Continuing what has been a recent trend, the U.S. Court of Appeals for the District of Columbia Circuit has issued another decision against the National Labor Relations Board (NLRB). On May 7, the court determined the Board’s proposed rule mandating that employers display posters explaining employee rights under the National Labor Relations Act (NLRA) is invalid.

Background
The controversial posting rule was approved by the NLRB in August 2011 and slated to go into effect last year but was put on hold pending appeal. Under the rule, employers were required to post notices “in conspicuous places, informing [employees] of their NLRA rights, together with Board contact information and information concerning basic enforcement procedures.” The NLRB’s proposed notice describes employees’ right to form and join unions, bargain collectively, engage in other activities protected under the NLRA, or refrain from those activities altogether. (The poster didn’t mention employees’ right to decertify a union, not pay union dues in right-to-work states, or object to paying dues unrelated to union representation. The NLRB claimed it was entitled to “editorial judgment.”)

The rule also had stiff consequences for noncompliance. Failure to post the notice would, in and of itself, be deemed an unfair labor practice (ULP), be considered evidence of unlawful motive in any other ULP charge, and toll, or extend, the six-month statute of limitations for filing ULP charges. The NLRB believed the rule was necessary because “employees were not aware of their rights under the [NLRA].” Specifically, the Board cited the fact that only a small portion of the private workforce is unionized and the workforce is increasingly made up of immigrants and workers coming out of high school who are ignorant of their rights under the NLRA.

Court’s decision
Business groups opposed the requirement on several grounds. They argued that the NLRB has no authority to require the posters, the rule created a new ULP that Congress hadn’t intended when the NLRA was passed (namely, not displaying the poster), the rule violated employers’ free-speech rights, and the Board didn’t perform a required analysis of the rule’s effect on small employers. The NLRB maintained that Congress gave it authority to create regulations to fill in gaps in the NLRA. The D.C. Circuit wasn’t persuaded by the NLRB’s arguments.

The court noted that the First Amendment to the U.S. Constitution and Section 8(c) of the NLRA permit employers to freely communicate with employees about unionization as long as their speech doesn’t contain any threats or promise any benefits. In addition, the law allows employers to remain silent on the topic altogether at their discretion. However, under the NLRB’s rule, “the government selected the message and ordered its citizens to convey that message” and then assessed penalties for noncompliance. The court made it very clear that such a mandate is unlawful. Nat’l Ass’n of Mfrs v. NLRB, Nos. 12-5068 and 12-5138.

Bottom line
The NLRB has yet to issue a statement about the decision, so it’s unknown whether the case will make its way to the U.S. Supreme Court. However, the Board is still precluded from implementing the posting requirement. The D.C. Circuit’s decision is a significant development for employers everywhere. When considered in conjunction with another ruling by a federal district court in South Carolina that the NLRB’s proposed rule is invalid, the latest decision by the D.C. Circuit means that employers nationwide have a good-faith basis for refusing to post the notice pending the resolution of these cases.

Brian R. Garrison is an attorney with Faegre Baker Daniels, practicing in the firm’s Indianapolis, Indiana, office. He may be contacted at brian.garrison@FaegreBD.com.

BeautifulPeople.com, an online dating site that makes sure members meet requirements for attractiveness, has just launched a jobs component. Employers seeking “beautiful people” can post jobs, and members of the dating site can peruse openings from employers who don’t want the less than attractive on their team.

BeautifulPeople.com launched the jobs site June 3 with a press release proclaiming “Potential employers seeking to hire good-looking staff only need look no further.” The company claims a database of 750,000 comely members. Employers can approach members who state that they’re actively looking for employment and are willing to be contacted. The service also allows members to submit applications through the site.

If it sounds like a service that might invite the unscrupulous to invent job openings just to contact “beautiful” people, Greg Hodge, managing director of the website, says not to worry. “We have a dedicated team to validate each business which applies to our recruitment service so that every introduction is safe and legitimate,” Hodge said in the press release announcing the service. “This isn’t an invitation for the aesthetically challenged to come and ogle our beautiful members.”

The company’s validation practices and mission already have convinced at least some users. The company’s announcement quotes working mother Olivia Kinnard who plans to use the service to search for a nanny. “The truth is, my toddler, Kit, responds better to good-looking people,” she said. “And I’m sure I’m not the first parent to think they need a slim and fit nanny to be able to keep up with a busy child–it’s just that many wouldn’t dare to come out and say it.”

But is it legal?

A jobs site catering to just the beautiful may raise red flags, but no law specifically protects jobseekers who don’t fit typical notions of what makes a person attractive. That’s not to say employers are immune from legal hazards if they overtly consider beauty when evaluating job candidates.

For example, the Americans with Disabilities Act (ADA) may present a legal risk. Michael P.  Maslanka, managing partner of the Dallas office of Constangy, Brooks & Smith, LLP and editor of Texas Employment Law Letter, points to a case in which a hotel maid lacking an upper denture was found to violate the resort hotel’s appearance policy. The firing led to a claim in which the employee said she was regarded as having a disability and was the victim of an ADA violation.

A person’s weight also can lead to discrimination that may fall under the ADA if an employee or applicant is morbidly obese and considered disabled under the law. Maslanka says people often jump to stereotypical conclusions about what an overweight person can or can’t do.

