Monthly Archives

July 2016

Wellness Programs’ Notice Form Provided by the EEOC

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New rules have been published by the Equal Employment Opportunity Commission (EEOC) on May 17, 2016, under the Americans with Disabilities Act (ADA) for employers that have instituted “wellness programs.” Under the rules, employers must make sure participation in those programs is voluntary, and that the programs are reasonably designed to promote employee health.

The rule requires employers to provide to covered employees a notice describing what information will be collected as part of a wellness program, who will receive it, and how it will be used. Importantly, the rules require that employee medical information solicited for such programs is kept confidential.

The required notice must be provided on the first day of a covered health plan year that begins on or after Jan. 1, 2017. Once the notice requirement becomes effective, the EEOC’s rule does not require that employees get the notice at a particular time, but mandates that employees must receive the notice before providing any health information, and with enough time to decide whether to participate in the program. Waiting until after an employee has completed a wellness program’s health risk assessment (HRA) or medical examination to provide the notice is illegal.

On June 16, 2016, the Equal Employment Opportunity Commission (EEOC) posted a sample employee notice to assist employers with wellness programs to comply with those rules, by offering a specific notice form for use by such employers, and which includes all of the required provisions, along with non-retaliation language.

The Notice is written in a fill-in-the-blank format so any employer can use it by simply adding the specific information into the form provided, and providing it to employees. Employers should note that employees with disabilities may need to have the notice provided in an alternative format (large print version, electronically formatted for screen readers, etc).

If you should need any assistance please contact your HR Ideas Representative at 925-556-4404.

View PDF Here

Updated Equal Pay Data Rule Fails To Address Employer Concerns

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Employers Now Face March 2018 Deadline For First Pay Report

The Equal Employment Opportunity Commission (EEOC) announced revisions to its planned pay data rule yesterday, but unfortunately the revisions do not address the majority of concerns employers had about the original controversial version. While the updated rule makes minor concessions to employers and provides much-needed clarity on two issues, the revisions do not sufficiently address the undue burdens that employers will face in completing required reports, and all but ignore concerns about confidentiality and the underlying utility of the rule.

Although the revised rule will still need to go through another public comment process, there appears to be sufficient momentum at the agency to push the rule forward as revised. Therefore, employers can expect to be subject to a heightened pay transparency standard for their 2017 compensation practices, with an initial reporting deadline of March 31, 2018.

This Blog answers the most commonly asked questions about this developing story.

What Was Originally Proposed?

On January 29, 2016, the Obama Administration proposed executive action through the EEOC to require certain businesses to provide detailed information about how much each of their employees is earning. Under the proposed law, affected employers would need to break down pay information by gender, as well as race and ethnicity, in order to make it very easy to identify pay gaps.

It would require any business with 100 or more workers to provide detailed information about their pay practices to the federal government through the annual EEO-1 Report. The goal of these proposed regulations is to better track pay disparities between genders so as to increase enforcement of equal pay standards. Read our full Alert here.

What Concerns Were Identified?

Many observers identified serious flaws with the EEOC’s proposed rule. Specifically, the proposed rule would cause undue burden on employers, while the utility of the data collection was deemed questionable at best. Moreover, employers had serious privacy concerns accompanying the gathering and production of this information.

On April 1, 2016, Fisher Phillips submitted comments to the EEOC regarding the proposed regulations (read more here). The firm recognized that the goal of eradicating and better identifying discriminatory pay practices was a worthy endeavor. However, the comments stated that the firm was concerned that the proposed regulations, as initially written, would not accomplish anything noteworthy.

Instead, the firm’s comments described how the proposed regulations would merely set employers up for unwarranted disparate impact claims of discrimination founded on inaccurate theories using data not sufficiently valid to withstand scrutiny. The time and expense to prove otherwise would be considerable for the nation’s employers, as would the burden to simply comply with the data-gathering efforts. Add to that the legitimate and well-founded privacy concerns that spring from these proposals, and the comments predicted a recipe for disaster.

