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.

The Crystal Ball: ADA, Breastfeeders, GINA

Usually I like to focus on current issues, but just as I emphasize to clients to be proactive, so, too, it's good for lawyers to think proactively about issues that might affect people in the future. One of those increasingly likely concerns are classes of employees that will receive protection under the law.

ADA Amendments

On September 23, 2009, the Equal Employment Opportunity Commission issued proposed regulations under the ADA Amendments Act of 2008 (ADAAA) which was effective January 1, 2009. The period for submitting comments to the proposed regulations has expired. The proposed regulations leave no doubt that vast numbers of heretofore "non-disabled" employees and applicants will now fall under the protection of the ADAAA. An individual is now disabled if any one of an expansive number of "major life activities" is limited or restricted – and not necessarily "significantly" limited. "Mitigating measures" such as medication which controls high blood pressure, high cholesterol or diabetes or prosthetic devices or hearing aids can no longer be considered when making this determination. Further, the proposed regulations clarify that individuals claiming to be protected because they were "regarded as" being disabled no longer have to prove that an employer regarded them as substantially limited in a major life activity. The foregoing major changes to federal disability law will greatly increase the number of employees (and applicants for employment) entitled
to protection under the ADAAA.

GINA

The employment provisions of the Genetic Information Nondiscrimination Act of 2008 (GINA) became effective on November 21, 2009. Employers with 15 or more employees now are prohibited from discriminating against employees or applicants based upon genetics or genetic information. Under GINA, employers are prohibited from using genetic information in making employment decisions, intentionally acquiring genetic information or disclosing genetic information. "Genetic information" is defi ned expansively under GINA and includes not only information about an employee's genetic tests and genetic tests of family members, but also includes information related
to family medical history. Therefore, information that is routinely shared at some workplaces by employees regarding family member illnesses/medical conditions may subsequently give rise to a claim of genetic discrimination should the employee subsequently be laid off or terminated. These claims will no doubt be included in employment discrimination lawsuits.

Sexual Orientation and Gender Identity

Federal legislation prohibiting discrimination on the basis of sexual orientation and gender identity likely will pass this year. Proposed federal legislation would add sexual orientation and gender identity or expression to the list of protected
classes under Title VII of the Civil Rights Act of 1964, as amended, and would apply to employers with 15 or more employees.

Breastfeeders

Proposed federal legislation, dubbed the Breastfeeding Promotion Act of 2009, would add lactating mothers to the list of protected classes under Title VII of the Civil Rights Act of 1964, as amended. The proposed legislation would make breastfeeding
and expressing breast milk protected activities. Additionally, the proposed legislation requires employers to provide lactating mothers reasonable break times to express milk and a private place, other than a bathroom, to express milk. Versions of proposed federal health care also contain language requiring
breaks for lactating mothers. Similarly, about half of the states have passed or proposed legislation encouraging or requiring employers to provide breaks to lactating mothers.

With so many protected classes, it may be increasingly difficult to find somebody who isn't protected in some manner. From a practical policy perspective, I think this moves us closer and closer to a 'just cause' standard when considering discharging an employee, and an increasingly 'inflexible' labor market.