When an employer draws such a conclusion, “that is when the ADA lands on an employer and lands hard,” Maslanka says. Employers should judge employees and applicants as individuals, “no more, no less.” He says employers can prefer the attractive over the unattractive as long as the distinction isn’t grounded in a disability.

But the ADA isn’t the only antidiscrimination law implicated. Maslanka cites another case in which a hotel manager disliked a desk clerk’s button-down-shirt-and-pants look. A court allowed the case to go to trial finding that a jury could conclude sex discrimination by finding that the manager engaged in sex stereotyping and unlawfully discriminated against the employee for not being feminine enough.

Demand for pretty employees

Despite potential legal dangers, the service may find a niche, according to Daniel S. Hamermesh, an economics professor at the University of Texas and author of Beauty Pays: Why Attractive People Are More Successful. “I expect there will be a fair amount of interest in this,” he says. “In China, for example, nearly 10 percent of job ads list beauty as a requirement for applicants. The more important question is whether this will remain viable. I wouldn’t be surprised to see this lead to legislation to clamp down on the explicit use of beauty in job advertising.”

Hamermesh says a preference for the pretty over the plain is common in a variety of occupations, but it may not be a conscious decision on the part of an interviewer to limit a search to attractive candidates. “A few companies have people who admit they are doing this, but most people will not,” he says. “So my guess is that this is unconscious in most cases.”

Whether conscious or unconscious, the preference for pretty people is hard to overcome, Hamermesh says. “After all, if your customers want beautiful people to buy from, or your employees want good-looking fellow workers, if you ignore those preferences you are hurting your bottom line. And the evidence is that customers are the driving force behind looks discrimination. So until people’s attitudes change generally, I don’t see why employers, absent any external pressure, will or even should wish to overcome these tendencies.”

As summer heats up, temperatures start to rise, anticipation for family vacations and summer holidays grows, and the spirit of summer can be felt throughout the workplace. As the arrival of summer becomes increasingly evident in cubicles and corner offices, employees can become relaxed about workplace rules and conduct. In some instances, relaxed attitudes can influence employees’ office attire in negative ways.

Every employer can identify one employee who rolls into work wearing a Margaritaville T-shirt or short shorts and a tank top―all with the sounds of flip-flops echoing up and down the hall. In other instances, conflicts can arise among employees vying for time off during prime vacation season.

Identifying and addressing instances of dress code violations or vacation conflicts can be essential to maintaining a professional workplace throughout the year. Below are some important steps to follow to successfully implement a workplace dress code and to avoid unnecessary conflict over vacation time.

Summertime blues
Be clear with employees about your dress code and vacation policies. A clear, understandable policy is the cornerstone of successful enforcement. A good dress code will identify clothes that are inappropriate. For instance, some clothing may be off limits simply because of the content depicted on it. Some workplaces ban clothing with alcohol-related or other suggestive messages regardless of whether it appears on a collared shirt or tank top. While a particular style of clothing may be permissible as long as it meets certain criteria (e.g., length), it’s essential to provide objective standards. For example, if you are seeking to regulate the length of employees’ shorts, provide a specific length that is acceptable.

Also, consider instructing employees as to which accessories are appropriate with their clothing. Again, a clear and understandable policy is the goal. Consider whether your company seeks to prohibit flip-flops while allowing open-toe sandals or whether all sandals are off-limits. Be clear about whether summertime items such as sunglasses or tattoos are permissible as well.

Regarding vacation policies, let your employees know up front if there are certain times of the year that are unavailable for vacations. Similarly, it is important to have a system in place to accommodate absences during peak periods. It could be as simple as trading holidays or holding a lottery for certain times of the year. Whatever system fits your workplace best, make certain it is clearly communicated to all employees and they have a chance to review it throughout the year.

The heat is on
Lead by example. To get employees to “buy in” and follow your dress code, management must set the tone by complying with the code first. Make sure managers are aware of the dress code, and continue to educate them about the code’s requirements as time passes.

Along with your vacation policy, ensure that management continues to be invested in the company even during peak vacation periods. Nothing erodes morale more than seeing managers missing time while rank-and-file employees are required to be at work. Also, make sure that conflicts between managers for time off are handled internally, without alerting other employees to the situation. Those issues should not become fodder for internal conflict.

Finally, when it comes to enforcement, be certain to apply your policies consistently among employees. Because clothing preferences can often be tied to individuals’ personalities, tension can result when employees are confronted about their workplace attire. When that happens, managers will have much more credibility if they can point to the specific policy that is being violated and the employee sees that others are being held responsible for their clothing choices. As with the dress code, it’s important that employees see the vacation policy is being enforced fairly. It is imperative to avoid the appearance of favoritism.

Bottom line
As summer gets into full swing, unique challenges confront employers. Those challenges can be met by (1) communicating your expectations to personnel in a clear, understandable manner, (2) having management lead by example, and (3) enforcing policies consistently and fairly. By following these guidelines, your workplace will slide through summer with minimal conflict.

Chelsea V. Brown is an associate with Steptoe & Johnson in Morgantown, West Virginia, focusing her practice on litigation. She may be contacted at chelsea.brown@steptoe-johnson.com.

