McDermott, Will and Emery, LLP

Fla. Class Actions Show Why Correct COBRA Notices Matter

In Florida’s federal courts, there has been an epidemic of class actions alleging that employers failed to provide technically proper notice of the right to continued healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act. A dozen such lawsuits have been filed (each by the same law firm) with mirror image allegations.

These cases illustrate why it is necessary to sweat the details in issuing COBRA notices, which McDermott’s Megan Mardy and Julie McConnell walk through in a recent analysis for Law360.

Access the full article.

Originally published by Law360, October 2019

https://www.employeebenefitsblog.com/2019/11/fla-class-actions-show-why-correct-cobra-notices-matter/

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Class Certification Denied in ERISA Health Coverage Lawsuit

A federal district court denied class certification to health plan participants who claimed the plan promised them lifetime benefits. The court found too many individualized questions about what the plan told each participant, and the claims could not be resolved on a class-wide basis. Fitzwater, et al. v. Consol Energy, Inc., et al., No. 2:16-cv-09849 and 1:17-cv-03861 (S.D.W.Va., October 15, 2019).

Access the full article.

https://www.employeebenefitsblog.com/2019/11/class-certification-denied-in-erisa-health-coverage-lawsuit/

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Federal Employee Labor Union Files Grievance Against VA’s Smoking Ban

The Department of Veterans Affairs’ new smoking ban took effect on Oct. 1, prohibiting all patients and non-staff from smoking on VA hospital premises. In January the ban will extend to employees.

The smoke-free policy was created to initiate a healthier environment and improve care for veterans, but the American Federation of Government Employees argues that the ban violates the labor union’s contract.

A 2008 contract that is still in effect states that all VA facilities will provide employees with “reasonably accessible designated smoking areas.” However, the ban does not allow any smoking while on VA property, including parking areas.

Because of the conflicting policies, the AFGE filed a national grievance, which the VA’s Office of Labor Management Relations denied. The 670,000-member labor union has invoked arbitration and is waiting to schedule a hearing once the arbitrator is selected.

“Although we believe that the agency violated the law and our contract by implementing the directive for AFGE’s bargaining unit employees, we encourage employees to comply with the directive to avoid the threat of discipline while we continue to challenge the policy,” said Alma Lee, AFGE National Veterans Affairs Council president, in a statement.

In addition to the contractual dispute between the union and the VA, the ban has received pushback from veteran’s and their families who don’t think the policy is necessary.

Alma Lee, AFGE National Veterans Affairs Council president.

Al Lewis, author of “Cracking Health Costs,” said that the ban is only a good idea in theory and questions whether it is a wise decision for the overall productivity of the organization. “Instead of creating a culture of health, you are creating a culture of deceit,” Lewis said.

The idea of taking away all designated smoking areas from veterans using VA facilities is also seen as cruel and unfair. Based on the affiliation between tobacco products and the military, it is common for veterans to rely on smoking as a source of comfort.

Pat Englewood, an organizational psychologist and counselor said that the use of tobacco products can be part of good and bad memories of the military service that a veteran may choose to not let go of, or can’t let go of.

A Centers for Disease Control and Prevention study released in 2018 found that about 30 percent of veterans use tobacco products, which is a much higher rate than most of the non-veteran population. The prior culture of tobacco use in the military is considered a significant influence on this issue.

Englewood said that part of the upset toward the smoking ban may be derived from the veteran’s addiction to these products.

“The craving has become a necessary habit in their daily routine,” said Englewood, who is also a Vietnam era and Gulf War veteran. “If there is any threat that this craving will not be satisfied, then the big guns come out and they blame others through their defensive comments and behaviors.”

Although taking away the designated smoking areas will make it difficult to take smoke breaks, Englewood saw the new policy as a responsible step toward better protecting the health of the VA’s patients and staff.

“It is not an overstepping of power to look out for the health and well-being of all service members and hospital staff,” she said. “No one is taking anyone’s control of their lives away.”

Gary Kunich, a spokesman for the Milwaukee VA Medical Center, also supports the ban as he considers it to be a positive and healthy change toward maintaining a healthy work environment.

“We’ve actually gotten a lot of positive comments from people who are happy that we’re doing this, that there’s not a cloud of smoke outside or that there aren’t cigarette butts on the ground,” Kunich said.

Since the Milwaukee VA Medical Center has undergone this change, Kunich says that the ban has “changed things for the better.” According to Kunich, a majority of the employees and veterans at the Milwaukee facility don’t smoke and have wanted a healthier environment to provide and receive better care.

