Health Employment and Labor

labor and employment law for the healthcare industry

Posted on by Epstein Becker & Green, P.C.

Text Free Zone: OSHA’s Distracted Driving Initiative Kicks Into Gear

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By Casey M. Cosentino and Eric J. Conn

“Texting while driving” is an epidemic in America, which has prompted forty-two states and the District of Columbia to ban (completely or partially) this conduct for drivers.  Here’s a map of the U.S. states that have enacted some ban on texting while driving.  Studies suggest that texting while driving distracts drivers’ cognitive focus and removes their eyes from the road and hands from the wheel.  It is not surprising, therefore, that distracted driving is attributed with sixteen percent (16%) of all traffic fatalities in 2009.

The consequences of texting while driving are also seen in work-related accidents, as motor vehicle accidents are among the leading cause of worker fatalities.  Due to the political attention that texting while driving is garnering and the high number of employee deaths caused by motor vehicle accidents, OSHA has launched a Distracted Driving Initiative in partnership with the Department of Transportation to combat this safety issue.

 According to OSHA, sending and reading text or email messages is a workplace safety hazard that employers are legally obligated to prevent under the OSH Act’s General Duty Clause.  For instance, OSHA finds that workers are exposed to a hazard when an incoming text from a supervisor or an urgent email request from a client draws their focus away from the road.   Notably, formal or informal incentive programs (i.e., monetary bonuses for making a certain number of deliveries per hour or day) are the heart of OSHA’s Distracted Driving Initiative.  The agency believes the root cause of texting while driving is employers’ policies that leave employees no option but to text or email on the go.   Accordingly, employers violate the General Duty Clause when their policies or practices:

  1. Require texting/emailing while driving;
  2. Create incentives that encourage or condone texting/emailing while driving; or
  3. Structured in such a way that texting is a practical necessity for workers to carry out their job duties.

When OSHA determines that employers’ policies contribute to cell-phone related accidents, it will issue General Duty Clause citations, which carry maximum penalties of $70,000 per Willful or Repeat violation or $7,000 per Serious violation.  As a result of the Distracted Driving Initiative, employers should implement a workplace safety culture that explicitly prohibits texting while driving on the job or in company-owned vehicles.  Indeed, employers should draft or revise cell-phone usage policies to declare all vehicles “text-free zones,” including posting of such signage in company vehicles.

Effective policies should alert managers, supervisors, and employees that the company neither requires nor tolerates sending or reading text/email messages while driving.  The policies should also stress safe communication practices and incorporate procedures that eliminate financial or other incentive programs that encourage or require texting while driving in order to carry out job duties.  Additionally, employers should review such policies during training, education sessions, and new hire orientation programs.

OSHA has promised swift action upon learning of distracted driving accidents or receiving credible complaints from employees that their employers require or organize work so that texting while driving is a practical necessity.  OSHA is forthright in its position on distracted driving, and it will not hesitate to issue citations and penalties where necessary.  Given OSHA’s aggressive enforcement record over the past three years, we expect the agency to be on the lookout for a poster-child employer to use as an example for others under the new Distracted Driving Initiative.

Posted on by Epstein Becker & Green, P.C.

FTC Warns That Background Searches via Mobile App May Violate the Fair Credit Reporting Act

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 by Jeffrey M. Landes, Susan Gross Sholinsky, Steven M. Swirsky, and Jennifer A. Goldman

On January 25, 2012, the Federal Trade Commission (“FTC”) sent warning letters to three companies that market, in total, six mobile phone applications (“Apps”) that provide users with background check reports. In the warning letters, the FTC states that the Apps may violate the Fair Credit Reporting Act (“FCRA”). According to a press release issued by the FTC on February 7, 2012, the FTC cautioned the Apps’ marketers that, if they have reason to believe that the background reports provided will be used for employment screening, housing, credit, or other similar purposes, both the users of the Apps and the marketers of the Apps must comply with the FCRA.

 Read the full advisory online

Posted on by Epstein Becker & Green, P.C.