Regardless of whether you decide to give in to temptation or play it safe, it’s good to get the pros and cons from experts. A group of attorneys recently was asked to respond to a question about the legality of giving references. They were asked about the common practice of releasing only dates of employment, position, and pay when contacted for a reference and whether there’s any legal reason for not giving a more detailed reference.

Going beyond the basics
Peyton Irby, special counsel in the Jackson, Mississippi, office of the Jones Walker law firm and editor of Mississippi Employment Law Letter, pointed out that years ago many employers started giving limited information to avoid lawsuits based on former employees blaming a missed job opportunity on a negative reference. But employers do have alternatives to the strict “name, rank, and serial number” policy.

“Some prospective employers now ask, ‘Is this person eligible for rehire?’ A negative answer that is truthful should shield you from liability,” Irby says.

What if the employee is fired?
Steve Jones, a partner at Jack Nelson Jones & Bryant and editor of Arkansas Employment Law Letter, says the decision about what to say in a reference is complicated when an employee is fired. “If you aren’t careful in your statements to prospective employers, you may leave yourself open to a defamation lawsuit.”

A former employee can’t prove defamation without showing that you intentionally damaged his reputation by making false statements. “While that may appear like an easy trap to avoid, there are some serious pitfalls,” Jones says.

“Most of the time when an employee is fired, it’s for reasons that make him look bad. For example, if you let him go for stealing, excessive tardiness, or lying about his job qualifications, it’s hard to explain the discharge to a prospective employer without damaging the employee’s reputation,” Jones says. “In addition, it’s often difficult or impossible for an employer to fully prove what it knows to be true. As a result, the best policy is to say as little as possible and stick to the facts your company can prove.”

Jones suggests informing a fired employee at dismissal that you won’t be able to give a positive reference. Obtaining a written release from ex-employees also is recommended. “To give yourself increased protection from lawsuits, you may ask departing employees to sign a release that gives you permission to provide information to prospective employers and prevents them from suing you over the information you provide,” he says.

Jones emphasizes that employers should always follow the company’s reference policy. His “bottom-line recommendations” include keeping a reference brief, making sure your company designates a specific employee or department to handle reference requests, and providing only the information the company policy allows you to disclose.

State-specific laws
Some states have laws intended to protect employers that give references, but the protections are limited. South Carolina is one state with such a law. Reggie Gay, a shareholder with McNair Law Firm and editor of South Carolina Employment Law Letter, says employers must strictly comply with the law’s provisions to retain immunity.

Even employers in states without immunity laws may not want to refuse all reference requests. “A blanket prohibition against providing any information can cause problems as well,” Gay says. “That is true especially if you have knowledge of a former employee’s behavior that could result in harm to a third party. In those situations, you may have an obligation to disclose the information. Also, treat all former employees similarly. Providing information on some employees but not others may be grounds for a discrimination claim.”

Nebraska is another state with a law providing protection for good-faith references. Mark M. Schorr, chairman of the labor and employment law practice group at Erickson & Sederstrom and editor of Nebraska Employment Law Letter, stresses that immunity is not absolute, though. “If a former employer provides information that it know is false or provides a reference with malice, a deliberate intent to mislead, or reckless disregard for the truth, then immunity does not apply,” he says.

Emily Hobbs-Wright, an attorney with the Holland & Hart and an editor of Colorado Employment Law Letter, says Colorado also has an immunity law, but like such laws in other states, “the immunity doesn’t apply if the employer provides false information when it knows or reasonably should know the information is false.”

The implementation of the Affordable Care Act’s (ACA) tax credit for employers with fewer than 25 employees and the looming requirement that large employers (those with 50 or more full-time-equivalent (FTE) employees) provide affordable health insurance to their full-time employees or pay a penalty have resulted in some employers trying to limit the number of employees in their organization. One method that is gaining popularity (and that we do not recommend) is broadly classifying workers as independent contractors instead of employees. Employers must be extremely careful when trying to manipulate the system to obtain the ACA’s tax credits or avoid its requirements. Misclassifying an employee as an independent contractor can result in substantial penalties and quickly erase any benefit.

Motivating factors under the ACA
There are several provisions in the ACA that arguably incentivize an employer to reduce its number of employees. The Act provides tax credits to small employers. Tax-exempt organizations and small employers that pay at least 50% of the premium cost of employees’ health insurance qualify for a special tax credit. Employers with fewer than 25 FTEs who average less than $50,000 in wages per year are eligible. In 2014, the maximum credit will increase from 35% to 50% of premiums paid by eligible small employers and from 25% to 35% of premiums paid by eligible tax-exempt employers. The maximum credit is provided to employers with 10 or fewer FTEs who individually earn an average of $25,000 or less each year.

Soon, the ACA will require large employers to provide healthcare coverage to their employees or pay a penalty (the “play or pay” provision). Whether an employer is subject to possible penalties depends on its number of full-time employees (defined as those working 30 or more hours per week), including FTEs. If an employer has 50 full-time employees, including FTEs, it qualifies as a large employer and is subject to the “play or pay” provision. Independent contractors do not qualify as employees. Beginning January 1, 2014, if a large employer doesn’t offer coverage or its coverage doesn’t provide minimal value, it may find itself subject to monetary penalties.

