Employment Law Bits

SAFETEA-LU update

In June 2008, Congress enacted the SAFETEA-LU Technical Corrections Act of 2008 (TCA) to amend and make technical corrections to the SAFETEA-LU legislation enacted in 2005.

SAFETEA-LU changed the definition of “motor carrier” so that that motor carrier exemption under the Fair Labor Standards Act was no longer available to employers operating vehicles under 10,000 pounds. Section 305 of the TCA reversed this change, restoring the definition of motor carrier to its pre-SAFETEA-LU state. (See original blog posts on this subject in June and July 2008).

The TCA also contains language suggesting that this change was retroactive, and changes made by SAFETEA-LU to the motor carrier exemption should be treated as never having been enacted. This would mean that employers who were eligible for the motor carrier exemption prior to Aug. 10, 2005 (the date SAFETEA-LU was enacted) retained their eligibility through the enactment of the TCA on June 6, 2008.

Since the TCA was enacted, several employers have attempted to use this retroactivity provision as ground for summary judgment in litigation against them for failure to pay overtime as required by the Fair Labor Standards Act. As of January 9, 2009, five federal district courts (in California, Georgia, Kansas, Missouri, and Texas) have issued opinions regarding the retroactivity of the TCA’s change to the motor carrier exemption. All five courts have held against the employer, ruling that the provision restoring the motor carrier exemption will not be applied retroactively because (1) Congress has not indicated clear intent for retroactivity and (2) if it was applied retroactively, it would nullify other sections of the TCA, specifically section 306, which provides a limit on liability for violations of the FLSA overtime provisions for one year after the enactment of SAFETEA-LU.

So, what does this mean for employers involved in litigation for alleged violations of SAFETEA-LU overtime provisions after Aug. 10, 2005? It appears that those employers can rely on section 306, which limits liability for such violations for one year after SAFETEA-LU was enacted or until the employer had actual knowledge that is was no longer eligible for the motor carrier exemption, whichever is earlier.

Employers beware: amendments to ADA expand definition of “disability”

The Amendments to the Americans with Disabilities Act (ADA) significantly increases the number of employees who may be considered to have a “disability” under the ADA.  Since 1990, the ADA has made it unlawful for any employer to discriminate against a job applicant because of his “disability” and/or fail to provide reasonable accommodation to a disabled employee.  

Often whether an employer’s actions were in violation of the ADA turned on whether the employee had a “disability” under the statute.  Because “disability” was defined broadly in the statute, but interpreted narrowly by the Supreme Court, most employers were unsure of exactly which conditions constituted a “disability.”  Furthermore, many conditions in remission (i.e., cancer, and epilepsy) were not covered by the ADA.

Under the Amendments to the ADA, which went into effect on January 1, 2009, almost any physical or mental impairment now constitutes a “disability.”  In fact, the Act specifically states that the term “disability” is to be construed broadly.  Most significantly, the Act was expanded to cover:

• Mental tasks such as learning, reading, thinking, and communicating.
• Physical tasks such as bending.
• Major bodily functions such as functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.  
• Impairments that are episodic or in remission if such impairment would substantially limit a major life activity when active.

The Amendments to the ADA have both positive and negative consequences for employers.  On the down side, employers need to be much more sensitive to employees’ mental and physical conditions or risk facing increased litigation.  However, the law may benefit employers by clarifying who may qualify for ADA protection and eliminating litigation regarding whether an employee has a “disability” in the first place.

New identity theft law impacts all employers of Massachusetts residents

Massachusetts law now requires all businesses to take reasonable steps to protect the “personal information” of Massachusetts residents by May 1, 2009. “Personal information” is defined broadly as the first and last name of a Massachusetts resident or the resident’s first initial and last name in combination with either the individual’s: (1) social security number; (2) driver’s license number or state-issued identification card number; or (3) financial account, credit, or debit card number. Because all businesses have records of their employees’ name and social security number, every employer of Massachusetts residents is subject to the new requirements.

The new law requires all businesses to adopt a written, comprehensive information security program to safeguard all “personal information.” A copy of the program must be distributed to each employee, including temporary and contract employees, and they must acknowledge receipt of the program in writing.

Every information security program must, at a minimum:

• Designate one or more employees as the data security coordinator. This individual will be responsible for the initial implementation of the program; conducting annual employee training regarding the program; regular monitoring and testing of the program’s safeguards; and reviewing the scope of the program at least annually.
• Identify and assess reasonably foreseeable risks to security, confidentiality, and integrity of any electronic or paper records containing personal information. 
• Limit the amount of personal information collected to that which is reasonably necessary.
• Restrict access to records on a need-to-know basis. 
• Develop security policies for employees that take into account whether and how employees should be allowed to keep, access, and transport records containing personal information outside of business premises. 
• Prevent terminated employees from accessing records containing personal information immediately upon termination. 
• Verify that third-party service providers are capable of protecting personal information and are contractually obligated to do so.
• Adopt and implement appropriate computer system security requirements, including authentication requirements and access control measures. 
• Provide disciplinary measures for an employee’s violation of the program. 
• Document all security breaches and take response.

Additional information regarding the new law can be found at the Office of Consumer Affairs and Business Regulation’s website.

Employer’s failure to adhere to employee handbook’s discipline policy is evidence of improper termination

Companies with employee handbooks: Beware. An employer’s failure to adhere to a handbook policy regarding progressive discipline may be used as evidence of an improper termination. Therefore, it is critical that an employer be familiar with its own employee handbook and ensures that its practices conform to the stated policies.

It is also important that the language in a handbook is flexible enough to allow the employer to alter and adjust such policies as needed. Consequently, employers are urged to invest some effort and carefully draft their employee handbooks to reflect their business needs.

For example, in a recent Massachusetts Superior Court case, Ferry v. Rosewood Construction, a contractual employee sued his employer, claiming a breach of the employment contract, after he was suddenly terminated. The employment contract provided that the employee would maintain his employment as long as he maintained the responsibilities of his job description according to industry standards.

Prior to the employee’s discharge, the employer had adopted a “generic” employee handbook, without consulting with an attorney or an employment specialist. This handbook’s progressive discipline policy provided that for a first offense, a written or verbal warning would be issued; the next offense mandated suspension; and a subsequent offense would mean termination. The company, however, retained the right to discharge, demote or suspend an employee without warning for serious offenses. The employee had never received any type of discipline prior to his termination.

The court recognized that, notwithstanding an employment contract, an employer in Massachusetts does have the right to terminate a contractual employee, in good faith, for reasons such as lack of capacity or diligence, failure to conform to usual standards of conduct, or other culpable or inappropriate behavior.

In this case, the court found that the employer had no such reason. The court agreed that the disciplinary policy was not binding on the employer with respect to this particular employee. Nevertheless, it concluded that the employer’s failure to follow the disciplinary protocol outlined in the handbook was evidence that the employee was improperly fired, in breach of the employment contract. Subsequently, the employer was responsible for paying the remainder of the employment contract.

The court’s decision reveals that, although the employee handbook is an integral part of the communication between an employer and the employee, it presents many pitfalls. If you need any assistance with drafting or reviewing your employee handbook, you are urged to contact an attorney or an employment specialist.