The Ninth Circuit Court of Appeals recently held that some work performed by employees at home, as well as time spent commuting, may have to be paid in certain circumstances.
The plaintiff in Rutti was a technician for Lojack, Inc. ("Lojack") who installed car alarms. In the morning, Rutti, as well as Lojack's other technicians, would receive their assignments for the day, map the route to their assignments, and prioritize the jobs. While traveling to the first job in the morning, as well as when traveling home at the end of the day, technicians were required to keep their cell phones on and drive directly between home and the job site without making any additional stops. After returning home, technicians were required to upload data received at the job sites from a portable data terminal ("PDT") to the company by hooking the PDT up to a modem.
The Ninth Circuit determined that the technicians' commute time was compensable under state law, but not federal law. The federal Portal-to-Portal Act, as amended by the Employment Commuter Flexibility Act, explicitly provides that employers need not compensate employees for time spent traveling to and from where they perform their job duties. The result under federal law was not changed by the fact that Lojack's technicians drove company cars, or that they were subject to certain employer-mandated restrictions while driving.
California, however, maintains stricter wage and hour laws. Under California law, the relevant question is whether the employee's time is "subject to the control" of the employer. The Ninth Circuit found that because technicians had to keep their cell phones on, and could not make additional stops while going to and from the job site (such as dropping children off at school), the time was subject to the employer's control and had to be paid under California law.
The Ninth Circuit went on to find that under federal law, the technicians' job tasks before the "start" of the work day were not compensable, but that time spent uploading data from the PDT "after work" might have to be paid. Under federal law, the question of whether these types of "preliminary and postliminary" activities must be paid depends on whether they are part of the "principal activities" that the employee is employed to perform. Even if these tasks are part of the employee's "principal activities," they need not be paid if they are de minimus. In deciding whether certain job tasks are de minimus under federal law, courts examine the practical administrative difficulty of recording the additional time, the aggregate amount of time at issue, and the regularity of the additional work.
Applying those factors, the Court held that even if the tasks performed by technicians prior to leaving home were part of their "primary activities," they were de minimus. These tasks took only a matter of minutes to complete, and it would be very difficult to record the time that technicians spent working on them. However, time spent uploading data from the PDT might be compensable. There was evidence that this task took anywhere from 5 to 15 minutes each night. While the Court acknowledged that there would likely be some administrative difficulty recording this time, it found that the time added up to over an hour per week, and was a regular part of the employees' job duties, and therefore might not be de minimus. Accordingly, the time might have to be paid, depending on the specific facts.
Still, even if this activity was found to be compensable under federal law, that did not mean that the technicians' travel time home had to be compensated, even under the "continuous workday doctrine." Under this doctrine, which the U.S. Department of Labor has adopted, an employee's workday generally lasts until he has completed all of his principal activities during the day. The Ninth Circuit found that the "continuous workday" rule did not apply in these circumstances because technicians were relieved of all duties upon returning home, and could input the data from the PDT at a time of their choosing. Federal regulations preclude application of the "continuous workday doctrine" where employees are relieved from all duty for a long enough period to be able to use that time for their own purposes. Still, this commute time generally has to be paid under California law. Here, the Ninth Circuit did not reach the issue of whether the "preliminary and postliminary" activities performed by the technicians had to be paid under California state law.
This case reminds employers that there can be significant differences between federal and state law in the wage and hour areas, and that they need to ensure that their practices comply with both sets of laws.
Rutti v. Lojack Corporation, Inc., March 2, 2010
Showing posts with label DOL. Show all posts
Showing posts with label DOL. Show all posts
Wednesday, March 10, 2010
Wednesday, February 24, 2010
Adminstrative Rundown: EBSA, EEOC, and CMS
The Department of Labor's Employee Benefits Security Administration has posted a dedicated web page for 403(b) plan officials, including a new Field Assistance Bulletin, 2010-01. The new 403(b) web page is available at http://www.dol.gov/ebsa/403b.html, and the Field Assistance Bulletin at http://www.dol.gov/ebsa/regs/fab2010-1.html.
