for the Alternative Minimum Tax for inflation.  On January 3, 2013, the IRS published revised 2013 percentage‑method withholding tables in IRS Notice 1036, Early Release Copies of the 2013 Percentage Method Tables for Income Tax Withholding, www.irs.gov/pub/irs‑pdf/n1036.pdf.

Effective for wages paid on and after January 1, 2013, employers must also withhold Social Security tax at a rate of 6.2% from all wages up to $113,700.  As noted above, this represents a 2% increase from the 2011 and 2012 tax rate, which was 4.2%.

The Act also makes permanent the tax credit for employer‑provided child-care facilities and services.  Additionally, it extends permanently the exclusion from income and employment taxes of employer‑provided education assistance of up to $5,250.  The employer may also deduct up to that amount annually for qualified education expenses paid on an employee's behalf.

The increase for the exclusion for employer‑provided transit and carpool benefits was also extended permanently.  The exclusion had been increased to $240 a month through 2012 but had been scheduled to fall back to $125 at the beginning of 2013.

For businesses, the legislation extended for two years several tax breaks, including a production tax credit for developers of wind projects, the research and development tax credit, and a measure allowing for bonus depreciation.  The Work Opportunity Tax Credit, which rewards employers for hiring individuals from certain disadvantaged groups (such as unemployed veterans), was revived and extended through 2013.  The employer wage credit for activated military reservists was also revived and extended through the same time period.

The Act extended for one more year the federally funded unemployment compensation benefits available to unemployed workers who have exhausted their initial period of state benefits (typically 26 weeks).  Without the extension, it was estimated that more than two million of the long‑term unemployed would have run out of benefits.

Since June 2008, a series of federal legislative measures have extended the period for such benefits.  These measures included the American Recovery and Reinvestment Act of 2009 and, most recently, the Extended Benefits, Reemployment, and Program Integrity Improvement Act of 2012.

Topics: legal research, employment law, John Buckley, The Lawletter Vol 37 No 11, American Taxpayer Relief Act of 2012, extended some Bush-era tax cuts, SS withholding increased, increased credit for employer-provided child-care, education assistance, and transit/carpool benefits, extension of federally funded unemployment compens

EMPLOYMENT LAW: New NLRB Rule Mandates Posting of Employee Union Rights

Posted by Gale Burns on Tue, Sep 11, 2012 @ 14:09 PM

The Lawletter Vol 36 No 3

John F. Buckley IV, Senior Attorney, National Legal Research Group  

The National Labor Relations Board ("NLRB") has promulgated a new rule, 76 Fed. Reg. 54006 (Aug. 30, 2011) (to be codified at 29 C.F.R. pt. 104), requiring employers to post and maintain a notice of employee rights under the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151–169.  The rule takes effect November 14, 2011.  Pursuant to this rule, an employer who falls under the NLRB's jurisdiction must post a notice of employees' rights to organize a union and bargain collectively with the employer.  The rule also sets out the size, form, and content of the notice and contains enforcement provisions.  According to the NLRB, the rule is needed because employees are not aware of their union rights under the NLRA, and the rule will increase awareness to allow employees to effectively exercise those rights.  See 76 Fed. Reg. at 54006.

The rule applies to any employer covered by the NLRA.  As to retail businesses, including home construction, the NLRB will assert jurisdiction over employers that have a gross annual volume of business of $500,000 or more.  For nonretail businesses, jurisdiction attaches to an employer that has an annual interstate inflow or outflow of at least $50,000. The rule also sets out a table categorizing certain employers and the required amounts of annual gross volume of business required to meet NLRB jurisdiction.  See 29 C.F.R. § 104.204 tbl.

The rule sets out the content that must be included in the notice, informing employees that they have the right to organize a union to negotiate with the employer concerning wages, hours, and other terms and conditions of employment; to form, join, or assist a union; to bargain collectively with the employer for wages, benefits, hours, and other working conditions; to discuss wages and benefits and other terms and conditions of employment or union organizing with coworkers or with a union; to take action with one or more coworkers to improve working conditions; to strike or picket, depending on the purpose or means of the strike or picketing; and to choose not to do any of the activities, including joining or remaining a member of a union.

