July 2009

The administrative exemption creates one of the most difficult distinctions in the wage and hour area. Whether somebody works in an “administrative capacity” has a lot to do with whether they work “in the business” or “on the business.” A telling case was recently decided in the Northern District of West Virginia, Desmond v. PNGI Charles Town Gaming (08-1216). In this case, racing officials at the Charles Town Gaming racetrack were treated as exempt employees. After extensive analysis, the appellate court overturned the previous court, ruling that the employees were not exempt and overtime was owed.

Remember, an employer bears the burden of proving, by clear and convincing evidence, that an employee’s job falls within the administrative exemption. These exemptions are “narrowly construed against the employee seeking to assert them.” In viewing the dichotomy, the court made these points to keep in mind:

1. The indispensability of an employee’s position within the business cannot be the determining factor of whether the position is directly related to the employer’s general business operations.
2. Regulations generally exclude “run of the mill” jobs with administrative classification. So although secretaries and clerks might be “indispensable,” they are not exempt under the FLSA. In the same way, just because an employee is required under state law (i.e., posting a flagman around highway work), it does not mean that they are indispensable for purposes of exemption analysis.
3. The employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from being a secretary, working on a manufacturing production line, or selling a product in a retail or service establishment.

According to the DOL, administrative exempt work includes — but is not limited to– functional areas such as tax, finance, accounting, budgeting, auditing, insurance, quality control, purchasing, procuring, advertising, marketing, research, safety and health, personnel management, human resources, employee benefits, labor relations, public relations, government relations, computer network, internet and database administration, legal and regulatory compliance, and similar activities. Not included would be work consisting of tasks similar to those performed on a manufacturing production line or selling of a product in a retail or service establishment. (See 29 C.F.R. § 541.241)
To learn more, please click here.

An employee’s serious medical condition often extends beyond the 12 weeks granted under the FMLA. Under the ADA, they’re able to take off additional time for their medical condition unless it causes an undue hardship. For example, in a case decided by the First Circuit, an employee took 15 months of medical leave and then requested an additional two months of unpaid leave. However, he could not provide absolute assurances that he would return to work on that date. The court ruled that unless the employer could show that his continued absence poses an undue hardship (temporary placement is inadequate or too costly) an additional two months may be a reasonable accommodation.

The ADA does not require an employer to grant an extended leave of absence when it’s unlikely that the leave will enable the disabled employee to perform the essential functions of the job. The courts have found leaves to be unreasonable where the employee works only five out of 28 months, the employee is out for a year and a half and asks for a 90-day extension, and the leave was so erratic that the employer does not know from one day to the next that the employee will be returning to work or not or when they might arrive.

An employee with a disability might need leave for a number of reasons related to the disability, including, but not limited to:

* Obtaining medical treatment (e.g., surgery, psychotherapy, substance abuse treatment, or dialysis); rehabilitation services; or physical or occupational therapy.
* Recuperating from an illness or an episodic manifestation of the disability.
* Obtaining repairs on a wheelchair, accessible van, or prosthetic device.
* Avoiding temporary adverse conditions in the work environment (for example, an air-conditioning breakdown causing unusually warm temperatures that could seriously harm an employee with multiple sclerosis).
* Training a service animal (e.g., a guide dog).
* Receiving training in the use of braille or to learn sign language.

When considering whether or not to grant extended leave as an accommodation, consider these factors:

* When the employee expects to return to work.
* Whether the absences will be planned or erratic.
* Whether they will be able to perform their full duties when they return.
* Whether the employee was hired to perform a certain task.
* Whether additional leave and temporary employees are more costly than hiring a new employee.
* Whether the leave creates an undue hardship under the circumstances.

Click here to learn more.

Many employers have grappled with defining “involuntary termination” under COBRA. According to a recent IRS bulletin, here are the standards. Note: These questions apply solely for purposes of determining whether there is an involuntary termination under section 3001 of ARRA (including new Code sections added by section 3001 of ARRA — but not for any other purposes under the Code or any other law).

Question 1. What circumstances constitute an involuntary termination for purposes of the definition of an assistance-eligible individual?

Answer: An involuntary termination means a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee’s implicit or explicit request, where the employee was willing and able to continue performing services. An involuntary termination may include the employer’s failure to renew a contract at the time the contract expires, if the employee was willing and able to execute a new contract providing terms and conditions similar to those in the expiring contract and to continue providing the services. In addition, an employee-initiated termination from employment constitutes an involuntary termination from employment for purposes of the premium reduction if the termination from employment constitutes a termination for good reason due to employer action that causes a material negative change in the employment relationship for the employee.