In the 10 years that Kunich has worked at this facility, he recalls town hall meetings where some of the veterans would ask why they still allowed smoking on the property. “It just seemed to be a logical step forward and the right thing to do for all of our employees and all of our veterans,” he said.

For veterans who are struggling to quit smoking or using other tobacco and nicotine products, Kunich encourages them to take this as an opportunity to find healthier habits by taking advantage of the programs that the VA offers.

https://www.workforce.com/2019/11/08/federal-employee-labor-union-files-grievance-against-vas-smoking-ban/

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A Page From My Working Mom Diaries

Stefanie Coleman, Workforce Game Changer 2019.

These are interesting times for a professional woman in her 30s.

For many, more than a decade has been invested in a career. Rungs on the ladder climbed, reputations established. Big responsibilities in tow … heck, some of us run departments, even companies!

And that is awesome — after all, the #futureisfemale. It is also the decade where women in big cities like New York and London most commonly start having children [1a] [1b].

Gender aside, it is my opinion that jobs get more rewarding with age. The more time you spend in the workforce, the more experiences you have.

In time (assuming these experiences are relevant), they will pave the way to enhanced responsibilities, usually coupled with better role titles, bigger teams to manage, and more generous compensation. Sure, the pressure is higher, but in the eyes of an emerging executive, the benefits of climbing the corporate ladder outweigh that burden.

But this poses an interesting challenge for professional women who want children.

Imagine this. After more than a decade of hard work, a woman in her mid-30s is breaking into leadership ranks. Established and credentialed in her field, she is scaling the corporate ladder — her eye on the prize, the next promotion in sight. But she knows she wants to birth children, and that window won’t stay open forever. So that is what she does, and while she will always cherish that decision, she wonders if it will hurt her career.

It shouldn’t. But for some women it does, particularly when the right support is not in place. And this is my reason for this blog post.

blogI don’t suppose to have all the answers — and as a mother of two currently on maternity leave, I’m still working this out for myself. But I do have some thoughts. And, if my thoughts help even one more mother assimilate back to work when it suits her, then I’ll take it.

I took interest in this topic in 2015 when I discovered my first child was on her way. I was 32 and living with my husband in New York City. Eyeing up promotion and facing the most challenging client engagement of my career, the discovery of my pregnancy was both thrilling and terrifying.

Among the excitement were the moments when I realised the “work hard, play hard” mentality that served me through my 20s was no longer an option. After all, a pregnant woman needs her sleep. The realisation was perplexing — I needed to reframe my attitude toward work and its role in my life, and I didn’t know where to start.

I’ve made a lot of progress since then. Two babies later, I am often asked how to juggle life as both a mother and a professional. It’s the impossible question as there is no simple, let alone right answer. Alas, I attempt:

  1. It takes a village.This African proverb is profound. For me, that village is my husband, nanny, in-laws and sister. Put simply, I could not do my job without them. A working mother must identify her villagers — they must be strong and reliable, trusted to look after the most precious of possessions. They must be thanked and appreciated, for this group is the most important coalition for a working mother’s success.
  2. We’re in this together. There are many allies to working mothers — both men and women. But other moms in particular truly get it. We must support one another. A colleague told me she thought of asking me for a change of clothes since her baby ruined her outfit in transit to an important meeting. I wish she’d have asked — I’d have moved mountains to help. Another colleague jumped on a plane to cover for me at a moment’s notice when I was too pregnant to travel across the U.S. for a meeting. Her words when I thanked her: “We must help each other out.” I knew exactly what she meant.
  3. Find a supportive employer. I am lucky since my firm is consistently ranked a top company for working mothers [2]. A firm that takes diversity and inclusion seriously is more likely to support a working mother’s integration than one that does not. Look for flexible work policies and family friendly benefits, as well as a leadership culture that promotes wellness and work life balance.
  4. Divide domestic duties. As articulated by Annabel Crabb in her quarterly essay on Men At Work [3], many working mothers continue to take on the lion’s share of domestic duties in the home. In fact, research from Manchester University and the Institute for Social and Economic Research at Essex University in the U.K. has shown that working mothers with two kids score consistently higher on chronic stress indicators, such as blood pressure and hormones, as compared to the general population [4]. In order to transition back to work in a way that is sustainable and healthy, we need to see more balance in the way domestic duties are divided between family members in the home.
  5. Set boundaries and get to work. Working mothers are expert multi-taskers, whether it’s fixing the kids’ breakfast while taking a conference call or squeezing in a doctor’s appointment between meetings, one thing is for certain and that is that working mothers have very little time. This means that what time we do have reserved for work must be used wisely. For me this has meant less procrastination. If something needs to be done, it needs to be tackled fast. It also means that there is only time for the critical items. As a fellow working mother once coached me, “You can drop the rubber balls but not the crystal one.” Identifying what really matters at work is important, and de-prioritizing the rest is a necessary action for a working mother (even if it doesn’t feel natural).