Also, the EEOC now has a press release up with a link to the published NPRM about RFOA under the ADEA as well as background about the proposed rule.
Based on the Supreme Court ADEA decisions in Smith v. Jackson, 544 U.S. 228 (2005), and Meacham v. Knolls Atomic Power Lab., 128 S.Ct. 2395 (2008), the EEOC released a proposed rule defining the “reasonable factor other than age” (RFOA) defense available to employers under the Age Discrimination in Employment Act (ADEA).
The EEOC proposes to amend its existing regulations to meet the new standards in Smith and Meacham. Smith provided for a limited ADEA disparate impact claim. Meacham found that employers have the burden of proving the RFOA defense (that a challenged employment practice causing adverse impact was based on a “reasonable factor other than age”).
In response to the two U.S. Supreme Court decisions, the U.S. Equal Employment Opportunity Commission (EEOC) has released for public comment a proposed rule construing the “reasonable factor other than age” (RFOA) defense under the ADEA.
In an effort to provide a more objective standard for determining whether an RFOA exists and clarify the scope of the defense, the EEOC seeks to revise paragraph 1625.7(b) of the existing regulations addressing the RFOA defense. Although the standard remains lower than Title VII’s business necessity defense, 1625.7(b)(1) makes it clear that the RFOA is not to be viewed under a “rational-basis” standard. Employers will be required to show that the challenged practice was reasonably designed to further or achieve a legitimate business purpose and was reasonably administered to achieve that purpose.
The EEOC proposes a “prudent employer” standard to determine whether or not an employer relied upon reasonable factors in making the challenged employment decision and included a list of non-exhaustive factors to consider, including:
1.The commonality of the business practice used by the employer;
2.The manner in which the practice was administered;
3.The employer’s awareness of a possible age-adverse impact before making their decision;
4.Steps taken by the employer to “accurately and fairly” assess the impact of their decision upon older persons as well as steps taken to mitigate unnecessary harm to older workers;
5.The existence of a lesser discriminatory alternative;
6.The extent to which the employer or supervisors engaged in age-based stereotyping; and
7.The extent to which employers gave supervisors guidance or training about how to avoid discrimination.
While no single factor would be dispositive of reasonableness under the EEOC’s proposed rule, the EEOC suggests that an employer is more likely to succeed on the RFOA defense if the bulk of these factors weigh in the employer’s favor.
For the RFOA defense to apply, the EEOC makes clear in its proposed rule that the challenged practice in fact must be based on a non-age factor. Recognizing that the courts have held that objectively measurable factors such as salary and seniority are non-age factors, even though they sometimes correlate with age, the EEOC’s rule instead focuses on the unchecked use of subjective criteria that can often be age-based stereotypes about older workers’ flexibility, willingness to learn, or technological skills.
The proposed regulations, therefore, set forth a non-exhaustive list of factors to help employers determine whether an employment practice is based on a non-age factor, including:
1.The extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
2.The extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
3.The extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.
The EEOC is accepting public comment until April 19, 2010. A proposed final rule covering this and the March 2008 proposed rules will then be coordinated with other federal agencies and reviewed by the Office of Management and Budget before becoming effective.
Finally, CMS (Centers for Medicare & Medicaid Services) reported that it will delay implementation of Medicare Secondary Payer mandatory reporting, which was to begin April 1, to Jan. 1, 2011. Medicare Secondary Payer reporting requirements are intended to ensure that Medicare remains the secondary payer when a Medicare beneficiary has medical expenses that should be paid primarily by a liability, no-fault, or workers compensation plan. The reporting requirement originated in the Medicare, Medicaid, and the SCHIP Extension Act of 2007 and insurers and self-insured employers sought a delay in the reporting deadline, citing a lack of guidance on reporting requirements among other issues. The delay applies only to non-group health plan reporting. It does not apply to group health plan reporting.
Also, the EEOC now has a press release up with a link to the published NPRM about RFOA under the ADEA as well as background about the proposed rule.
