Recent Employment Law Changes
A number of employee-friendly laws signed by former President George W. Bush and President Obama have taken effect since 2009. What follows is an overview of these recent statutory changes, and what to watch in 2010. (Note: A separate article is in the works to outline changes that will occur in connection with the landmark health-care reform legislation that President Obama signed into law in March 2010.)
Effective 2009
In essence, the ADAAA redefined the concept of a disability by expanding the definition of “major life activities” with two non-exhaustive lists, including activities such as walking, reading, bending, and communicating, and major bodily functions, such as functions of the immune system; normal cell growth; and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions. “Mitigating measures” other than eyeglasses or contact lenses may no longer be considered in assessing whether an individual has a disability. And, an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active. In addition, the “regarded as” provision of the ADA was clarified to permit an individual to establish ADA coverage by showing that he or she was subjected to prohibited treatment based on an actual or perceived impairment, regardless of whether the impairment limits a major life activity; however, he or she would not be entitled to a reasonable accommodation.
On October 28, 2009, President Obama signed the NDAA for FY2010. This included enhancement of Military Family Leave via expansion of exigency leave benefits to include family members of active duty service members (previously available only to family members of National Guard and Reservists), and expansion of the caregiver leave provisions to include veterans whose serious injury or illness occurred any time during the five years preceding the date of treatment.
- Title VII of the Civil Rights Act of 1964 (Title VII)
- Age Discrimination in Employment Act (ADEA)
- Americans With Disabilities Act
- Rehabilitation Act
Like the ADAAA, this is a congressional overruling of the 2007 Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007), which held that to be timely, a charge of discrimination had to be filed within 180 days (or 300 days in certain jurisdictions) from the date the discriminatory pay decision was made. While back wages are limited to two years preceding filing of charges, employers may face difficulty providing justification for decisions made long ago.
Under the law, an individual subjected to compensation discrimination may now file a charge within 180 (or 300) days of any of the following: 1) when a discriminatory compensation decision or other discriminatory practice affecting compensation is adopted; 2) when the individual becomes subject to a discriminatory compensation decision or other discriminatory practice affecting compensation; or 3) when the individual’s compensation is affected by the application of a discriminatory compensation decision or other discriminatory practice, including each time the individual receives a paycheck that is based on a discriminatory decision or practice.
- State Children’s Health Insurance Program (SCHIP)—signed February 4, 2009, by President Obama, expands children’s health insurance to include provisions amending the Employee Retirement Income Security Act (ERISA) by requiring group health plans and insurers to allow employees and their dependents who are eligible for coverage—but who are not enrolled in the group plan—to enroll if they become ineligible for Medicaid or a state child health plan, or if they become eligible for financial assistance from Medicaid or a state child health plan. The employee or dependent must exercise this option within 60 days.
- American Recovery and Reinvestment Act of 2009 (ARRA)—signed February 17, 2009, by President Obama, contains provisions amending the Consolidated Omnibus Budget Reconciliation Act requiring subsidies for COBRA continuation coverage premiums. Under ARRA, responsibility for paying COBRA coverage premiums pursuant to employment termination or other qualifying events occurring between September 1, 2008, and March 31, 2010, is apportioned 35 percent to “assistance eligible individuals” and 65 percent to employers. The employer payment may be reimbursed through a credit against withholding and Federal Insurance Contributions Act (FICA) taxes. Model notices reflecting the March 31, 2010, extension are available on the Department of Labor Web site. In addition to the subsidy, ARRA added new whistleblower protections for nonfederal employees who report or disclose perceived misuse of stimulus funds and creates employee protection for complaints related to mismanagement, waste, and abuse of stimulus funds.
- Pro-Labor Executive Orders and E-Verify—signed January 30, 2009, by President Obama, E-Verify and a number of new executive orders, effective September 8, 2009, make clear the Obama administration’s predisposition toward labor unions and authorize project labor agreements for large-scale construction projects. E-Verify, which applies to federal contracts awarded on or after September 8, 2009, is an Internet-based system designed to enable employers to verify electronically that newly hired employees are authorized to work in the United States. The system does not verify a new hire’s immigration status, only his or her employment eligibility. As a result, E-Verify may not be used as a pre-hire screening tool; it may be used only once a person has been hired and has completed an I-9.
Effective in 2010
- Genetic Information Nondiscrimination Act of 2008 (GINA)—signed by President Bush May 21, 2008, became effective January 1, 2010, for most health plans. GINA prohibits employers, employment agencies, unions, and joint labor-management training committees from discriminating based on an individual’s “genetic information.” GINA also amends ERISA to prohibit group health plans and group health insurance issuers from using genetic information to calculate premiums, determine eligibility, or make other underwriting decisions. In addition, use or disclosure of genetic information for underwriting purposes is a violation of the Health Insurance Portability and Accountability Act (HIPAA). Employers who perform health risk assessments and develop wellness programs must ensure that they do not run afoul of GINA, including its prohibitions and recordkeeping requirements.
- Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)—signed by President Bush October 3, 2008, as a part of the Emergency Economic Stabilization Act, became effective for calendar year plans beginning on or after January 1, 2010.
MHPAEA amends ERISA, the Public Health Service Act, and the Internal Revenue Code. MHPAEA requires group health plans (51 or more employees) that currently provide mental health or substance use disorder benefits to ensure that any financial requirement (such as deductibles, co-payments, co-insurance, out-of-pocket expenses) or treatment limitation (such as limits on the number of visits, days of coverage, or other similar limits on the scope or duration of treatment) are no more restrictive than the predominant financial requirements or treatment limitations applied to substantially all medical and surgical benefits. MHPAEA does not require that health plans provide mental health or substance use disorder benefits, but to the extent they already provide such benefits, it applies to require parity as between the types of benefits.
MHPAEA also: 1) requires parity with respect to plans that provide coverage by out-of-network providers; 2) adds new disclosure requirements regarding criteria for medical necessity determinations and reasons for denial of reimbursement or payment for services with respect to mental health or substance use disorder benefits; and 3) both provides and expands exemptions for certain small employers with respect to minimum and average employee requirements and cost percentage increases.
What to Watch Going Forward
In addition to employee-friendly initiatives, the Obama administration has announced a proposed 2011 budget that includes a $25 million allocation for a Department of Labor “Misclassification Initiative” targeting employers that misclassify workers as “independent contractors” rather than as employees. The initiative follows a joint proposal by the Department of Labor and the Department of the Treasury to enhance the ability of both agencies to penalize employers that misclassify employees as independent contractors and eliminate incentives to continue doing so.
Other enforcement initiatives focus on Fair Labor Standards Act (FLSA) violations, particularly as to exempt/non-exempt misclassification and overtime pay violations; Equal Employment Opportunity Commission and Office of Federal Contract Compliance Programs disparate impact and systemic discrimination investigations; and employee benefits audits. These enforcement initiatives and the current economic climate emphasize the importance of performing self audits before audit notices are received or investigators appear. Performing self audits can reduce the risk of full-blown audits and costly penalties.
Ira M. Shepard and Catherine E. Walters are attorneys with the law firm Saul Ewing, LLP. E-mail: ishepard@saul.com; cwalters@saul.com.