Involuntary termination is the involuntary termination of employment, not the involuntary termination of health coverage. Thus, qualifying events other than an involuntary termination, such as divorce or a dependent child ceasing to be a dependent child under the generally applicable requirements of the plan (for example, loss of dependent status due to aging out of eligibility), are not involuntary terminations qualifying an individual for the premium reduction. In addition, involuntary termination does not include the death of an employee or absence from work due to illness or disability.

The determination of whether a termination is involuntary is based on all the facts and circumstances. For example, if a termination is designated as voluntary or as a resignation, but the facts and circumstances indicate that, absent such voluntary termination, the employer would have terminated the employee’s services, and that the employee had knowledge that the employee would be terminated, the termination is involuntary.

Question 2. Does an involuntary termination include a lay-off period with a right of recall or a temporary furlough period?

Answer: Yes. An involuntary reduction to zero hours, such as a layoff, furlough, or other suspension of employment, resulting in a loss of health coverage is an involuntary termination for purposes of the premium reduction.

Question 3. Does an involuntary termination include a reduction in hours?

Answer: Generally no. If the reduction in hours is not a reduction to zero, the mere reduction in hours is not an involuntary termination. However, an employee’s voluntary termination in response to an employer-imposed reduction in hours may be an involuntary termination if the reduction in hours is a material negative change in the employment relationship for the employee.

Question 4. Does involuntary termination include an employer’s action to end an individual’s employment while the individual is absent from work due to illness or disability?

Answer: Yes. Involuntary termination occurs when the employer takes action to end the individual’s employment status (but mere absence from work due to illness or disability before the employer has taken action to end the individual’s employment status is not an involuntary termination).

Question 5. Does an involuntary termination include retirement?

Answer: If the facts and circumstances indicate that, absent retirement, the employer would have terminated the employee’s services, and the employee had knowledge that the employee would be terminated, the retirement is involuntary.

Question 6. Does involuntary termination include involuntary termination for cause?

Answer: Yes. However, for purposes of Federal COBRA, if the termination of employment is due to gross misconduct of the employee, the termination is not a qualifying event and the employee and other family members losing health coverage by reason of the employee’ termination of employment are not eligible for COBRA continuation coverage.

Question 7. Does an involuntary termination include a resignation as the result of a material change in the geographic location of employment for the employee?

Answer: Yes.

Question 8. Does an involuntary termination include a work stoppage as the result of a strike initiated by employees or their representatives?

Answer: No. However, a lockout initiated by the employer is an involuntary termination.

Question 9. Does an involuntary termination include a termination elected by the employee in return for a severance package (a buy-out) where the employer indicates that after the offer period for the severance package, a certain number of remaining employees in the employees group will be terminated?

Answer: Yes.

Click here to learn more.

For many years, Dilbert owned the HR stage. Now the TV show The Office has taken over. You can see their employee handbook, as well as hilarious pictures of offices around the country.

For a few minutes of amusement, go to www.nbc.com/office.

Blanket English-only policies are often found to be discriminatory. A case in point is the recent settlement agreement between the EEOC and an employer that enforced an English-only rule solely against Hispanics.

In EEOC v. Royalwood Care Center LLC, a Spanish-speaking janitor brought a charge of discrimination against the nursing home after he had been fired for violating the company’s English-only policy. Under the employer’s policy, employees were prohibited from speaking Spanish with Spanish-speaking residents of the assisted living facilities. Further, employees were disciplined for speaking Spanish in parking lots while on breaks.

The company’s policy was not enforced, however, with respect to a good portion of Filipino employees who spoke Tagalog. Instead, the company’s English-only rule was implemented essentially as a no-Spanish rule.

The EEOC has provided guidance on circumstances in which business reasons would justify an English-only rule. Although there’s no precise test for making this evaluation, relevant considerations include safety concerns and communication concerns with English-speaking customers.

Before adopting an English-only rule, consider whether there are any alternatives that would be as effective in promoting safety or efficiency. Also make sure to:

• Ensure that the policy on languages spoken in the workplace is applied equally to all persons, regardless of national origin or language spoken.
• Revise training and other policies, especially those on discrimination, to include versions in other languages for limited-English employees.
• Provide opportunities for the claimants to obtain English proficiency training.
• Designate an area in each facility where employees may speak in languages other than English.
• Permit employees to speak their primary languages to customers or patients who speak those languages.