Complimentary Seminar/Webinar – ADA Standards Enacted in September 2010 Will Take Effect on March 15, 2012

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Please join us on Wednesday, February 22, 2012 at 9:00 am EST for a complimentary seminar/webinar  presented by Epstein Becker Green attorneys Kara M. Maciel and Jordan Schwartz.  They will address how the new ADA standards affect the health care industry and describe specific actions that employers should take to comply with these updated legal requirements and avoid significant financial penalties.

Registration is free and you can register by clicking here.

Posted on by Evan Rosen

Are Interns Creating Wage And Hour Liability For Your Company?

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On February 1, 2012, a former intern of Hearst Corp.’s Harper’s Bazaar filed a purported class action alleging that the company violated the Fair Labor Standards Act (“FLSA”) and applicable state law by failing to pay minimum wage and overtime pay to her and the other interns. 

Although the lawsuit is against a publishing company, it nonetheless highlights a growing trend in health care.  The economic downturn has led many job seekers to get their foot in the door anyway they can, even if it means interning without pay.  Indeed, as the complaint against Hearst Corp. asserts, “[u]npaid interns are becoming the modern-day equivalent of entry-level employees.”  Companies likewise find value in interns because they can train these individuals without incurring any costs, and then hire fully trained workers when they have a job opening.  But companies need to be very careful about their use of interns and volunteers or they could face significant wage and hour liability. 

The Department of Labor uses the following six factor test to determine whether an “intern” is actually an intern, as opposed to an “employee” who is entitled to compensation under the FLSA.

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the above factors are met, then the intern is not entitled to minimum wage or overtime under the FLSA.  The Department of Labor’s six factor test, when applied to the health care industry, can best be satisfied by following the best practices, which will help protect your company from liability.  First, ensure that the intern is receiving academic credit from an educational institution.  A recent graduate who offers to “intern” to gain experience and get his or her foot in the door is a red flag.  Second, do not use interns to displace employees in the schedule.  For example, if an LPN calls out sick, do not replace him or her on the schedule with an intern.  Interns should work alongside regular employees, not in place of them.  Third, an internship should not serve as a trial period prior to permanent employment immediately following the internship.  Fourth, the internship should be for a definite and fixed duration.

Finally, keep in mind that several states, such as New York, have their own tests to determine whether an “intern” is actually an “employee.”  To avoid wage and hour liability your company must comply with both federal and state laws.  Therefore, it is important to check state laws too, and not to just rely on the federal test described above.

Posted on by Epstein Becker & Green, P.C.

Epstein Becker Green Launches First-of-Its-Kind Wage & Hour Guide for Employers App

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We are pleased to announce that Epstein Becker Green’s first app – Wage & Hour Guide for Employers – is now available for download in the App Store on iTunes, for both iPhones and iPads.  You can find the app by searching for “Wage Hour” or clicking here. 

Epstein Becker Green Wage & Hour Guide AppThe Wage & Hour Guide app enables employers to access up-to-date federal wage and hour guidelines as well as various state guidelines, which can differ by jurisdiction.  In addition, users can obtain insights and commentary about the latest wage and hour developments and issues by accessing Epstein Becker Green’s Wage and Hour Defense Blog directly through the app.  To provide the best user experience possible, the app provides users with the ability to download the guide to their iPhone or iPad for reference anywhere at any time – with or without an Internet connection, all at no cost.

Posted on by Kerry M. Parker

New York Home Care Worker Wage Parity Act Takes Effect on March 1, 2012

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 Medicaid home care aide services providers need to act quickly to avoid the risk of non-payment for services.  The New York State Home Care Worker Parity Act, Public Health Law § 3614-c, establishes minimum “total compensation” requirements for “home care aides” who perform Medicaid-reimbursed work for certified home health agencies (“CHHAs”), long term home health care programs (“LTHHCPs”) and managed care plans (“MCPs”).  The Act applies to both mainstream managed care plans and all forms of managed long term care plans, and also affects licensed and limited licensed home health care services agencies to the extent that they contract with a CHHA, LTHHCP or a MCP to provide services to Medicaid clients of those entities in the designated locations.  The Act’s compensation requirements are intended to establish wage parity among various types of home care workers in New York City and Nassau, Suffolk and Westchester counties. 

