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Although there are more and more indicators of an improved economy, a recent survey by job search site CareerBuilder is forecasting that 2012 won’t be much different than 2011 with less than a quarter of hiring managers planning to add to their staffs. Despite this, there was some degree of improved optimism in the report.

In its survey of more than 3,000 human resource and hiring professions, CareerBuilder found that 23% of respondents will add full-time, permanent staff in 2012 which is only down from 24% who said the same thing for 2011.

In addition, the survey found that 70% of companies either intend to maintain their staffs at the same size or are unsure of their hiring and layoff plans. Slightly more employers in the western part of the U.S. stated they would recruit new workers than in other regions of the country.

The CareerBuilder survey also reported and commented on voluntary employee turnover stating thatn employees voluntarily resigned at 34% of companies during 2011 with many complaining of low salaries and work overload. Also, the survey reported that 43% of hiring managers are concerned that top talent will resign.

Regarding pay increases, the survey reported that more than half of the employers are reporting that current workers will get pay increases in 2012 ( mostly in the 1% – 5% range), with new employees at 32% of companies getting higher starting salaries.

Overall, the report is showing that small businesses are more optimistic that the whole with more companies with fewer than 250 employees planning to add workers in 2012.   12.28.2011

The National Labor Relations Board (NLRB) announced on December 23, 2011 that it has agreed to postpone the effective date of its rule that requires U.S. employers to post a notice of employee rights under the National Labor Relations Act (NLRA) until April 30, 2012.

This is the second time the new notice has been postponed. The new rule with accompanying poster was originally scheduled to take effect on November 14, 2011. After lawsuits were filed against the NLRB this past fall challenging the NLRB’s authority to implement the rule, the NLRB announced in October it was postponing the effective date to of the new rule
until January 31, 2012. This second postponement to April 30, 2012 comes via a request from the U.S. District Court Judge who recently heard oral arguments with respect to one of the lawsuits.  12.27.2011

With the enactment of the 1991 Civil Rights Act twenty years ago, employment discrimination claims got more power along with a potential for larger damage awards. More important, for the first time jury trials became available under Title VII of the 1964 Civil Rights Act and the American with Disabilities Act. Along with access to jury trials, compensatory and punitive damages became available. With this combination, employers faced increased exposure to potentially rising litigation costs and damages.

In response, insurers came up with a new form of coverage for employers called employment practices liability insurance or short for EPI. Although there’s no standardized policy,  EPLI typically provides coverage against discrimination and retaliation claims based on federal, state and local law. These include at race, sex, national origin, age, disabilities, religion,
pregnancy, and wrongful termination.

When purchasing EPLI, policyholders want coverage for their expenses in defending against claims, and they want indemnification for any settlement costs or jury damages that may result.

Unlike other liability insurances, there are no standardized forms for EPLI, and the employer can negotiate to some extent. However, there’s no negotiation over an employer’s employment policies. Employers are required to have them or a carrier may likely refuse coverage.

One of the most important issues today regarding EPLI is the choice of a defense lawyer. If a policy doesn’t include a specific attorney in advance, the insurance carrier will use its own.  Although the carrier’s choice of the defense attorney may be a good cost-control for the carrier, it may not be the best quality for the policyholder.

The choice of the defense attorney may be a problem for an employer if they aren’t familiar with their role in the decision. Going into litigation, an employer may want its own attorney.
However, the employer won’t have that option unless it’s discussed, negotiated on and agreed upon prior to the policy being endorsed. Otherwise, if the company wishes to use its own attorney and the policy doesn’t endorse it, the carrier will not pay for the defense of the claim. In most cases, most carriers of EPLI are rigid on defense coverage and want their panels of attorney to handle the defense of any claims as they can control the costs as well as the overall defense of a case.

In general, the carrier will approve the defense counsel at the onset of a claim. In addition, the employer needs to get the carrier’s input at every step and the carrier will be involved in any settlement discussion. In the case where there’s mediation, the carrier and the employer have to work together and make agreements on who participates in the mediation.

With the rise in wage and hour claims, many carriers are reluctant to issue wage and hour coverage even though there’s a huge demand for it. The reluctance is due large damages, local laws that make compliance difficult, and too much misclassification existing already. 12.23.2011

On December 23, President Obama signed a two month payroll tax extension through February 29, 2012 which was passed by Congress to extend the 4.2% Social Security payroll tax rate for individuals, continue unemployment insurance benefits, and prevent reimbursement cuts to Medicare providers. The tax reduction continuation amounts to about $1,000 per
year for the typical U.S. household.

The House and Senate both passed by unanimous consent the bill earlier on Dec. 23, a day after House Republicans dropped their opposition to legislation previously passed by the Senate. To secure the agreement, a House-Senate conference committee was established to negotiate a package that would extend the payroll tax cut through the end of 2012, as well as a longer-term extension of unemployment insurance benefits and the Medicare reimbursement provisions known as the “doc fix.”