If an employer is close to being considered a small or large employer based on its number of full-time employees and FTEs, it is very unwise to manipulate those numbers by converting employees to independent contractors or replacing some portion of its existing workforce with independent contractors. Each worker must be carefully and individually analyzed to determine whether he should be classified as an employee or independent contractor.

Independent contractor test
Establishing that someone truly is an independent contractor isn’t easy. Although not specifically set forth in the ACA, it appears that the appropriate test to determine independent contractor status is set forth in IRS Publication 15A. The IRS previously applied what was commonly referred to as the 20-factor test. In response to pressure for simplification, the agency recently created an 11-factor test. The 11 factors are organized into three categories: (1) behavioral control, (2) financial control, and (3) relationship of the parties.

When it comes to behavioral control, you should examine the following areas:

• Instructions that you give the worker; and
• Training that you give the worker.

In terms of financial control, you should consider the following:

• The extent to which the worker has unreimbursed business expenses;
• The extent of the worker’s investment;
• The extent to which the worker makes services available to the relevant market;
• How the worker is paid; and
• The extent to which the worker can realize a profit or loss.

The third category is the type of relationship between the parties. When contemplating that factor, you should consider:

• Written contracts describing the relationship the parties intended to create;
• Whether the company provides the worker with employee-type benefits (e.g., insurance, a pension plan, vacation pay, or sick pay);
• The permanency of the relationship; and
• The extent to which services performed by the worker are a key aspect of the company’s regular business.

You should consider all 11 factors. Unless an employer is confident it can satisfy all the factors, it should assume that the government agency administering the law will take the position that workers are employees and not independent contractors. For that reason, it generally is advisable to take a conservative approach when classifying workers as independent contractors.

Bottom line
Any employer that is on the line in terms of whether it is classified a large or small employer and is contemplating potential penalties under the ACA should (1) exercise extreme caution if it attempts to manipulate its number of employees by reclassifying them as independent contractors and (2) consult with legal counsel. The penalties for improperly classifying workers could substantially outweigh the benefits of a tax credit or the penalties under the ACA.

Gesina M. Seiler is a partner with Axley Brynelson, LLP. She is key member of the firm’s ACA team. She may be contacted at gseiler@axley.com.

In another study, this one by The Chronicle of Higher Education and American Public Media, researchers found that almost a third of employers surveyed said colleges are doing only a fair or even a poor job of producing good employees. Employer complaints focused on graduates who lacked basics such as adaptability, communications skills, and the ability to solve complex problems.

Despite noting shortcomings on the part of colleges and universities, more employers than ever are insisting that their employees have college degrees. The Chronicle of Higher Education study says two-thirds of employers almost never waive degree requirements when hiring. Also, the kinds of jobs that once didn’t require a degree now often do.

Certainly technological advances have made higher education more necessary than it once was in some segments of the economy. Manufacturing is on example. Factory work that once required little education beyond on-the-job training is often more complicated now and may require high-level math and computer skills. But since the recession, other jobs that might not require a degree are now often filled by people who have graduated from four-year institutions.

The Chronicle study asked employers how they value a bachelor’s degree today versus five years ago. Thirty-nine percent said about the same, 26 percent said less, 25 percent said more, eight percent said a lot more, and just two percent said a lot less. By industry, manufacturing employers were the ones most likely to value a bachelor’s degree more now than five years ago, followed by service/retail employers.

The McKinsey study, which was conducted in the United States and eight other countries, found that employers, education providers, and young job seekers “have fundamentally different understandings of the same situation,” according to the study’s executive summary. “Fewer than half of youth and employers, for example, believe that new graduates are adequately prepared for entry-level positions. Education providers, however are much more optimistic: 72 percent of them believe new graduates are ready to work,” the report says.

The study concludes that when jobseekers, employers, and educators aren’t on the same page it’s because they aren’t engaging with one another. “One-third of employers say they never communicate with education providers; of those that do, fewer than half say it proved effective,” the study summary says.

But getting employers, jobseekers, and educators on the same page may be the answer, according to the study. “Two features stand out among all the successful programs we reviewed,” the summary says. “First, education providers and employers actively step into one another’s worlds. Employers might help to design curricula and offer their employees as faculty, for example, while education providers may have students spend half their time on a job site and secure them hiring guarantees.”

The second feature of successful interaction between educators and employers relates to how they form relationships with students early on. “Instead of three distinct intersections occurring in a linear sequence (enrollment leads to skills, which lead to a job), the education-to-employment journey is treated as a continuum in which employers commit to hire youth before they are enrolled in a program to build their skills,” the study summary says. “The problem, then, is not that success is impossible or unknowable – It is that it is scattered and small scale compared with the need.”

Recently, the Employers Counsel Network (ECN) met in Alexandria, Virginia, where several notable speakers stopped by to provide their insights on current developments in the employment arena at the national level and to share their predictions for President Barack Obama’s second term. The first post looked at the personnel turnover at federal agencies, the extensive reach of the Occupational Safety and Health Administration’s Directorate of Whistleblower Protection Programs (DWPP), and enhanced enforcement efforts from the Office of Federal Contract Compliance Programs. The second post focused on how the National Labor Relations Board (NLRB) keeps pushing forward with its agenda despite questions about the legitimacy of the current Board as well as recent operational changes at the Equal Employment Opportunity Commission (EEOC). This post will detail information about federal legislative issues and bills provided in the ECN sessions.

