Upcoming Presentations

                                                  

 Having Difficult Conversations, Tips, Tricks and Techniques – The Fall Professional Speakers of EPWNG Event

 

Please join my fellow panel speakers and me to learn strategies for effectively engaging in difficult but necessary conversations in your professional and personal life.

 

Wednesday, October 22

8:30 a.m. – 10:00 a.m.

Maggiano’s Old Orchard

 

Click here for details and to RSVP: http://epwng.memberclicks.net/psoe

January 2012 Bulletin

CLIENT BULLETIN   January 2012

HOT EMPLOYMENT ISSUES FOR 2012

 

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.

 

  1. 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 inIllinois. 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.

 

  1. 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.

 

  1. 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.

 

  1. Accommodations and Severe Obesity: Americans with Disabilities Act (ADA). Attention will remain on theADA and new EEOC regulations that took effect in 2011, focusing more on reasonable accommodations for the disabled than on whether a condition is anADA disability.  For example, a federal judge ruled last month thatNew York City’s taxi fleet violatesADA 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 anADA 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.

 

  1.  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.
  1. 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.
  1. 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.
  1. 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.
  1. 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 aRIF 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.

ANNOUNCEMENTS

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 lori.a.goldstein@gmail.com. Visit www.lorigoldsteinlaw.com for information about the Law Office of Lori A. Goldstein.

© 2012 Lori A. Goldstein

October Bulletin

LAW OFFICE OF LORI A. GOLDSTEIN
CLIENT BULLETIN
October 2011

SURPRISE RELIEF FOR EMPLOYERS AND GOOD NEWS FOR WORKERS:

VOLUNTARY SETTLEMENT OPPORTUNITY TO RECLASSIFY INDEPENDENT CONTRACTORS TO EMPLOYEES

The Internal Revenue Service (IRS) has established a new Voluntary Classification Settlement Program (“VCSP”), allowing employers to reclassify workers from independent contractors or non-employees to employees at significantly reduced tax costs, legal liability and exposure. Whether a worker is an employee or an independent contractor depends on several factors, including the extent of control a company has over the individual. VCSP follows a recent agreement between the Department of Labor (“DOL”), IRS and 11 states, including Illinois, to share information and cooperate to enforce worker classification laws. This program can benefit employers who are currently at risk of audit and penalties for not treating true employees as employees. Similarly, workers will benefit from the new employee rights provided.
Background

Based on the need for additional tax and unemployment revenue in the current economic climate, the IRS and other governmental agencies have increasingly focused on whether organizations are properly classifying workers. Organizations that misclassify workers may be subjecting themselves to IRS scrutiny and liability for unpaid Social Security and Medicare tax, income tax withholding, penalties and interest. In addition, mis-classification can lead to liability to workers and the government, under state tax laws, workers’ compensation laws, unemployment compensation laws, federal or state wage laws (e.g. overtime, minimum wage, meal breaks, vacation pay on termination), ERISA, discrimination laws, or many other employment laws.

Who Is Eligible for VCSP?

The program is available to businesses, including tax-exempt organizations and government entities, who want to voluntarily and prospectively change the classification of certain workers currently treated as independent contractors or non-employees – to employees. To be eligible, an organization must satisfy the following requirements:
– Consistently treated the workers as non-employees;
– Filed all required Forms 1099 for the workers for the previous three years;
– Is not subject to a current IRS audit or any worker classification audit by DOL or a state government agency;

and

– Has complied with the results of any prior IRS or DOL audit concerning the classification of the workers.VCSP Terms and Conditions To begin the process, employers must prepare and file IRS Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before the date that the worker reclassification is proposed to take effect. The IRS will contact the employer once it has reviewed the Form 8952 and verified eligibility. The Form can be found at

http://www.irs.gov/pub/irs-pdf/f8952.pdf

and the instructions at

http://www.irs.gov/pub/irs-pdf/i8952.pdf

The employer must agree to prospectively treat the class of workers as employees for future tax periods. Additionally, with respect to the three calendar years following the reclassification, the company must agree to extend the statute of limitations on assessment of employment taxes from three to six years.
Under the VCSP, the employer: (1) will pay slightly higher than 1 percent of the prior year’s wages attributable to the reclassified employees*; (2) will not be liable for any interest and penalties on that liability; and (3) will not be subject to an employment tax audit with respect to their worker classification of those workers for prior years.