The extension through Feb. 29 will be paid for through a one-tenth of 1 percent increase in the fees charged by government-sponsored housing finance enterprises (GSEs) to guarantee mortgage loans as described in Title IV of the bill.

In addition to the two-month extensions, the newly enacted package also includes a requirement for the president to make a decision within 60 days on a permit to authorize construction of the Canada-Texas Keystone XL pipeline, and it modifies previous Senate-passed language that critics said would make the payroll tax cut extension difficult or unworkable for payroll processors to implement.  12.23.2011

Congress has passed a spending bill (H.R. 2055) for fiscal year 2012 with restrictions affecting certain wage and safety rules. Under policy riders attached to the omnibus measure, which includes funding for several agencies, the Department of Labor would be prohibited from implementing a rule on wages for temporary workers under the H-2B visa program, and service advisors at auto dealerships would be exempt from the Fair Labor Standards Act’s overtime requirements. The bill also would prohibit the Occupational Safety and Health
Administration from requiring the reporting of work-related musculoskeletaldisorders on OSHA Form 300, and it would block the National Labor Relations Board from implementing electronic voting procedures in representation elections. President Obama is expected to sign the legislation. 12.21.2011

A U.S. District Court judge on December 19th had pointed questions for lawyers from the National Labor Relations Board and for groups challenging NLRB’s notice-posting rule, but at the conclusion of a hearing that lasted nearly two hours, she asked the board to consider postponing the Jan. 31, 2012, effective date of the controversial rule (Nat’l Ass’n of Mfrs. v. NLRB, D.D.C., No. 11-cv-1629, motions hearing 12/19/11).

The hearing was held to consider legal arguments of NLRB and the National Association of Manufacturers, the National Right to Work Legal Defense and Education Fund Inc., the Coalition for a Democratic Workplace, and the National Federation of Independent Business along with several small businesses that joined in challenging the NLRB rule, which requires employers to post a notice informing employees of their federal labor law rights.

Actively questioning lawyers on both sides of the dispute, the judge pressed the challengers on their arguments that the National Labor Relations Act does not expressly give the board authority to require notice postings.

“Why do they need express notice-posting authority if they have express rulemaking authority?” Jackson asked a lawyer arguing for the National Association of Manufacturers.

But the judge also questioned NLRB’s authority to treat a failure to post the new employee rights notice as an unfair labor practice.

The judge stated that said she would issue an order within the time given to her if she is required to do so, but she called Jan. 31 an “arbitrary” date, and said the legal issues raised by the parties “deserve more time than I’ve been given.” The judge said she understands the board may lack a quorum to act after December, but she asked that board members consider some action that would defer implementation of the rule until she has been able to resolve the legal challenges.

Acting on a 1993 petition for rulemaking, a divided NLRB proposed the regulation in December 2010 and published a final rule in the Aug. 30 Federal Register (76 Fed. Reg. 54,006).

Citing Section 6 of the NLRA, which gives the agency authority to adopt “such rules and regulations as may be necessary to carry out the provisions of this Act,” a three-member board majority consisting of then-Chairman Wilma B. Liebman and Members Craig Becker and Mark Gaston Pearce adopted the rule as a measure to address a “knowledge gap” that they said left most American workers unaware of their NLRA rights.

Member Brian E. Hayes dissented from the board’s proposing the rule as well as its final adoption, finding that the act did not authorize the board’s action, which he called “patently arbitrary and capricious.”

The rule will apply to any employer covered by the NLRA, excluding states or political subdivisions not subject to board jurisdiction.

The final rule included a summary of current board standards for more than two dozen types of businesses, along with the board’s general retail standard providing coverage of an employer with an annual gross volume of business of $500,000 or more, and the nonretail standard giving the board jurisdiction over employers with annual inflows or outflows across state lines that meet or exceed $50,000.

NLRB estimated in its notice of proposed rulemaking that the “great majority” of 6 million small businesses in the United States will be required to comply with the notice-posting requirement.

NLRB’s final rule provides that an employer that fails or refuses to post the required notice would violate Section 8(a)(1) of the act, which proscribes employer action “to interfere with, restrain or coerce employees” in their exercise of rights guaranteed by the NLRA.

In most cases, the board predicted, employers will fail to post the notice only because they are unaware of the new requirements, and “when it is called to their attention, they will comply without the need for formal action or litigation.”

An unfair labor practice charge could, however, be filed against an employer that refused to comply with the rule, and NLRB’s general counsel and board will be able to process the charge in the same manner as other Section 8(a)(1) allegations and seek a cease-and-desist order to prevent continuing noncompliance, as well as “additional remedies” that “may be appropriately invoked in keeping with the Board’s remedial authority.”

