Hunton Employment & Labor Perspectives

In a budget report released by the House Appropriations Committee on May 8, 2014, lawmakers expressed their concern with “the EEOC’s pursuit of litigation absent good faith conciliation efforts.”   The Committee’s report, which sets out the Committee’s recommended funding proposals for various federal departments and agencies, directs the EEOC “to engage in [good faith conciliation] efforts before undertaking litigation and to report, no later than 90 days after enactment of this Act, on how it ensures that conciliation efforts are pursued in good faith.”

In the past few months, the EEOC has filed two federal lawsuits challenging what might be considered “run of the mill” separation agreements. Such separation or severance agreements have become a relatively common practice when the employment relationship is terminated, as the employer can offer a severance payment in exchange for a broad release of potential claims. These agreements provide employers with the finality that is necessary for making business decisions, risk assessments, long-term plans, and the like. In cases in which there are potentially viable claims, settling them immediately avoids the time and expense of litigation. And even if the employee would not have had any viable claims against the employer, merely avoiding the possibility of litigation and its costs is usually well worth the amount of the severance payment. The indication that EEOC is taking a closer look at these agreements is thus concerning to employers and the lawyers who represent them.

On April 9, 2014, the Sixth Circuit of Appeals not only affirmed summary judgment in EEOC v. Kaplan Higher Education Corp., et al. but also chastised the EEOC for applying a flawed methodology in its attempts to prove that using credit checks as a pre-employment screen had an unlawful disparate impact against African-American applicants.

The government has continued to issue a number of regulations and other guidance on the Patient Protection and Affordable Care Act (PPACA) and related health care laws, including the following:

• The “employer mandate” that will take effect in 2015;
• IRS reporting requirements for health plans and large employers;
• The 90-day waiting period limits;
• Transitional reinsurance contributions required to be made by large employers;
• The Mental Health Parity and Addiction Equity Act; and
• Standard transactions under HIPAA.

You're Invited: Pay Equity Under The Obama Administration

Pay equity for women and minorities has been a priority throughout President Obama’s administration. President Obama has wielded his Executive power with increasing frequency in 2014. President Obama recently issued an Executive Order and a Presidential Memorandum that target the pay practices of federal contractors. Both actions are designed to increase transparency in employee compensation. They may have significant consequences for covered employers.

On April 3, 2014, the Internal Revenue Service issued guidance (Revenue Ruling 2014 9) that should make it much easier for qualified plans (including section 403(b) plans) to accept direct rollover contributions from other qualified plans and IRAs.  While qualified plans have long been allowed to accept such rollovers, the new guidance should encourage more plans to accept rollovers by simplifying the process of determining whether a proposed rollover is an “eligible” one which the plan can accept without jeopardizing the plan’s on-going compliance.

On April 22, 2014, the Sixth Circuit reversed the district court’s dismissal of an ADA case against Ford Motor Company, finding that there was a fact issue as to whether telecommuting most days is a reasonable accommodation. In EEOC v. Ford Motor Company (No. 12-2484), the court addressed an increasingly common, yet persistently difficult, question:  when must employees be allowed to work remotely, and when is physical, in-person attendance an essential function of a job?

During his most recent State of the Union Address on January 28, 2014, President Barack Obama stated that one of his top priorities in the coming year was to address what he described as “stagnant wages.”  More importantly, he warned Congress that if they did not take steps to tackle the issue soon, he was prepared to attempt to address the issue unilaterally through exercise of his executive power.

IRS final regulations issued earlier this year provide guidance on compliance with the employer coverage mandate under the Affordable Care Act (ACA), including determining full-time status and offering coverage with minimum value. In addition, the government has also issued final and proposed regulations regarding 90-day waiting periods under the ACA.

While both sets of final rules largely follow the previously issued proposed rules, there are some key changes of note for employers.

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Jurisdiction

Jurisdiction may be the most important factor organizations should take into consideration when offshoring.  Some countries do not recognize certain U.S. legal doctrines, such as confidentiality agreements, and without proper jurisdiction an organization may be unable to enforce its contract with a vendor.

When selecting an offshore country, organizations should consider whether the country permits a choice of law provision which would allow courts to apply U.S. law.  If the country permits choice of law provisions, the provision should be well defined in the contract so that there is no ambiguity.  Organizations should also consider working with counsel in the offshore country to assist with legal intricacies, even if a United States choice of law provision is permissible.