Based on the Supreme Court ADEA decisions in Smith v. Jackson, 544 U.S. 228 (2005), and Meacham v. Knolls Atomic Power Lab., 128 S.Ct. 2395 (2008), the EEOC released a proposed rule defining the “reasonable factor other than age” (RFOA) defense available to employers under the Age Discrimination in Employment Act (ADEA).
The EEOC proposes to amend its existing regulations to meet the new standards in Smith and Meacham. Smith provided for a limited ADEA disparate impact claim. Meacham found that employers have the burden of proving the RFOA defense (that a challenged employment practice causing adverse impact was based on a “reasonable factor other than age”).
In response to the two U.S. Supreme Court decisions, the U.S. Equal Employment Opportunity Commission (EEOC) has released for public comment a proposed rule construing the “reasonable factor other than age” (RFOA) defense under the ADEA.
In an effort to provide a more objective standard for determining whether an RFOA exists and clarify the scope of the defense, the EEOC seeks to revise paragraph 1625.7(b) of the existing regulations addressing the RFOA defense. Although the standard remains lower than Title VII’s business necessity defense, 1625.7(b)(1) makes it clear that the RFOA is not to be viewed under a “rational-basis” standard. Employers will be required to show that the challenged practice was reasonably designed to further or achieve a legitimate business purpose and was reasonably administered to achieve that purpose.
The EEOC proposes a “prudent employer” standard to determine whether or not an employer relied upon reasonable factors in making the challenged employment decision and included a list of non-exhaustive factors to consider, including:
1.The commonality of the business practice used by the employer;
2.The manner in which the practice was administered;
3.The employer’s awareness of a possible age-adverse impact before making their decision;
4.Steps taken by the employer to “accurately and fairly” assess the impact of their decision upon older persons as well as steps taken to mitigate unnecessary harm to older workers;
5.The existence of a lesser discriminatory alternative;
6.The extent to which the employer or supervisors engaged in age-based stereotyping; and
7.The extent to which employers gave supervisors guidance or training about how to avoid discrimination.
While no single factor would be dispositive of reasonableness under the EEOC’s proposed rule, the EEOC suggests that an employer is more likely to succeed on the RFOA defense if the bulk of these factors weigh in the employer’s favor.
For the RFOA defense to apply, the EEOC makes clear in its proposed rule that the challenged practice in fact must be based on a non-age factor. Recognizing that the courts have held that objectively measurable factors such as salary and seniority are non-age factors, even though they sometimes correlate with age, the EEOC’s rule instead focuses on the unchecked use of subjective criteria that can often be age-based stereotypes about older workers’ flexibility, willingness to learn, or technological skills.
The proposed regulations, therefore, set forth a non-exhaustive list of factors to help employers determine whether an employment practice is based on a non-age factor, including:
1.The extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
2.The extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
3.The extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.
The EEOC is accepting public comment until April 19, 2010. A proposed final rule covering this and the March 2008 proposed rules will then be coordinated with other federal agencies and reviewed by the Office of Management and Budget before becoming effective.
Finally, CMS (Centers for Medicare & Medicaid Services) reported that it will delay implementation of Medicare Secondary Payer mandatory reporting, which was to begin April 1, to Jan. 1, 2011. Medicare Secondary Payer reporting requirements are intended to ensure that Medicare remains the secondary payer when a Medicare beneficiary has medical expenses that should be paid primarily by a liability, no-fault, or workers compensation plan. The reporting requirement originated in the Medicare, Medicaid, and the SCHIP Extension Act of 2007 and insurers and self-insured employers sought a delay in the reporting deadline, citing a lack of guidance on reporting requirements among other issues. The delay applies only to non-group health plan reporting. It does not apply to group health plan reporting.