Economy,  jobs remain top concerns
Partisan rancor continues to fester in Washington, D.C. According to Michael Aitken, vice president of government affairs for the Society for Human Resource Management (SHRM), both communism and the late Hugo Chavez currently poll more favorably than Congress. Despite the attention gun control and immigration reform have received of late, few Americans view either as among the nation’s top problems. The top issues continue to be the economy in general and unemployment and jobs, followed by the federal debt and health care.

Federal legislation on comp time
U.S. Representative Martha Roby (R- Alabama) has introduced legislation to amend the Fair Labor Standards Act (FLSA) to allow private-sector employers the option to give their hourly employees the choice of compensatory time off (at time and a half) or pay for overtime hours worked. State and federal government employers already have the ability to use comp time, but the FLSA currently prevents private employers from offering it to their employees.

Also known as the Working Families Flexibility Act, HR 1406 would require an employee to have worked a minimum of 1,000 hours within the last 12 months to be eligible for comp time. It would allow employees to accrue up to 160 hours of comp time a year and “cash out” unused comp time within specified periods of time. Employees would be permitted to use their accrued comp time upon request within a reasonable time, provided their use of comp time wouldn’t unduly disrupt the employer’s operations. SHRM supports the bill, but it is currently opposed by unions.

Increasing the minimum wage
Seven in 10 Americans now say they would support raising the federal minimum wage to $9 an hour. The Fair Minimum Wage Act (S 460 and HR 1010) has been introduced in both the Senate and the House. The Act would amend the FLSA to incrementally raise the federal minimum wage to $10.10 over the next two years. The minimum wage would then be indexed annually to account for inflation. The proposed legislation also would increase the minimum wage for tipped employees incrementally so that it would eventually be 70% of the regular minimum wage.

Immigration reform
The Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S 744), introduced in the Senate by the “Gang of Eight,” proposes a comprehensive overhaul of the nation’s immigration laws, including enhanced employment verification requirements. The legislation would add several new steps to the verification process, raising concerns about its burdensomeness. For example, an employer would attest on a new “form” that it had verified a new hire’s employment and identification status by examining certain documents.

In addition, the bill would require employers to verify the identity of each person hired using the “photo tool” program or another identity authentication program to check that the individual hadn’t stolen anyone’s identity. The photo tool program is an enhancement to the U.S. Citizenship and Immigration Services’ (USCIS) E-Verify system. It’s designed to help employers comply with immigration law by detecting some forms of identity fraud in the employment eligibility process.

The proposed legislation also would clear the current green card backlog and would increase the H-1B visa cap to 110,000 per year. Employers would be required to post job openings on the Department of Labor’s (DOL) website for 30 days and attest to the nondisplacement of U.S. workers for 90 days before and after filing the Labor Certification Application (LCA). It would create a new three-level prevailing wage system for most employers, effectively adjusting wages upward. There’s concern that under the proposal, employers would pay their foreign national workers more than their U.S. workers.

NLRB and Noel Canning
The House recently passed the Preventing Greater Uncertainty in Labor-Management Relations Act (HR 1120) in response to the D.C. Circuit’s Noel Canning ruling. The bill prohibits the National Labor Relations Board (NLRB) from taking any action that requires a quorum of its members until it actually has a quorum. It also prohibits the NLRB from implementing, administering, or enforcing any decisions finalized on or after January 4, 2012. The bill isn’t expected to be passed by the Senate; it was intended to send a message to the Obama administration.

Taxes and benefits
The American Taxpayer Relief Act was passed by Congress on January 1, 2013, and signed into law by the president on January 2. The bipartisan tax deal didn’t address tax reform or the debt limit, but it revised tax rates on high earners, modified the estate tax, and extended the Bush-era tax cuts. The Act also extends, among other things:

• Internal Revenue Code Section 127, allowing employers to provide up to $5,250 per year tax-free in tuition, fees, and books to employees for undergraduate and graduate-level courses;
• The provision giving employers a tax credit of up to $150,000 for acquiring, constructing, rehabilitating, or expanding property used for a childcare facility;
• The exclusion from income of up to $10,000 in adoption expenses paid through an employer assistance program; and
• An increase in the monthly exclusion for employer-provided transit and vanpool benefits (through December 31, 2013).

Lobbyists for employers are closely watching all proposals relating to the tax treatment of employer-operated health insurance plans. SHRM’s Aitken suggested at the ECN meeting that the easiest solution would be to place a maximum limit on the amount of deductions rather than seeking to rewrite the tax code.

Bottom line
Despite congressional gridlock, the DWPP, the OFCCP, the NLRB, and the EEOC continue to push ahead with President Obama’s agenda for his second term. Employers should keep an eye on developments in the employment arena because the months ahead look to be full of significant changes and challenges.

Sophie E. Zdatny is an attorney with Dinse, Knapp & McAndrew, P.C. in Burlington, Vermont. She has a general litigation practice in both state and federal court, with a concentration in  insurance coverage  and employment law. She may be contacted at szdatny@dinse.com.