An employer's failure to post the notice may be considered interfering with, restraining, or coercing employees in the exercise of the rights guaranteed under the NLRA.  29 C.F.R. § 104.210.  Furthermore, the six-month statute of limitations under the NLRA may be tolled in other unfair-labor-practice actions if the employer has failed to post the notice.  Id. § 104.214(a).  Significantly, if an employer's failure to post the notice is deemed to be knowing and willful, it may be used as evidence of motive in cases in which motive is an issue.  Id. § 104.214(b).

The rule is controversial, and employer groups and members of Congress have questioned the NLRB's statutory authority to enact it.  The Society for Human Resources Management, who opposed the rule, maintains that the NLRB exceeded its authority and that it has created a new unfair labor practice for failure to post the notice, a task that should be left to Congress through legislation.  Because the six-month statute of limitations may now potentially be tolled by the NLRB in any unfair-labor-practice charge against an employer where the employer has failed to post the notice, such tolling could subject employers to unfair-labor-practice claims that were previously barred.  Legislation has been proposed that would reverse the NLRB's August 30 decision.  H.R. 2833, 112th Cong. (Sept. 1, 2011); see http://thehill.com/blogs/floor-action/house/179513-quayle-bill-would-reverse-nlrb-requirement-to-post-employee-rights.

Topics: legal research, employment law, The Lawletter Vol 36 No 3, John Buckley, NLRB rule, posting of employee rights to organize a union, union rights

EMPLOYMENT LAW: Overtime Compensation: Factual Specificity Required to State a Claim in the Wake of Twombley and Iqbal

Posted by Gale Burns on Tue, Sep 11, 2012 @ 14:09 PM

The Lawletter Vol 36 No 4

Dora Vivaz, Senior Attorney, National Legal Research Group

The decisions by the U.S. Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, ___, 129 S. Ct. 1937, 1951 (2009), established that in order to state a claim for relief, a complaint must include sufficient nonconclusory factual allegations to nudge the claim "across the line from conceivable to plausible."  The lower courts are now grappling with just what is required, as a practical matter, in order to sufficiently support a claim.  In a recent case, the U.S. District Court for the District of Maryland addressed that question in the context of a wage-and-hour claim for overtime compensation. 

The court first noted the elements of a claim for overtime compensation:  (1) that the employee had worked overtime hours without compensation, and (2) that the employer knew or should have known that the employee had worked overtime, but failed to compensate him for it.  Butler v. DirectSat USA, LLC, Civ. Act. No. DKC 10-2747, 2011 WL 2669349, at *4-5 (D. Md. July 6, 2011).  The court then noted that in the wake of the Supreme Court's recent decisions in Iqbal and Twombly, courts across the country have articulated different views as to the level of factual specificity required to sufficiently plead the claim.  Id. 

The court noted that many courts have required that at a minimum, a plaintiff should allege the approximate number of hours worked for which overtime compensation was not paid.  Id. at *4 (citing cases).  It noted that many courts, on the other hand, have found sufficient the bare allegation that the plaintiff had worked more than 40 hours per week and not been compensated for the overtime.  Id. (citing cases).  The court determined that in the case before it, the more lenient approach was appropriate because there were sufficient other allegations, including details of the types of work activities performed during overtime hours, to provide the defendant with enough information to form a response.  Id. at *5.  This is important because not all "work time" is compensable—travel time to and from work, for example, and time spent on other preliminary and postliminary activities are not generally compensable under the Fair Labor Standards Act. 

The issues of how much and what factual specificity is required for wage-and-hour overtime compensation claims will undoubtedly be further addressed and eventually resolved by the courts in the future.  In the meantime, it is clearly to everyone's advantage for the plaintiff to include as many nonconclusory factual allegations as s/he has knowledge of, including not only the number of overtime hours worked but the nature of the activities, the relationship of the overtime to the plaintiff's regular hours, and the period during which the failure to compensate occurred.

Topics: Dora Vivaz, legal research, The Lawletter Vol 36 No 4, overtime compensation, wage-and-hour claim, what level of factual specificity required, inclusion of nonconclusory factual allegations

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