VCSP Benefits – Employers and Employees

Employers obtain the following benefits under the VCSP:

– Employers pay the IRS 10% of tax liability in full payment of payroll taxes due (approximately one percent of the reclassified employees’ compensation for the preceding tax year.)
– No interest or penalties will be applied.
– The IRS will not audit payroll taxes for prior years related to the workers who are voluntarily reclassified as employees.
Reclassified employees will benefit from employee rights, including Social Security and Medicare tax, income tax withholding, workers’ compensation laws, unemployment compensation laws, overtime, minimum wage, meal breaks, ERISA, and other benefits otherwise provided to the company’s employees.
Employer Issues to Weigh in Considering VCSP
– Not All Potential Liability Resolved: Because the program’s goal is employment tax compliance, the settlement is limited to resolving federal employment tax liabilities with the IRS. But, it does not relieve employers of liability to the workers and agencies under state tax laws, workers’ compensation laws, company employee rights, or other employment laws and related audits, fines, penalties and other liabilities.
– No IRS Audit Shelter for Workers Not Reclassified: VCSP is also limited to the specific workers reclassified: employers will not be subject to an IRS audit of those individual workers. However, the IRS may check to determine that all workers in a specific job group/classification have been reclassified. Moreover, VCSP has no effect on the risk of audit for other classifications of workers that were not reclassified, and for issues unrelated to worker classification.
– Employee Rights and Benefits: Reclassified employees will be entitled to the same rights and benefits shared by current employees, including rights under various employment laws that do not apply to nonemployees and independent contractors. Increasing the number of employees can impact employee benefit plans. For example, a company with a defined benefit pension plan or that contributes to a multi-employer plan may face unexpected liability for contributions or benefits for the reclassified workers. ERISA plans may need to be amended to cover reclassified workers prospectively.
– Confidentiality: Whether employers’ voluntary submissions to the IRS will be subject to disclosure is uncertain. Generally, tax return information, personal and financial data is not revealed. But, the agencies have agreed to share information and refer matters to each other. Should such information become public, these settlements could lead to private individual and class action claims of misclassification.

Next Steps

The agreement signed by the agencies means that employers may simultaneously face audits and enforcement on multiple fronts. The IRS is providing employers with an opportunity to seek relief for possible misclassification mistakes. All businesses who classify workers as independent contractors or non-employees should consider both reviewing that classification and determining whether a filing under the VCSP is appropriate.
NLRB Requires Employers to Post Right to Unionize in January

Recently, the National Labor Relations Board (“NLRB”) postponed until January 31, 2012 the effective date of its controversial new rule requiring private employers to post a notice advising employees of their right to form and support a union. Failure to post the notice would constitute an unfair labor practice. Both Congressional opposition and several lawsuits challenge the rule based on the agency’s authority and First Amendment rights. The delay may afford courts an opportunity to decide on the rule’s validity before the effective date. But employers should be prepared as posting could increase union organizing activity. Make sure managers are familiar with and enforce applicable employment laws and company policies and keep the doors of communication open.

The Law Office of Lori A. Goldstein represents both employers and individuals with workplace issues.
For assistance regarding whether a worker is properly classified or other workplace issues, please contact attorney:

Lori A. Goldstein at (847) 624-6640 or
lori.a.goldstein@gmail.com

April 2011 Bulletin

LAW OFFICE OF LORI A. GOLDSTEIN

CLIENT BULLETIN   April 2011

Employers Face Increased Obligations,

Risk under Amended ADA Regulations

Last month, the federal Equal Employment Opportunity Commission (“EEOC”) issued final regulations under the ADA Amendments Act of 2008 (“ADAAA.”)  The statute and regulations change the definition of “disability” and shift the focus from whether an individual is disabled to whether discrimination occurred. The key changes expand the list of major life activities, lower the bar for finding a substantial limitation, clarify that episodic impairments or those in remission may be disabilities, and require employers to disregard the positive effects of mitigating measures.  Employers must focus on reasonable accommodations, and on whether an individual with a physical or mental condition is otherwise qualified to perform essential job functions. Employers should reassess job descriptions, job qualifications, testing procedures, and sick and medical leave policies. Documentation and training will also be essential.

History

The ADAAA was enacted on September 25, 2008, and became effective on January 1, 2009. The amendments apply to employers, as well as to federal agencies and contractors and recipients of federal financial assistance. The regulations will become effective on May 24, 2011.

The ADAAA’s purpose is to reinstate a “broad scope of protection.” Congress determined that people with many types of impairments – including epilepsy, diabetes, multiple sclerosis, major depression, and bipolar disorder – had difficulty meeting theADA’s definition of disability.  The final regulations retain theADA’s three-part definition of “disability”: (1) a physical or mental impairment that substantially limits one or more major life activities; (2) a record (or past history) of such an impairment; or (3) being regarded as having a disability. However, the interpretation of the definition has broadened.