Internships can be a win-win for both the employer and the intern, but there are pitfalls to avoid. For one, the legality of unpaid internships has gotten a lot of attention in recent years, and some high-profile lawsuits have made many employers wary of using unpaid interns. But employers should consider more than just the rules surrounding compensation.

Here’s a look at other issues to consider.

Management concerns
Interns are inexperienced and unproven, and managing such workers can be a challenge. InternMatch, an online system linking students and employers, offers tips on how to manage these short-term workers. One tip is to assign an intern one manager—one who enjoys working with students.

“Students can accomplish big goals when given the right amount of guidance,” a blog on the InternMatch website says. “But, they are new to the work-world and your industry, and so if thrown out to sea and told to start paddling they won’t know what your expectations are or where to start. Ultimately, you want to find someone on your staff who enjoys sharing his or her expertise with young people and is going to be committed to helping the interns.”

InternMatch’s tips also include making sure an intern has a project. Start with something small and easily managed that will show the intern’s strengths and weaknesses. Then another more overarching project can be assigned that will allow the intern to stay focused and learn quickly. Set weekly goals for the intern, and meet every week, maybe for coffee or in some other informal setting, to check in and answer questions.

InternMatch also advises employers to break assignments down and closely supervise work. “Interns are new to the professional world, so by having them complete drafts lets you point them in new directions, before going down a wrong road,” the tips list says.

Compensation
A legal danger zone in the world of internships concerns payment. Many potential interns are willing to work for free just to have some experience to put on a resume, and many employers are eager to bring them on. But the U.S. Department of Labor (DOL) has specific guidelines on when an unpaid internship is and is not permissible under the Fair Labor Standards Act.

The DOL applies a six-part test to determine when an intern in the for-profit private sector can be unpaid. All six criteria must be met.

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.
2. The internship experience is for the benefit of the intern.
3. The intern does not displace regular employees but works under close supervision of existing staff.
4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded.
5. The intern is not necessarily entitled to a job at the conclusion of the internship.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

A little history and a look ahead
Statistics tell a story about internships. Research from InternMatch shows that 81 percent of the employers they surveyed said they have a better experience with new hires who have intern experience, and 37 percent of students say internships are a good job-search resource. But the success of internship programs didn’t come about overnight. Today’s internships got their start in the 11th century with the apprenticeship system, according to InternMatch research.

The first academic internship in the United States was created in 1906 in the accounting department of the University of Cincinnati. In the early 1980s, just three percent of college students completed internships before graduation, but 80 percent of college seniors had completed at least one by 1999, according to InternMatch’s research.

The latest iteration of interns has gone digital. Now 33 percent of employers hire “virtual interns,” those who use technology to do their work remotely, InternMatch says. The organization surveyed more than 100,000 students and found that 59.3 percent were willing to take a virtual internship although they still prefer to work in an office.

For more HR HeroLine articles on internships, click here.

Recently, the Employers Counsel Network (ECN) met in Alexandria, Virginia, where several notable speakers stopped by to provide their insights on current developments in the employment arena at the national level and to share their predictions for President Barack Obama’s second term. This is the second post in a three-part series detailing the information provided in those sessions. The first post looked at the personnel turnover at federal agencies, the extensive reach of the Occupational Safety and Health Administration’s Directorate of Whistleblower Protection Programs (DWPP), and enhanced enforcement efforts from the Office of Federal Contract Compliance Programs. This post will focus on how the National Labor Relations Board (NLRB) keeps pushing forward with its agenda despite questions about the legitimacy of the current Board as well as recent operational changes at the Equal Employment Opportunity Commission (EEOC).

Undaunted, NLRB moves forward
Earlier this year, in the Noel Canning case, the U.S. Court of Appeals for the D.C. Circuit invalidated President Obama’s January 2012 recess appointments to the NLRB. The decision threw into question not only the validity of the NLRB’s recent decisions but also decisions issued under previous administrations in which the Board included recess appointment members as well as actions by its regional directors. The issue is pending before other federal circuit courts of appeals, some of which have already heard oral arguments on the issue. On April 25, the DOJ filed a petition asking the U.S. Supreme Court to review the D.C. Circuit’s decision. The appeal isn’t expected to be heard this term.

Despite the uncertainty, acting General Counsel Lafe Solomon has affirmed the Board’s intent to move forward aggressively with its agenda. All cases involving NLRB members with recess appointments have been put on hold by the D.C. Circuit, but the Board continues to work to resolve employment disputes. To deal with sequestration, the NLRB has curtailed its discretionary spending on training, awards, and travel.  Obama has put up five nominations for the NLRB, which the U.S. Senate is expected to consider soon.

Who owns employee e-mails? At the ECN meeting, Solomon touched on the NLRB’s Register Guard decision, in which it upheld the validity of an employer’s policy prohibiting the use of e-mail for “non-job-related solicitations.” The Board acknowledged that an employer could make distinctions in its rules that might adversely affect employees’ National Labor Relations Act (NLRA) Section 7 rights—such as allowing charitable, but not noncharitable, e-mail solicitations—as long as such policies (or enforcement of them) don’t discriminate along Section 7 or union-related lines. Solomon noted that these cases involve balancing employers’ property rights in their e-mail systems and the employees’ rights to talk with each other.

