Last year brought key employment law news, issues, and decisions affecting employers and employees. Worker classification (overtime exempt vs. nonexempt, and independent contractor vs. employee) and stricter enforcement on unemployment compensation and payroll taxes was the norm, as governmental agencies sought to maintain public coffers. With the struggling economy, unemployment benefits were extended, and employment losses and operational changes continued – from large reductions-in-force and company reorganizations to individual terminations, demotions, and modifications in compensation and benefits. As a result, claims of wrongful discharge, discrimination, harassment, retaliation and other employment law violations were prevalent. Many of these topics will stay in the forefront and new issues will require attention in 2012.
- Unemployment Numbers Remain High, Benefits Extended (Again.) Federal and state unemployment rates were shockingly high in 2011. At year-end, 13.9 million (more than 8%) were unemployed nationally, with a 10% unemployment rate in Illinois. On December 23, President Obama signed into law a 2-month extension of the payroll tax cut and a temporary federal extension of unemployment compensation. Claimants whose state unemployment benefits have expired may receive up to 99 weeks of federal benefits. This is the third consecutive year that extensions have been granted.
- The Age Discrimination in Employment Act (ADEA) & Disparate Impact. The Equal Employment Opportunity Commission (EEOC) proposed new regulations which are under consideration. If passed, they will make it easier for employees to sue their employers for “disparate impact” age discrimination (a claim that a neutral decision disparately impacted older workers.) Rather than relying on business necessity, an employer will have to establish and prove that the decision was reasonably designed and implemented to achieve a legitimate business purpose. The “reasonableness” test will be based on several factors and will be tough compared to the employee’s burden of showing an adverse impact. The EEOC made the change in response to two federal ADEA disparate impact cases. Employers should expect more claims in 2012 and will need to consider how best to reduce the risk and defend future ADEA disparate impact cases. Recommendations include using objective standards for evaluating employees, avoiding arbitrary decision-making, and conducting an adverse impact analysis on age and other protected categories for group terminations.
- Workplace of Many Generations. In recent years, many employees have opted or needed to remain in the workforce into their 70’s and 80’s. Mandatory retirement is lawful only in narrow circumstances. An aging workforce will present a number of issues in 2012. Increased health care costs and health care issues are common, including leaves of absence, disability accommodations and discrimination, flexible work arrangements, and workers compensation. Employers and managers should be sensitive to, and trained on, obligations regarding age, disability, and other unlawful discrimination, harassment, and retaliation. Retaining older workers can be beneficial by having mature employees with experience, work ethic, motivation and good judgment. Age diversity can also trigger conflicts, as different generations work together, often with different attitudes about corporate culture. Today’s workforce includes the “Traditional Generation” (born before 1945), “Baby Boomers” (born 1946-1963); “Generation X” (born 1965-1980); and “Millennials” (born after 1980.) A recent poll showed that most workers (including Millennial themselves) believe that Millennial are less motivated to take on responsibility and less engaged at work.
- Accommodations and Severe Obesity: Americans with Disabilities Act (ADA). Attention will remain on the ADA and new EEOC regulations that took effect in 2011, focusing more on reasonable accommodations for the disabled than on whether a condition is an ADA disability. For example, a federal judge ruled last month that New York City’s taxi fleet violates ADA because there are not enough accessible taxis to accommodate wheelchair-bound customers. Further, whether a condition constitutes a protected disability will become a significant issue in one aspect. In late 2011, a federal court found that severe obesity (body weight 100% over the norm) is an ADA disability regardless of cause. Many courts have previously ruled that severe obesity is covered only if it is caused by an underlying physiological disorder. This issue is likely to move to the Supreme Court. In the meantime, employers should be cautious when handling accommodation requests from individuals with this condition.
- Enforcing Non-compete Obligations in Illinois. Last year, the Illinois Supreme Court clarified the employer’s burden for enforcement by taking a more flexible view of noncompetition agreements between employers and employees. The Court reaffirmed that a “legitimate business interest” is an important factor, but only one of a totality of circumstances that should be considered on a case by case basis. In addition to non-compete agreements and confidentiality policies, companies should consider reviewing or implementing employee and contractor agreements that protect the company’s confidential information and limit solicitation of customers and employees.
- Social Media in the Workplace. Electronic communication and social media at work have become an accepted reality. Companies and employees are dealing with social media electronic policies, appropriate workplace activities (during work and during breaks), employee participation in social media away from work, and employee privacy. In 2011, the National Labor Relations Board (NLRB) was extensively involved in deciding disputes involving employee terminations by union and non-union employers based on employees’ social media activities. Decisions have primarily protected employees, but often depend on the content of the communications. Look for more NLRB and possible court action on this in 2012.
- NLRB Required Poster. In 2011, the NLRB issued a requirement for all employers (including non-union) to post a specific poster advising employees of certain rights, including association, organization, and discussion of terms/conditions of employment. The controversial decision and ongoing discussion again delayed the effective date of the requirement, from January to April 30, 2012 until further notice.
- Prevention of Workplace Bullying and Harassment. A bill currently in Congress would broaden employers’ liability for workplace harassment beyond discriminatory harassment. Specifically, employers could be responsible for workplace bullying and harassment, even if the misconduct is not based on a victim’s protected class (e.g. gender, race, nationality, etc.) If the law is passed, employers can expect workplace harassment suits to rise significantly. Now is the time to review and modify workplace harassment policies, train employees, and emphasize the importance of reporting workplace bullying for prompt resolution.
- Economic Alternatives to Group Terminations. As the economy struggles to improve in 2012, many businesses may still need to make employment changes for financial and business reasons. Employers continue to explore alternatives to group reductions in force (RIFs), including furloughs, voluntary time off, unpaid vacation, reduced schedules, and temporary and contract staffing. These can be tricky, particularly regarding wage and overtime requirements and docking rules, so employers should consult with legal counsel to create lawful plans. Even if a RIF is the only option – and is supported by economic and operational reasons – it is critical that the company’s selection of employees to terminate is non-discriminatory and well documented. Severance packages can be beneficial to employers and employees, but should always be part of a written severance agreement and release.
TIPS FOR 2012
The new year is a good time to review and update employment policies and handbooks, job descriptions, employment and restrictive covenant agreements, and employment forms. Many companies conduct a full or partial annual audit of their employment practices and documents. With a legal focus this year on age, disability, and other discrimination, harassment and retaliation claims; RIFs and legal economic alternatives; social media; and worker classification, companies will be busy. This is also a logical time to consider reclassifying workers (for example, in connection with annual evaluations, raises, and/or bonuses.) Businesses can take advantage of the IRS Voluntary Classification Settlement Program (VCSP) established in 2011, to properly reclassify as employees any workers who have been incorrectly treated as independent contractors.
Please attend my upcoming presentation on January 26 at 10:15 a.m. at the Career Resource Center of Lake County, 40 E. Old Mill Rd, Lake Forest, IL. Topics will include at-will vs. contract employment, discrimination and harassment issues, attracting and retaining older workers, social media in the workplace, and non-compete and severance contracts.
This bulletin is intended to provide clients and others with general information and is not intended to provide specific legal advice or opinions. For assistance with topics addressed in this bulletin or other workplace issues, please contact Lori Goldstein at (847) 624-6640 or firstname.lastname@example.org. Visit www.lorigoldsteinlaw.com for information about the Law Office of Lori A. Goldstein.
© 2012 Lori A. Goldstein