KEY PROVISIONS OF THE ACT:

  • Beginning on March 1, 2012, covered employers will be required to pay New York City “home care aides” a minimum wage rate of $9.00 per hour, plus either provide health benefits or pay a benefit supplement rate of $1.35 per hour for a minimum total compensation of $10.35 per hour (equating to 90% of the total compensation mandated by the Living Wage Law of New York City).
  • Minimum total compensation requirements for home care aides in Nassau, Suffolk and Westchester counties will begin on March 1, 2013.
  • The Medicaid reimbursements rates for CHHAs, LTHHCPs and MCPs are not being increased at this time.
  • “Home care aide” means a home health aide, personal care aide, home attendant or other licensed or unlicensed person whose primary responsibility includes the provision of in-home assistance with activities of daily living (“ADLs”), instrumental ADLs or health related tasks, but excludes aides “working on a casual basis,” (which, according to the New York Department of Health (“DOH”), means those working on an “incidental, irregular and/or intermittent basis.”)  For additional information, see Home Care Worker Wage Parity FAQs, January 2012.
  • CHHAs, LTHHCPs and MCPs must provide the DOH with annual written certifications that all services provided are in full compliance with the terms of the Act, on NY DOH Forms prepared by the DOH. 
  • For covered entities that contract for home care aide services with licensed home care services agencies or other covered third parties, the CHHA, LTHHCP or MCP must obtain written certifications from such third parties which attest to the third party entity’s compliance with the terms of the Act.  The certifications also obligate the CHHA, LTHHCP and MCP to obtain, on a quarterly basis, all information from the third party necessary to verify compliance with the terms of the Act.  All certifying parties are required to maintain certifications and all information exchanged between them for a period of ten years.
  • The portion of the minimum compensation rate relating to health benefits are superseded by any collective bargaining agreement that was in effect as of January 1, 2011, or a successor to such an agreement, which provides health benefits to home care aides through payments to a jointly administered labor-management fund. 
  • Failure to fully comply with the Act, including the timely submission of the required certifications, will result in non-payment for any covered services rendered after March 1, 2012. 

IMPACT OF THE ACT:

            First, covered employers that pay aides less than $9.00 per hour currently will have to raise pay rates (and provide the benefit supplement) with no corresponding reimbursement increase from Medicaid.  Also, covered entities undoubtedly will have questions as to the intended meaning of various parts of the Act, notably the phrase “working on a casual basis,” as many home care aides work for one or more employers on a per diem basis, and the definitional guidance provided by the DOH does not clearly address those particular employment circumstances.

            Nonetheless, beginning March 1, 2012, no payments will be made to covered providers unless they have filed the required certifications of compliance.  Prior to filing certifications of compliance, home care organizations should perform all appropriate testing and review to ensure that each certification is accurate when made.

Posted on by Epstein Becker & Green, P.C.

OSC Targets Health Care and Other Industries

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Written by: Robert S. Groban Jr.

The U.S. Department of Justice’s Office of Special Counsel (“OSC”) was established by Immigration Reform and Control Act of 1986 (“IRCA”). The OSC investigates and prosecutes employers for discriminating against workers based on national origin, citizenship status, and document abuse. Liability can attach when an employer acts too zealously in satisfying its Form I-9 obligations, such as asking foreign-looking applicants for more or different documents than it seeks from “American” workers or instructing employment applicants on which documents to provide for Form I-9 verification. Given the recent increase in Form I-9 audits by U.S. Immigration and Customs Enforcement (“ICE”), employers understandably have been too eager to satisfy their legal obligations and inadvertently crossed the line into prohibited discrimination under the IRCA. Proper training of all involved in the Form I-9 process can help organizations navigate the treacherous waters that IRCA established between the Scylla of its worksite enforcement requirements and the Charybdis of its anti-discrimination provisions.