For these reasons, the comments submitted by Fisher Phillips respectfully urged the EEOC to take action steps to address the concerns raised.

What Did The EEOC Announce In Response?
Employers were encouraged when EEOC Chair Jenny Yang announced on June 22, 2016, that the agency would soon issue a revised version of its proposed pay data collection rules in an effort to “think about how we minimize the burden on employers.” It appeared that the agency was acknowledging that the initial proposal was unduly burdensome, and we were hopeful that some of the concerns identified above would be addressed (read more here).

Unfortunately, the revised rule announced yesterday does little to assuage employer concerns. In fact, the revised rule only makes two substantive changes to the original rule.

What Change Has Been Proposed Regarding Reportable Pay Data?

Currently, all employers with 100 or more workers already complete the EEO-1 form on an annual basis, providing demographic information to the government about race, gender, and ethnicity. The original proposal will require employers to complete a revised EEO-1 form that will also require salary and pay information be included. However, the original proposal was silent on how employers were to determine the correct amount to be listed.

The revised rule clarifies that employers should use Box 1 on the employee’s W-2 form as a measure of reportable compensation on the upcoming EEO-1 Reports. Although the EEOC acknowledged that many employers argued for a “base pay” standard rather than W-2 income, the agency stated that it believes that W-2 income is a suitable measure for pay data collection. It also stated that supplemental pay (including shift differentials and overtime pay) is a critical component of compensation that should be included in the reporting because it can be influenced by discrimination.

What Change Has Been Proposed Regarding The Timing Of The Reports?

The original proposed rule included the same reporting year as the current EEO-1 Report, which means that employers would have had to produce the pay data information before September 30 of each year, starting in 2017. However, employers vigorously objected to this reporting period, as it would have required them to construct a separate compensation report spanning October 1 through September 30 for each employee.

The EEOC’s revised rule states that, beginning with the 2017 EEO-1 Report, the reporting deadline for all EEO-1 filers will be March 31 of the year following the report year. Thus, the first EEO-1 report that will need to include pay data – the 2017 EEO-1 Report – will be due by March 31, 2018. This will allow employers to use W-2 data from the preceding calendar year in order to compile their reports several months after the close of the year.

For those already required to complete the EEO-1 Report, you will still need to produce a 2016 Report by September 30, 2016. However, you will then have an 18-month period before your next report is due, this time to include pay data (March 31, 2018).

What Should Employers Do Now?

In light of these developments, affected companies should make it a priority to review current pay systems and identify and address any areas of pay disparity. It is critical to take steps now to minimize increased scrutiny once the data begins to be reported next year.

By conducting your own gender-specific audit of pay practices, you will be able to determine whether any pay gaps exist that might catch the eye of the federal government when you turn over this information beginning in 2018. You should have time to determine whether any disparities that may exist can be justified by legitimate and non-discriminatory explanations, or whether you will need to take corrective action to address troublesome pay gaps.

Should you have any questions, please contact your HR Ideas Representative.

Employers Risk Higher Penalties for Hiring Unauthorized Workers

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The U.S. Department of Justice is increasing civil monetary penalties substantially for employers who knowingly employ an unauthorized worker and for certain other immigration-related violations, according to an interim final rule the Department has published. The rule will take effect on August 1, 2016, and will apply to violations occurring after November 2, 2016. The increases come in response to the Bipartisan Budget Act of 2015, which requires agencies to adjust penalties for inflation.

Under the Immigration Reform and Control Act of 1986 (IRCA), it is unlawful for an employer to hire or continue to employ a person knowing that the person is not authorized to work in the United States. IRCA requires employers to verify employment eligibility of all employees by completing a Form I-9, and failure to comply with these rules subjects employers to substantial civil monetary penalties.