Revoking deferrals. Currently, some cases that have been deferred pending arbitration have been awaiting resolution for up to seven years. Solomon favors issuing a “Notice to Show Cause” why a deferral shouldn’t be revoked if a case hasn’t been arbitrated within a year. He intends to move forward in revoking deferrals in a number of cases.

At-will disclaimers and confidentiality of investigations. As you are likely aware, the NLRB has been very active recently in providing guidance on certain issues that apply to both nonunion and unionized workplaces such as social media policies. Solomon recently issued a memo on the legality of at-will disclaimers in which the following language was found to be lawful: “Only the Company President is authorized to modify the Company’s at-will employment policy or enter into any agreement contrary to this policy. Any such modification must be in writing and signed by the employee and the President.” The NLRB reasoned that language is lawful because it provides that the at-will relationship can be modified in the future.

In another memo addressing the confidentiality of investigations, the Board approved of the inclusion of the following language in a code of conduct: “[The employer] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [the employer] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.” Solomon explained that employers shouldn’t have a blanket confidentiality provision, but specific and reasonable justifications for why an investigation should be kept confidential may pass muster. For example, a parallel criminal investigation would justify the need for confidentiality.

10(j) injunctions. Section 10(j) of the NLRA authorizes the NLRB to seek temporary injunctions against employers and unions in federal district courts to stop unfair labor practices while a case is being litigated before administrative law judges and the Board. Solomon stated that injunctions are most often sought in two particular types of cases: (1) “nip in the bud” cases in which employers fire employees engaged in union organizing and (2) “first contract” cases involving employers in the first year of a union contract.

Operational changes at the EEOC
The EEOC has been more operationally focused in the past year and has been working on its Strategic Enforcement Plan (SEP). At the ECN meeting, Victoria Lipnic, a Republican EEOC commissioner, discussed her concern that the agency has delegated too much of its authority to its general counsel in the past. To increase accountability, the general counsel now meets with the commission quarterly to discuss cases involving controversial issues, novel issues of law, amicus (friend of the court) briefs, and significant resources to litigate.

Alcohol- and drug-testing policies. In EEOC v. U.S. Steel Corp., a federal district court in Pittsburgh, Pennsylvania, rejected the EEOC’s challenge to an employer’s random alcohol-testing policy. The court upheld the validity of the policy for newer employees in safety-sensitive jobs under the Americans with Disabilities Act (ADA). The EEOC had alleged that the random alcohol-testing policy violated the ADA’s prohibition against medical exams that aren’t “job-related and consistent with business necessity.” The court disagreed, citing the workplace conditions. Lipnic expressed her hope that with better accountability, the EEOC can avoid such cases being filed without first being vetted by the commissioners.

Looking ahead. The EEOC is looking into improving the quality of its investigations and reducing its backlog. Lipnic noted that she has heard a lot of criticism about the conciliation program and it’s a matter of concern for the agency. The EEOC is also concerned about a developing split in the federal circuits over whether it must identify every member of a class before filing a class action suit.

The EEOC is currently focused on cases involving systemic issues. It’s preparing to hold hearings on the Genetic Information Nondiscrimination Act of 2008 (GINA), the ADA, and wellness plans. Lipnic also would like more attention to be paid to the difficulties of getting hired faced by applicants over the age of 50.

The next post in this three-part series will include a federal legislative roundup looking at issues from raising the federal minimum wage to immigration reform.

Sophie E. Zdatny is an attorney with Dinse, Knapp & McAndrew, P.C. in Burlington, Vermont. She has a general litigation practice in both state and federal court, with a concentration in  insurance coverage  and employment law. She may be contacted at szdatny@dinse.com.

As the first of a three-part series, this post will look at the recent personnel turnover at federal agencies, the extensive reach of the Occupational Safety and Health Administration’s Directorate of Whistleblower Protection Programs (DWPP), and enhanced enforcement efforts from the OFCCP.

Agency shuffle
Hilda Solis, secretary of the U.S. Department of Labor (DOL), resigned earlier this year, and President Obama’s nominee, Thomas Perez of the U.S. Department of Justice’s (DOJ) Civil Rights Division (CRD), is awaiting confirmation by the Senate. Perez’s background is in litigating practice-and-pattern cases, and it’s anticipated that if he’s confirmed, he’ll focus on wage and hour issues, including misclassification of employees.

On April 26, the Senate confirmed Jenny Yang to serve as an EEOC commissioner. Yang was among the lawyers who represented 1.5 million women in the Wal-Mart Stores Inc. v. Dukes sex discrimination class action. She also represented more than 28,000 female employees who alleged sex discrimination in a pay and promotion lawsuit against Boeing Company in Washington state. Before entering private practice in 2003, Yang was a senior trial attorney at the CRD. The EEOC has been operating with only four members since last year.