To read EBG’s Immigration report in its entirety, click here.

Posted on by Gretchen Harders

U.S. Department of Labor Cracks Down on MEWAs

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On December 6, 2011, the U.S. Department of Labor (“DOL”) issued a proposed rule on Form M-1 filing requirements, a proposed rule on DOL ex parte cease and desist orders, a notice of proposed form revision to Form M-1 and a notice of proposed form revision to Form 5500  implementing new requirements for multiple employer welfare arrangements (“MEWAs”) under the Patient Protection and Affordable Care Act (“PPACA”) (referred to as the “Proposed Rules”).  PPACA prohibits false statements or representations of fact about a MEWA’s financial condition, benefits provided and its regulatory status in connection with the marketing of participation in a MEWA.  The deadline for submitting public comments to the Proposed Rules is March 5, 2012. 

MEWAs are multiple employer welfare arrangements or similar entities that offer or provide medical benefits to employees of two or more employers that are not under common control of a single employer.  Employer plans that participate in MEWAs are subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) in the same manner as any other employer sponsored employee benefit plan.  MEWAs covered by ERISA are subject to broader State insurance regulation than single employer ERISA welfare plans.  MEWAs generally have been used by small employers as an alternative to traditional health insurance coverage as they enable small employers to purchase health coverage at large group premium rates.  Many MEWAs do not satisfy the reserve thresholds or contribution and consumer protection requirements under State law applicable to licensed health insurance issuers.  In its fact sheet announcing the Proposed Rules, the DOL stated that MEWAs promote “abusive and fraudulent practices and become financially unstable,” and cited to examples of MEWAs that failed to cover millions of dollars in unpaid claims and benefits.

New Reporting Requirements.  An employer who sponsors an employee benefit plan subject to ERISA through participation in a MEWA is obligated to file a Form M-1 with the DOL.  This is not solely the obligation of the MEWA for reason that each employer’s plan, with the exception of certain employee associations, constitutes a distinct ERISA plan independently subject to the requirements of ERISA.  Unless the employer has a designated plan administrator responsible for the filing of the Form M-1, the employer is statutorily presumed to be the plan administrator of the plan it sponsors. 

The Proposed Rules expand the DOL reporting requirements for MEWAs and impose substantial penalties for failure to report.  The reporting rules also apply to multiemployer arrangements claiming they are exempt from the MEWA requirements.  Typically,  these are plans and arrangements established pursuant to a collective bargaining agreement (referred to by the DOL as “ECEs”).

  • MEWAs are required to file annual reports with the DOL on Form M-1 by March 1 of the year following the taxable year.  All MEWAs and ECEs are required to file a Form M-1 within 90 days of the MEWA’s or ECE’s origination or establishment.
  • The Proposed Rules would require MEWAs to file a Form M-1 with the DOL 30 days prior to registration, and ECEs to file a Form M-1 30 days prior to origination, as well as an annual Form M-1.  The Proposed Rules make clear that the obligation to file Form M-1 extends to all MEWAs, whether or not ERISA-covered plans, and ECEs.  Although the requirements may differ as to what constitutes a registration event for MEWAs and an origination event for ECEs, the Preamble to the Proposed Rules makes clear the general intent is to require all such arrangements to be subject to similar reporting requirements. 
  • MEWAs that are ERISA plans filing Form 5500 annual reports will be required to prove their compliance with the Form M-1 filing requirements.  MEWAs that are ERISA plans of small employers (less than 100 employees) will no longer be exempt from the requirement to file a Form 5500 annual report.
  • The Proposed Rules impose civil and criminal penalties for a MEWA’s failure to file or the fraudulent filing.  Civil penalties are up to $1,100 per day from the date of failure to file or the filing of the fraudulent Form M-1.  Criminal penalties are up to 10 years imprisonment, fines under Title 18 of the United States Code or both. 