Thursday, February 4, 2010
DOL Employment Priorities
Last Monday, the U.S. Department of Labor (DOL) released its budget for the 2011 fiscal year. In a 95-page summary of the new budget, the DOL elaborated upon its plans for the approximately $14 billion it seeks in discretionary budget authority. According to the summary, the DOL will focus its efforts in 2011 on supporting reform of the Workforce Investment Act, rebuilding Worker Protection Programs, initiating a multi-agency legislative proposal to establish automatic workplace pensions, and boosting funds for unemployment insurance integrity efforts. From our perspective, however, the two most notable aspects of the 2011 budget are its provisions concerning employer misclassification of workers and paid family leave.
The DOL proposes to devote $25 million to a joint Labor-Treasury Misclassification Initiative that will enable the agency to better detect, investigate, and prosecute employers who misclassify their workers, and to offer competitive grants to boost states’ incentives to address the problem. In addition, the DOL proposes to further limit the possibility of employer misclassification by:
1.requiring employers to demonstrate that their employees are classified correctly,
2.closing the safe harbor created by Section 530 of the Revenue Act of 1978, and
3.making misclassification of employees an explicit violation of the FLSA.
This Initiative has a dual focus of adding to state and federal government revenues by ensuring that businesses pay appropriate payroll taxes on behalf of individuals would be more properly classified as employees and ensuring that those persons who should be classified as employees receive the overtime and benefits to which they would be entitled. Assuming that the DOL’s budget is approved, employers will need to pay even more attention ensure their intended independent contractor relationships will pass muster. Errors in classification undoubtedly will prove to be very expensive.
Finally, another important provision of the DOL’s budget for this next fiscal year is additional funding to establish more state paid leave funds. Currently, three states (California, Washington, and New Jersey) have state paid leave insurance programs which allow workers, who cannot afford to take unpaid leave under FMLA, to take time off to care for an ill child, spouse, parent, or bond with a newborn while still receiving benefits from the state. The 2011 Budget establishes a $50 million fund within the DOL that provides competitive grants to states that choose to launch such paid-leave programs. These funds will be allocated to assist states with planning and start-up activities related to paid-leave programs.
The DOL proposes to devote $25 million to a joint Labor-Treasury Misclassification Initiative that will enable the agency to better detect, investigate, and prosecute employers who misclassify their workers, and to offer competitive grants to boost states’ incentives to address the problem. In addition, the DOL proposes to further limit the possibility of employer misclassification by:
1.requiring employers to demonstrate that their employees are classified correctly,
2.closing the safe harbor created by Section 530 of the Revenue Act of 1978, and
3.making misclassification of employees an explicit violation of the FLSA.
This Initiative has a dual focus of adding to state and federal government revenues by ensuring that businesses pay appropriate payroll taxes on behalf of individuals would be more properly classified as employees and ensuring that those persons who should be classified as employees receive the overtime and benefits to which they would be entitled. Assuming that the DOL’s budget is approved, employers will need to pay even more attention ensure their intended independent contractor relationships will pass muster. Errors in classification undoubtedly will prove to be very expensive.
Finally, another important provision of the DOL’s budget for this next fiscal year is additional funding to establish more state paid leave funds. Currently, three states (California, Washington, and New Jersey) have state paid leave insurance programs which allow workers, who cannot afford to take unpaid leave under FMLA, to take time off to care for an ill child, spouse, parent, or bond with a newborn while still receiving benefits from the state. The 2011 Budget establishes a $50 million fund within the DOL that provides competitive grants to states that choose to launch such paid-leave programs. These funds will be allocated to assist states with planning and start-up activities related to paid-leave programs.
Tuesday, February 2, 2010
Mental Health Parity Act
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which amended the Public Health Service Act, the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, generally is effective for plan years beginning on or after October 3, 2009. For calendar year plans, the effective date is January 1, 2010. The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury have published an interim final rule implementing the provisions of MHPAEA. The regulation is effective on April 5, 2010, and applicable to plan years beginning on or after July 1, 2010.
Also available is a DOL Fact Sheet that explains the anticipated changes and impact of the provisions in the interim final rule. It is not anticipated that this "interim" final rule will be changed between now and the July 1, 2010 final effective date.