EEOC Lists Conditions That Are Virtually Per Se Disabilities

For the first time, the EEOC has listed conditions that are not technically “per se” disabilities, but will “virtually always” be covered impairments: deafness, blindness, intellectual disability (formerly mental retardation), partially or completely missing limbs, mobility impairments requiring use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive-compulsive disorder, and schizophrenia. While the EEOC states that theADA’s original case-by-case approach remains, by listing conditions that are substantially limiting, the agency has effectively changed this.

Major Life Activities Added

Final regulations list examples of major life activities, adding sleeping, concentrating, thinking, communicating, sitting, reaching and interacting with others to the original list of: caring for oneself, performing manual tasks, seeing, hearing, eating, , walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, interacting with others, and working.

The EEOC also extends the concept of “major life activities” to include “the operation of major bodily functions” such as the “immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.” The “major bodily functions” of the special sense organs, skin, genitourinary, cardiovascular, hemic, lymphatic and musculoskeletal systems, were also added.

A New Broadened Interpretation to “Substantially Limits”

The final regulations adopt “rules of construction” to determine if an individual is substantially limited in performing a major life activity, including the following:

       – An impairment need not prevent or severely or significantly limit a major life activity to be considered “substantially limiting.” Nonetheless, not every impairment will constitute a disability.

       – The term “substantially limits” should be construed broadly in favor of expansive coverage to the maximum extent permitted by the terms of theADA.

       – The determination of whether an impairment substantially limits a major life activity requires an individualized assessment.

       – The primary focus of theADAis on whether discrimination occurred; the determination of disability should not require extensive analysis.

       – Although determination of whether an impairment substantially limits a major life activity as compared to most people will not usually require scientific, medical, or statistical evidence, such evidence may be used if appropriate.

Temporary Impairments Are Protected

Now even impairments that are transitory  (i.e. will last fewer than six months) and minor can be substantially limiting. The ADAAA and final regulations state that an impairment that is episodic or in remission meets the definition of disability if it would substantially limit a major life activity when active. The regulations’ appendix provides examples, including epilepsy, hypertension, asthma, diabetes, major depressive disorder, bipolar disorder, and schizophrenia. An impairment such as cancer that is in remission but that may possibly return in a substantially limiting form will also be a disability.

Cannot Consider Mitigating Measures to Determine Disability

In determining whether someone is disabled – based on the impact of his impairment on the performance of a major life activity – employers can no longer  consider mitigating measures (such as insulin for diabetics), except for ordinary eyeglasses or contact lenses. But, all otherADA determinations – including the need for a reasonable accommodation and whether an individual poses a direct threat – can take into account both the positive and negative effects and burdens of a mitigating measure.

“Regarded As” Analysis Broader

ADAAA expressly expanded the “regarded as disabled” analysis by prohibiting discrimination based on the employer’s alleged perception of a mental or physical impairment, even if the perceived impairment is not an actual disability.

Also, while there is no duty to accommodate those “regarded as” having a disability, the new regulations require employers to reasonably accommodate those with a “record of” disability, absent undue hardship.  How or why to accommodate an individual with a past, but no current, disability is questionable.

Employers’ Takeaway From New Regulations

The expanded approach of the regulations means that employers may find it more difficult to handle workplaceADAsituations and may risk additional claims. Successfully defendingADAclaims on the basis that an individual is not disabled will be less common. By listing conditions that are “virtually always” disabling, including temporary impairments, and extending major life activities and the definitions of “substantially limits” and “regarded as,” the EEOC has broadened the rights of the disabled and the obligations of employers.

Employers must focus on reasonable accommodation, and on whether an individual with a physical or mental condition is qualified to perform essential job functions, with or without reasonable accommodation. Companies should re-evaluate job duties and job descriptions, hire and testing procedures, and attendance and absence policies, to ensure that they are legitimate, nondiscriminatory and satisfy the “business necessity” standard.

Management training will be crucial to make sure key staff knows how to conduct an interactive dialogue to evaluate reasonable accommodation requests. Employers should ensure that decisions are properly documented, and supported by objective evidence.

For assistance with workplace issues concerning your company’s rights and obligations as to disabled employees or  regarding other personnel issues, please contact Lori Goldstein at (847) 624-6640 or lori.a.goldstein@gmail.com.