Under the interim final rule, the minimum penalty for a first offense of knowingly employing an unauthorized worker will increase from $375 to $539 per worker, and the maximum penalty will increase from $3,200 to $4,313 per worker. The largest increase raises the maximum civil penalty for multiple violations from $16,000 to $21,563 per worker. Paperwork violations can now be assessed a maximum penalty of $2,156 per relevant individual, up from $1,100. Finally, for unfair immigration-related employment practices, the maximum penalty increases from $3,200 to $3,563 per person discriminated against.

NLRB Strikes Healthcare Facility Conduct Rules

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The National Labor Relations Board (NLRB) has provided clear signals that the unique, patient-centric environments of general hospital and medical centers—and even surgical services and perianesthesia departments—will not justify any departure from its sweeping decisions striking policies, procedures, and codes of conduct under Section 8(a)(1) of the National Labor Relations Act (NLRA). An employer violates Section 8(a)(1) of the NLRA if it maintains work rules that tend to chill employees’ exercise of their Section 7 right to engage in protected, concerted activity. Even if a rule does not explicitly restrict protected activities, it will violate Section 8(a)(1) if an employee would reasonably construe the rule to prohibit Section 7 activity.

Relying on this provision, on April 13, 2016, in William Beaumont Hospital (363 NLRB No. 162), the NLRB found William Beaumont Hospital’s Code of Conduct for Surgical Services and Perianesthesia unlawful under Section 8(a)(1) to the extent it prohibited:

—conduct that “impedes harmonious interactions and relationships”;
—-“[v]erbal comments or physical gestures directed at others that exceed the bounds of fair criticism”;
—-“[n]egative or disparaging comments about the moral character or professional capabilities of an employee or physician made to employees, physicians, patients, or visitors”; and
—-“behavior that is disruptive to maintaining a safe and healing environment or that is counter to promoting teamwork.”

These are great examples of how to not construct sentences that might be considered “overly broad”.

OSHA Officially Increases Civil Penalties by 78 Percent

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On June 30, 2016, the U.S. Department of Labor (DOL) announced its interim final rule on Federal Civil Penalties Inflation Adjustment Act Catch-Up Adjustments. The rule was formally published in the Federal Register on July 1.

The increase is the result of the Bipartisan Budget Act of 2015, signed into law on November 2, 2015. The Bipartisan Budget Act was the consummation of a deal reached in Congress to avoid a default on the nation’s debt. Surprisingly, the bill also contained the Inflation Adjustment Act, a provision that allowed federal agencies to annually adjust their civil penalties for inflation beginning with a one-time adjustment this year to catch up from the last time the agency’s civil penalties were modified.

For the Occupational Safety and Health Administration (OSHA), the last time Congress increased the agency’s civil penalties was 1990. Under the interim rule, the maximum penalties for workplace safety violations issued by OSHA will spike by 78.16 percent, effective August 1, 2016, as follows:

Other-than-Serious violation: from $7,000 to $12,471;
Serious violation: from $7,000 to $12,471;
Repeat violation: from $70,000 to $124,709;
Willful violation: from $70,000 to $124,709;
Failure-to-Abate violation: from $7,000 to $12,471 per day; and
Violation of a posting requirement: from $7,000 to $12,471.

The 78.16 percent figure represents inflation from October 1990 to October 2015. This increase closely tracks the Consumer Price Index, as we predicted last year.

State Plan States must also adopt these increases, according to the DOL. The federal Occupational Safety and Health Act (OSH Act) requires State Plans to be at least “as effective as” federal OSHA. What constitutes “as effective as,” however, is the subject of ongoing debate between OSHA and its state counterparts.

Limited Retroactivity

According to the DOL, the new civil penalty amounts will apply “only to civil penalties assessed after August 1, 2016, whose associated violations occurred after November 2, 2015, the date of enactment of the Inflation Adjustment Act.” In other words, for pending inspections that occurred before August 1, 2016, OSHA may wait until after August 1 to issue any citations and apply the higher penalty caps to those inspections.