Whistleblower protection programs
Did you know that the DWPP isn’t limited to enforcing the Occupational Safety and Health Act (OSH Act)? The DWPP enforces more than 20 statutes, protecting employees who report violations of various workplace laws, including the Sarbanes Oxley Act (SOX), the Federal Railroad Safety Act (FRSA), the Consumer Product Safety Improvement Act (CPSIA), the Affordable Care Act (ACA), the Consumer Financial Protection Act (CFPA), the Clean Air Act (CAA), and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Each statute has its own provisions governing the number of days to file suit, whom it covers, the allowable remedies, the burden of proof, and so on.

Historically, the DWPP has been hampered by a lack of resources for enforcement, leading to a significant backlog in whistleblower claims. However, the agency is scheduled to receive an additional $5.9 million in fiscal year (FY) 2014.

The DWPP has 10 regional offices.  Whistleblower complaints can be filed with any area, regional, or national office, in any language, and orally or in writing. The DWPP is currently developing an online complaint form.

Focus on ‘disincentive’ policies
Section 11(c) of the OSH Act prohibits employers from discriminating against employees because they report an injury or illness. Reporting a work-related injury or illness is a core employee right, and retaliating against a worker for reporting an injury or illness is illegal discrimination under Section 11(c). The DWPP is currently focusing on the use of so-called disincentive policies in particular industries, including railroads, airlines, and communications.

Disincentive policies are programs that unintentionally or intentionally provide employees with an incentive to not report injuries. For example, an employer might enter all employees who haven’t been injured in the previous year into a drawing to win a prize, or a team of employees might be awarded a bonus if no one from the team is injured over some period of time. Such programs might be intended to encourage workers to use safe practices, but they nevertheless can run afoul of Section 11(c).

The DWPP states that there are better ways to encourage safe work practices. For example, you may want to consider providing T-shirts to workers serving on safety and health committees, offering modest rewards for suggesting ways to strengthen safety and health, or throwing a recognition party at the successful completion of companywide safety and health training.

OFCCP’s ramped-up enforcement efforts
OFCCP regulates government contractors, including some healthcare providers. The government contractors regulated by the OFCCP include prime contractors, subcontractors, and some healthcare providers. Hospitals or other healthcare providers are not covered under the laws enforced by the OFCCP if their only relationship with the federal government is as a participating provider under Medicare Parts A and B and Medicaid. If, however, a hospital or other healthcare entity provides care to active or retired military servicemembers under a contract with the U.S. Department of Veterans Affairs (VA) or the U.S. Department of Defense (DOD), it may fall under the OFCCP’s jurisdiction. Teaching hospitals doing research for a university that has a contract with the federal government may also be covered.

On March 30, the U.S. District Court for the District of Columbia held that the OFCCP has jurisdiction over three University of Pittsburgh Medical Center (UPMC) hospitals. The court held that the UPMC hospitals qualified as federal subcontractors because they provided medical services to federal employees who are members of an HMO called the UPMC Health Plan. None of the hospitals held a federal contract, but the HMO held a prime contract with the Office of Personnel Management (OPM).

Focus on pay equity. The OFCCP enforces Executive Order 11246, which directs the DOL to ensure that federal contractors comply with their equal employment opportunity and affirmative action obligations. It also enforces Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). Those three legal authorities require federal contractors to be proactive in ensuring equal opportunity on the bases of gender, race, color, religion, national origin, disability, or status as a protected veteran. The OFCCP is currently taking a lead on pay equity.

On March 1, the OFCCP issued Directive 307 on pay discrimination. Under the directive, the agency isn’t limited to reviewing employee pay. It also can examine other employment practices and opportunities that may affect compensation, including work assignments, training, preferred or higher-paid shift work, desired sales territories, promotions, and other opportunities for advancement.

The newly announced OFCCP compensation “methodology” effectively removes any standardized method for reviewing compensation and possibly substitutes a results examination for a consistent analytical framework. The OFCCP now proposes using “pay analysis groups,” and it’s unclear whether the agency will combine disparate jobs that might fall into different job groups or locations to justify conclusions about pay practices. If so, it will be a dramatic change in the accepted methodology of reviewing compensation under current law.

Game-changing disability regulations. In December 2012, the OFCCP released its proposed rules for Section 503 of the Rehabilitation Act. The proposed rules provide for specific actions federal contractors and subcontractors must undertake in the areas of recruitment, training, record keeping, and policy dissemination. Most significant, the rules would require federal contractors to set a hiring goal of 7% of their workforce being people with disabilities and 2% being people with severe disabilities, which include mental health issues, blindness, deafness, and missing limbs.

The Census Bureau has added data fields to the census to obtain information for the DOL on the number of available employees with disabilities. The record-keeping provisions in the proposed rules have been criticized as being unduly burdensome, requiring, for example, individualized reports on each applicant with a disability who wasn’t hired and anonymous surveys of the workforce to identify potential accommodations. The final rule was scheduled to be released in April, but we were still waiting on the rule when we went to press.

The next post in this three-part series will focus on how the NLRB keeps pushing forward with its agenda despite questions about the legitimacy of the current Board as well as recent operational changes at the EEOC.

Sophie E. Zdatny is an attorney with Dinse, Knapp & McAndrew, P.C. in Burlington, Vermont. She has a general litigation practice in both state and federal court, with a concentration in  insurance coverage  and employment law. She may be contacted at szdatny@dinse.com.