When an employee requests an accommodation, employers should make two separate determinations: (1) Does the employee have a disability; and (2) Does the employee need the requested accommodation because of a limitation (any limitation) associated with the disability? To see how this applies to “side effects,” the EEOC gives this example:

Q: Must an employer provide a reasonable accommodation that is needed because of the side effects of medication or treatment related to the disability, or because of symptoms or other medical conditions resulting from the underlying disability?

A: Yes. The side effects caused by the medication that an employee must take because of the disability are limitations resulting from the disability. Reasonable accommodation extends to all limitations resulting from a disability.

Let’s say that an employee with cancer must undergo chemotherapy twice a week, which causes her to be quite ill afterward. The employee requests a modified schedule — leave for the two days after chemotherapy. Because the treatment will last for six weeks, she requests a leave for this period. The employer must comply unless doing so would constitute undue hardship.

Similarly, any symptoms or related medical conditions resulting from the disability that cause limitations may also require reasonable accommodation. To learn more go to http://www.jan.wvu.edu/.

Given the President’s recent appointments to the National Labor Relations Board, Department of Labor, and EEOC, it’s clear that the current administration will be far more employee friendly than any in recent memory. The administration claims that more than 70% of employers are estimated to continue to violate wage and hour laws (especially those related to misclassification and overtime). Look for such actions as:

• Pro-NLRB decisions.
• Enforcement of fair pay initiatives.
• Support for the Employee Free Choice Act, currently stalled in Congress, but expected to raise its ugly head once again.
• Increased government enforcement of wage and hour and other discrimination laws as more dollars and investigations are assigned to the DOL and EEOC payrolls.

If there’s ever been a time to get your compliance act together, now is that time! HR That Works members should watch our recent ADA, FMLA, Seven Traps, and COBRA webinars.

This case took a bad twist for Southern Air. In May 2008 it filed a defamation lawsuit against former employees for slander in a Connecticut court after they raised air carrier safety concerns with Southern Air, OSHA, and the FAA. The workers, all former flight crew members, in turn, filed a whistleblower complaint with OSHA. OSHA ordered Southern Air to withdraw its lawsuit and pay out the $70.9 million. Of course, Southern Air is expected to appeal the judge’s ruling.

Lesson learned: Don’t sue or otherwise retaliate against employees who file safety complaints. Read more about the case here.

Every person is motivated by either pain or pleasure. Today, many employees are motivated to work hard due to the pain that can be associated with losing their jobs. The problem is that fear-based motivation is similar to that of “kick in the butt” theory of motivation — it only works as long as the fear of the kick is present.

The challenge is to motivate our workforce toward growth, not just survival. This requires nurturing of intrinsic motivation. To paraphrase motivation expert, Bob Nelson, it’s more powerful to light a fire within folks than underneath them. Here are five proven motivational pointers to keep in mind:

1. When people are doing work they can do well and enjoy doing well, they are naturally motivated. This holds true for every one of us. So begin by placing employees in this “sweet spot.” The challenge then becomes not to demotivate someone in this position. The excellent book Leadership and Self-Deception, states that we often deceive ourselves as not being the problem. When you’re running 75 miles an hour, most of us have little time for the positive and tend to deliver negative messages — usually when we react to someone stopping us from running. Praise, perhaps the most important motivational tool, gets short shrift when we’re running for our lives.
2. How you show you care isn’t as important as your effort to show you care. Study after study shows it’s not a specific motivation or retention program that works; it’s the desire and effort to have the program in the first place that makes a difference. What holds true for parenting and marriage also applies to managing: Begin by making an effort, any effort, to show that you care. One way to do this is to spend five minutes listening to someone. When was the last time you stopped running long enough to do that?
3. Engage your employees. You have a sales job to do and you want to know your employees’ fears and desires. Since management by control is dead, the only alternative is management by agreement. Make the employees part of the action in addressing productivity and other management concerns. HR That Works users should take a look at the White Paper: “Getting Your Employees to Think.” Encouraging employee thinking will motivate them.
4. Don’t forget the greenbacks. Money remains the No. 1 reason people go to work — always has been, always will be. But here’s the tipping point: Once folks are paid a “fair day’s wage,” money then falls off as a distant motivator — as a sense of belonging, ego gratification, self-actualization, and other motivators kick in. Make sure you pay a fair day’s wage by doing market surveys. What would you have to pay to hire any one of these employees today? Also, bear in mind that paying too far above grade is a waste of money that doesn’t benefit either the business or the employee.
5. Open the books. I’m a big fan of open book management as a motivational tool. Have your management team read Jack Stack’s Great Game of Business.

Conclusion: Stop running for five minutes, show your employees that you care, engage them, monitor your pay scales, and open the books. Now that’s a motivating formula!