In conjunction with the issuance of the Proposed Rules, the DOL proposed changes to Form M-1 to incorporate the new reporting requirements.  The proposed Form M-1, among other things, requires contact information of all persons associated with the MEWA, including promoters and third party vendors and providers.

On January 23, 2012, the DOL issued its revised Form M-1 for 2011, which has been updated to reflect PPACA requirements that became effective in 2011.  The 2011 Form M-1 is due by March 1, 2012, unless an extension to May 1, 2012 has been previously requested.

DOL Authority to Take Immediate Action Against MEWAs Deemed Fraudulent.  PPACA authorizes the Secretary to issue ex parte cease and desist orders when it appears that the conduct of a MEWA is:  (a) fraudulent; (b) creates an immediate danger to the public safety or welfare; or (c) is causing or is expected to cause significant, imminent and irreparable public injury. 

Fraudulent conduct is defined under the Proposed Rules as acts or admissions of a MEWA or a MEWA’s agent or employee that are committed knowingly and with an intent to deceive or defraud participants of the financial condition, benefits offered, management of the MEWA or the existing regulatory status of a MEWA under Federal or State law.  The DOL appears particularly concerned with MEWAs making false claims that the arrangement is established pursuant to a collective bargaining agreement and therefore exempt from MEWA requirements as an ECE.  Conduct that creates an immediate danger to the public safety or welfare or that is expected to cause significant, imminent or irreparable public injury does not require intent.  Examples of such conduct include a failure to establish or maintain ERISA claims procedures or a record keeping system, embezzlement or unreasonable compensation or payments to MEWA operators or third party providers. 

The Secretary may also issue a summary order to seize the assets of a MEWA that the Secretary determines is in a financially hazardous condition.  A financially hazardous condition occurs when a MEWA in imminent danger of becoming unable to pay benefit claims when due, a MEWA has sustained a significant loss of assets or the MEWA or a person responsible for the MEWA has been the subject of a cease and desist order.

A person that is adversely affected by a cease and desist or summary seizure order may request an administrative hearing regarding the order. 

What This Means for Employers.  The proposed civil and criminal penalties for failure to file Form M-1 raise the stakes for employers.  All employers that participate in a MEWA, including arrangements subject to collective bargaining agreements, should review the MEWA’s status and compliance with the Form M-1 filing requirements, as well as the requirements of ERISA-covered plans to file Form 5500 Annual Reports.  Employers also should be careful not to enter into any arrangement that inadvertently creates a MEWA.  This can occur in a variety of circumstances, such as a merger or acquisition, or the consolidation of plans offered by subsidiaries or affiliates that are independent employers that offer their own benefit plans.

A member of the Firm, Daly D.E. Temchine, aptly comments that the requirements of the Proposed Rules and the enforcement authority provided to the Secretary to act quickly have the potential to make MEWAs a more secure mechanism for employers to use as a vehicle for the provision of health benefit coverage to their employees. The disclosures required to be made by MEWAs enable employers, or their brokers or other agents, to conduct more informative investigations of a MEWA’s finances and operations than had previously been the case.  The availability of information, however, also creates a potential for greater liability on the part of an employer, broker or agent who fails to seek out that information and places in jeopardy the benefits promised to eligible participating employees.”

 

Posted on by Epstein Becker & Green, P.C.

EBG Obtains Defense Verdict in Pregnancy Discrimination and Retaliation Jury Trial in San Francisco

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The plaintiff, a former employee of On Lok, inc., a non-profit organization which serves the Bay Area elderly population, filed a lawsuit after her employment was terminated when she was seven (7) months pregnant and shortly before her anticipated maternity leave was expected to begin.  She claimed pregnancy discrimination and retaliation in response to her request for leaves of absence under the California Family Rights Act and the California Pregnancy Disability Leave Law,  among other related causes of action.