The final rule also provides that although Section 10(b) of the NLRA, generally precludes the issuance of an unfair labor practice complaint based on conduct occurring more than six months before the filing and service of an administrative charge with the agency, “the Board may find it appropriate” when an individual employee files a charge against an employer “to excuse the employee from the requirement that charges be filed within six months after the occurrence of the allegedly unlawful conduct if the employer has failed to post the required employee notice unless the employee has received actual or constructive notice that the conduct complained of is unlawful.”  12.20.2011

Three former Oracle Corp. employees who trained the software giant’s customers in various states may proceed with their California law overtime pay claims regarding work performed in that state as nonresidents, the U.S. Court of Appeals for the Ninth Circuit held Dec. 13 (Sullivan v. Oracle Corp., 9th Cir., No. 06-56649, 12/13/11).

The court reversed summary judgment to Oracle on the three plaintiffs’ claims seeking damages for failure to pay overtime under the California Labor Code and a similar claim under the state’s unfair competition law, predicated on the alleged Labor Code violations. But the court affirmed summary judgment to the company on two plaintiffs’ separate unfair competition law claims, based on work they performed in states other than California and predicated on Oracle’s alleged violations of the Fair Labor Standards Act.

The court had made the same rulings in 2008 but then withdrew its opinion and certified to the California Supreme Court certain questions regarding the applicability of the Labor Code and the unfair competition law. The state court answered that both laws cover overtime work performed in California for a California-based employer by nonresidents and that the unfair competition law does not apply to alleged FLSA overtime violations outside of the state.

Oracle argued that, if the Labor Code covered the plaintiffs’ work in California, it violated the 14th Amendment’s due process clause and the dormant commerce clause, but the Ninth Circuit disagreed. As to the due process clause, Oracle has sufficient contacts with California to allow application of the Labor Code in the case, Judge William A. Fletcher wrote for the court. Regarding the dormant commerce clause, he found that California applies its Labor Code to in-state work performed by state residents in the same manner as in-state work performed by nonresidents.

Delaware corporation Oracle has its principal place of business in California. It previously classified its instructors who trained customers in software use as “teachers” exempt from the overtime provisions of both the Labor Code and the FLSA.

Donald Sullivan worked as an Oracle instructor from June 1998 to January 2004, Deanna Evich was an instructor from August 1999 to July 2004, and Richard Burkow was an instructor from March 1998 to April 2002. Sullivan and Evich lived in Colorado, while Burkow resided in Arizona. All three primarily worked outside California.

A group of plaintiffs sued the company in 2003, alleging that Oracle misclassified the instructors as exempt from overtime pay. The U.S. District Court for the Central District of California certified one class of plaintiffs seeking damages under the Labor Code and a second class of plaintiffs seeking damages under the FLSA. The parties settled the lawsuit with the exception of California law claims “for periods of time they may have worked in the State of California when they were not a resident of the State.” The court dismissed those claims without prejudice.

Oracle reclassified its California-based instructors and started paying them overtime in 2003 pursuant to the Labor Code, and the company reclassified all of its United States-based instructors and began paying them overtime in 2004 pursuant to the FLSA. But the company did not retroactively compensate Sullivan, Evich, or Burkow for pre-reclassification overtime they had worked.

The three plaintiffs brought Labor Code claims that Oracle failed to pay overtime to instructors who resided outside California for work performed in the state, as well as claims for violation of California’s unfair competition law, which was predicated on the alleged Labor Code violations. Evich and Burkow also filed a claim for a different violation of the unfair competition law, predicated on FLSA violations, in which the two plaintiffs alleged they are entitled to overtime pay for work performed throughout the United States.

The district court granted summary judgment to Oracle on all three claims. The court ruled that the Labor Code and the unfair competition law does not cover workers who live and work primarily outside California, and that applying the Labor Code in that manner would breach the due process clause.

On appeal, the Ninth Circuit reversed the district court’s decision as to the three plaintiffs’ Labor Code and unfair competition law claims, but it affirmed the lower court’s holding on Evich’s and Burkow’s separate unfair competition law claims. The appeals court found that the Labor Code and the unfair competition law covered the overtime work that Sullivan, Evich, and Burkow performed in California. However, the unfair competition law does not apply to overtime work performed outside the state, even if Oracle violated the FLSA, the court said.

After both parties filed rehearing petitions, the Ninth Circuit withdrew its opinion and certified three state law questions to the California Supreme Court.

As to whether the Labor Code applies to overtime work performed in California for a California-based employer by state nonresidents, the state court answered that it applies. Regarding whether the unfair competition law covers such overtime work, the court said it does. Finally, the court responded that the unfair competition law does not apply to overtime work performed outside California for a California-based employer by state nonresidents if the employer ran afoul of FLSA overtime requirements.