If you are familiar with the Mental Health Parity Act of 1996 (MHPA), you are probably aware of the requirements that there be parity with respect to aggregate lifetime and annual dollar limits for mental health treatment and other major medical benefits. Since MHPA did not apply to substance use disorder benefits, MHPAEA was enacted to continue the MHPA parity rules as to limits for mental health benefits, and amended them to extend to substance use disorder benefits. Therefore, plans and issuers that offer substance use disorder benefits subject to aggregate lifetime and annual dollar limits must comply with the MHPAEA’s parity provisions.
I expect more guidance to be issued, but for plan sponsors that are concerned about compliance with the new act, start with the assumption that treatment for addiction gets the same protection as treatment for other mental illness claims.
Also available is a DOL Fact Sheet that explains the anticipated changes and impact of the provisions in the interim final rule. It is not anticipated that this "interim" final rule will be changed between now and the July 1, 2010 final effective date.
If you are familiar with the Mental Health Parity Act of 1996 (MHPA), you are probably aware of the requirements that there be parity with respect to aggregate lifetime and annual dollar limits for mental health treatment and other major medical benefits. Since MHPA did not apply to substance use disorder benefits, MHPAEA was enacted to continue the MHPA parity rules as to limits for mental health benefits, and amended them to extend to substance use disorder benefits. Therefore, plans and issuers that offer substance use disorder benefits subject to aggregate lifetime and annual dollar limits must comply with the MHPAEA’s parity provisions.
I expect more guidance to be issued, but for plan sponsors that are concerned about compliance with the new act, start with the assumption that treatment for addiction gets the same protection as treatment for other mental illness claims.
Thursday, January 14, 2010
Christmas comes late for Plan Administrators
The DOL has finally published model notices concerning the extended COBRA subsidy. The notices are 'Updated General Notice,' 'Premium Assistance Extension Notice,' and 'Updated Alternative Notice.' ARRA, as amended by the Department of Defense Appropriation Act, 2010 (2010 DOD Act--yes the COBRA subsidy was passed as part of a defense bill!), mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. The Department created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA's notice provisions, including those added by the 2010 DOD Act.
The notices are available now on the DOL website.
Separately, the DOL announced the publication of a final rule to protect employee contributions deposited to small pension and welfare benefit plans with fewer than 100 participants: the safe harbor is 7 days.
Currently, employers of all sizes must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the general assets of the employer, but no later than the 15th business day of the month following the month in which contributions are received or withheld by the employer. The latest date for forwarding participant contributions to health plans is 90 days from the date on which such amounts are received or withheld by the employer.
The new rule is published in the January 14, 2010 Federal Register.
The notices are available now on the DOL website.
Separately, the DOL announced the publication of a final rule to protect employee contributions deposited to small pension and welfare benefit plans with fewer than 100 participants: the safe harbor is 7 days.
Currently, employers of all sizes must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the general assets of the employer, but no later than the 15th business day of the month following the month in which contributions are received or withheld by the employer. The latest date for forwarding participant contributions to health plans is 90 days from the date on which such amounts are received or withheld by the employer.
The new rule is published in the January 14, 2010 Federal Register.
Tuesday, January 12, 2010
DOL COBRA Subsidy information released
In the waning days of 2009, the COBRA extension was passed, causing a bit of a kerfuffle in terms of compliance questions for eager-beaver administrators that had already made plans for New Year's. At last, the United States Department of Labor updated its website yesterday to include new information about the COBRA subsidy extension that was passed at the end of 2009.
Among the new documents:
•Updated Fact Sheet
•FAQs for employees and employers
•A new job loss poster
•A new flyer for employees
•A new flyer for employers
•A new flyer for employees on the application for review
Some of the forms have yet to be updated so employers should either seek legal advice if they need to send out such forms or stay tuned from the Department of Labor for updates.
Among the new documents:
•Updated Fact Sheet
•FAQs for employees and employers
•A new job loss poster
•A new flyer for employees
•A new flyer for employers
•A new flyer for employees on the application for review
Some of the forms have yet to be updated so employers should either seek legal advice if they need to send out such forms or stay tuned from the Department of Labor for updates.
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