 The Epstein Becker Green defense team of Steven Blackburn and Brooke Brown successfully demonstrated that the termination decision was not motivated by the plaintiff’s pregnancy or request for leave, but instead by the plaintiff’s misconduct related to an incident that was reported to and thoroughly investigated by the Organization’s management shortly before the termination decision.  In support of its case, the court allowed the defense to introduce favorable historical data regarding the Organization’s treatment of employees who requested pregnancy-related leaves of absence during the ten (10) years preceding the plaintiff’s termination.  The court also allowed a special jury instruction regarding the “business judgment rule,” which stated that the jury’s role was not to second-guess the Organization’s business decision, but it should instead determine  whether the plaintiff’s pregnancy or request for leave was a motivating reason for the termination decision.

Within a few hours of commencing deliberations, the jury returned a verdict in favor of the Organization.  During post-trial interviews, the jurors indicated that the business judgment rule was critical to their decision.

Matthew Goodin also assisted the EBG defense team in preparing for trial.

Posted on by Kerry M. Parker

Health Care M&A: Unwary Asset Purchasers May Take On Unwanted Employment-Related Liabilities.

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Acquirers of businesses often prefer to buy the assets of a seller, rather than the stock, to avoid assuming the seller’s liabilities.  Indeed,  the general common law rule is that a purchaser of assets does not assume the seller’s liabilities absent an agreement to do so, fraud or other inequitable conduct between the parties, whereas in a stock sale, the buyer steps into the shoes of the seller and assumes all assets and liabilities of the seller.  In an asset sale, the seller, in turn, would typically use part or all of the sale proceeds to pay its liabilities.  During the pre-sale due diligence process, the parties typically exchange information about themselves including, most importantly, information concerning the seller’s assets, actual and potential liabilities and claims, employee and employee benefits information and so on, and the acquirer often hires many of the seller’s employees in order to carry on the business.

 Unwittingly, however, asset purchasers may, under recent decisions, actually assume liability for ERISA and other employment-related liabilities and claims despite an intention to the contrary.  Federal circuit and district courts have departed from the general rule and expanded liability under the federal common law successorship doctrine.  For example, in a 2011 decision in Einhorn v. M.L. Ruberton Construction Co., 632 F. 3d 89 (3d Cir. 2011), Ruberton agreed to purchase assets and hire employees of Statewide, a construction contractor.  Ruberton took over several of Statewide existing projects as well.   Under two collective bargaining agreements, Statewide was delinquent in making employee benefit contributions  to a union’s pension and welfare funds and, as part of a deal struck among the parties and the union, Statewide agreed to remit the payments owed to the funds. After the sale closed, Statewide defaulted, and the funds’ administrator sued Ruberton to recover the delinquent funds contributions.  See Reed v. EnviroTech Remediation Services, Inc. et. al., Civ. No. 09-1976 (D. Minn. July 1, 2011).

 The Third Circuit Court of Appeals applied the successorship doctrine to hold Ruberton liable for Statewide’s debts to the ERISA funds to “vindicate important federal statutory policy” and because Ruberton had notice of the liability prior to sale and there was sufficient continuity of Statewide’s operations after the sale.  Id. at 99.  This same rationale has been used to hold an asset purchaser liable for claims of employment discrimination, FLSA wage and hour claims, and claims of unfair labor practices under the National Labor Relations Act brought against the seller of which the purchaser was aware at the time of sale.  See Brzozowski v. Correctional Physician Services, 360 F. 3d 173 (3d Cir. 2004) ; Steinbach v. Hubbard, 51 F. 3d 843 (9th Cir. 1995) ; Golden State Bottling Co., 414 U.S. 168 (1973) .

 The bottom line:  Buyer beware if you are or may be a  “successor” to the seller!  Asset purchasers must pay careful attention to due diligence information and understand that they may be unable to legally avoid responsibility for ERISA and other employment/labor-related claims and liabilities of the seller.   In order to best protect themselves against what happened to Ruberton and others in the cases discussed above, these issues must be factored into the negotiations of the purchase price, indemnification obligations, mandatory payments, reserves, and other terms of the deal.