Oracle contended that the Labor Code’s overtime requirements do not cover work performed in California by Colorado or Arizona residents and that the unfair competition law also does not apply to such work. Meanwhile, Evich and Burkow argued that the unfair competition law applies to alleged FLSA violations outside California. But the Ninth Circuit said the state supreme court’s related answers are conclusive as to both parties’ arguments.

Additionally, Oracle contended that, if the Labor Code did apply to the plaintiffs’ California work, the code violated the 14th Amendment’s due process clause and the dormant commerce clause.

The U.S. Constitution typically does not bar a state court’s application of its own state’s law, the Ninth Circuit responded. It pointed to the U.S. Supreme Court’s holding in Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), that, for a state’s law to be applied constitutionally in a particular case, the state must have “a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.”

In light of these principles, the appeals court disagreed with Oracle’s due process clause theory. “The contacts creating California interests are clearly sufficient to permit the application of California’s Labor Code in this case,” the court said. “The employer, Oracle, has its headquarters and principal place of business in California; the decision to classify Plaintiffs as teachers and to deny them overtime pay was made in California; and the work in question was performed in California.”

The court then rejected Oracle’s dormant commerce clause argument that applying the Labor Code to the plaintiffs’ work in California would lead to increased economic and administrative burdens on businesses that operate across state lines. California treats state residents and nonresidents equally with respect to its application of the Labor Code to work performed in the state, the court found.  12.20.2011

The Genetic Information Nondiscrimination Act (GINA) has not created substantial liability for employers in the two years since it went into effect, according to an analysis by attorneys with Alston & Bird. However, employers can face significant risks if they fail to ensure compliance with the more technical aspects of GINA and its implementing regulations, the authors contend. They recommend various actions that employers can take to avoid unwitting violations of the law, such as avoiding improper acquisition or disclosure of genetic information, ensuring that any such information is placed in a confidential medical file, and training managers and supervisors on appropriate and inappropriate actions under GINA. 12.20.2011

The Internal Revenue Service (IRS) has announced that it will revise the procedures of its determination letter program next year. In general, employers request determination letters to ensure that their pension and retirement plans are “qualified,” meaning that they meet all requirements for favorable tax treatment under the Internal Revenue Code. The modifications will eliminate program features that have limited utility, and many employers will no longer apply for determination letters, the IRS said. The changes will be described in detail in Revenue Procedure 2012-6, which is scheduled for publication Jan. 3, 2012, in Internal Revenue Bulletin 2012-1.  12.20.2011

California State reported its unemployment numbers for November 2011 recently with a reduction to 11.3% from 11.7% reported in October. In addition, this reduction compares to 12.5% reported a year earlier for November 2010. For the November report, the technology, trade and tourism industries along with cities such as San Jose, San Diego and San Francisco are contributing to the improved numbers.

California is one of the 43 U.S. states that reported over-the-month unemployment rate decreases. However, even with its slowly reducing unemployment rate, California is substantially above the U.S. national rate of 8.6% and remains one of the several U.S. states winning the unfortunate title of having unemployment at 10% or higher. The others include District of Columbia, Florida, Illinois, Mississippi, Nevada, North Carolina, Puerto Rico and Rhode Island.

What makes California’s unemployment numbers so important is because of the size of the state’s economy. California has a total labor force of just over 18 million people which is almost 12% of the total labor force of the entire U.S. And within California, the megalopolis we know as Los Angeles by itself has 32% of California’s total labor force and 28% of the entire state’s unemployed. The following is a listing of the 10 largest California counties by labor force numbers along with corresponding unemployment numbers for November. The top 10 counties represent approximately 70% of the entire state’s numbers. In addition, the numbers shown below are not seasonally adjusted which accounts for the discrepancy between the state’s reported 11.3% total unemployment rate which is seasonally adjusted.

 STATE/

COUNTY

LABOR

FORCE

TOTAL

UNEMPLOYED

UNEMPLOYMENT

RATE (%)

       
CA State (Total)

18,185,300

1,978,800

10.9%

       
Los Angeles

4,868,300

561,500

11.5%

Orange

1,591,000

128,400

8.1%

San Diego

1,587,600

145,500

9.2%

Riverside

915,600

117,100

12.8%

Santa Clara

888,500

80,500

9.1%

Alameda

751,900

72,000

9.6%

Sacramento

666,300

73,800

11.1%

Contra Costa

519,900

49,300

9.5%

San Francisco

464,000

36,200

7.8%

Ventura

431,400

40,900

9.5%

       
TOTAL (TOP 10)

12,684,500

1,305,200

 

12.20.2011