This article might feel stereotypical to some. Of course, there are women who do not want children, and there are fathers who are primary caretakers. And, obviously, women give birth to or adopt children at all ages, not just in their 30s. I’m not ignorant to that. Take my thoughts for what they are worth. As one working mother to another (or, the partner, child or colleague of a working mother), I hope these thoughts help our working mothers transition back to work with grace. After all, we’re all in this together.

P.S., This post is dedicated to my own working mother, Dr. Cathy Allen, and inspiring friends: Liz Kreuger, Caroline Gatenby, Courtney Nolan, Joanna Bates, Sarah McGrath, Emma Fletcher and Dr. Patricia Davidson. Also, the countless working mothers at PwC who inspire me every day — there are too many to name, but they know who they are.

https://www.workforce.com/2019/11/08/a-page-from-my-working-mom-diaries/

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Eggnog With a Splash of Paid Time Off

Providing employees extended time off at the end of the year is one way to add a bit of holiday cheer.

Office closures during the holidays — typically the days between or immediately around Christmas and New Year’s Day — can enhance employee productivity, according to a November 2018 survey of 2,000 full-time employees conducted by Chicago-based consulting firm West Monroe Partners. The study explored employee productivity during the holiday season and gauged how additional days off during the holidays affected that productivity. It found the “employees at offices that close additional days during the holidays are significantly more likely to report higher productivity during the time that they’re actually in the office” — 42 percent compared to 17 percent in offices that don’t shut down outside of federal holidays.

The study suggested that employers close the office on days beyond federal holidays, when feasible.

Some employers look at this potential benefit and can’t see past the missed productivity of those three or four days between Christmas and New Year’s, said Michael Hughes, a managing director with West Monroe and lead of the firm’s Operations Excellence practice. But they’re not considering the return on investment.

“In a tight job market, the ROI from deciding to close the office becomes very real,” he said. “We’ve tried this at our own company and [we] see the benefits of it year after year in terms of retention and productivity.”

According to the International Foundation of Employee Benefit Plans’ 2018 “Employee Benefits Survey,” 12 percent of organizations offer the full week between Christmas Day and New Year’s Eve as a paid holiday, compared to 9 percent of organizations in 2016.

If a company can withstand the hiatus from the client delivery and service perspective, it should strongly consider doing so.

Michael Hughes

Especially at a time with a tight labor market, employers are looking for new, innovative ways to attract talent and increase morale, said Julie Stich, vice president of content at the foundation. An extended vacation during the holiday season is one way to vie for candidates’ attention.

Michael Hughes, West Monroe Partners
Michael Hughes, West Monroe Partners

This makes sense in some industries more than others. The top three industries that offer holiday time off perks include education, technology and manufacturing. Conversely there are many industries in which virtually no companies offered such perks, including banking, finance, food service and health care, Stich said.

The top three industries provide examples for the type of environment that can more naturally offer this perk, Stich said. People in education may already have that downtime over winter break. Tech companies tend to be innovative in the benefits they offer. And manufacturers sometimes need to shutter their shops and turn off the machines for a week for maintenance. Offering that week between or around Christmas and New Year’s Day could fit in with a business need as well as give many employees the perk of a longer break, she added.

Hughes said that if a company can withstand the hiatus from the client delivery and service perspective, it should strongly consider this time off.

At West Monroe Partners, the finance and accounting teams are often working at the office or at home during this time of the year to meet end-of-year deadlines. The same goes for IT, as clients’ expectations of getting the necessary tech guidance does not stop just because it’s the holiday season.

One year a client experienced a ransomware attack the week between Christmas and New Year’s, Hughes said, and employees on the cybersecurity team stepped up, working on Christmas Eve and the days following Christmas. Instead of time off, these employees were recognized and rewarded in other ways for going above and beyond in their jobs.

“Folks in these positions understand this is a busy time based on their role in the company,” Hughes said. “As long as you provide them with a similar benefit — paid time off during another non-busy time in the year — or rotate who’s ‘on call’ from year to year, they are less affected by the decision.”

“If it’s not possible for your business to close for additional days during the season, then it’s even more important to offer workers alternative ways of disconnecting and recharging, such as greater scheduling flexibility,” he added.

Customer relations are something else to keep in mind. Organizations need to let their clients or customers know in advance that they will not be providing services over a certain period of time. They can’t just rely on an update on their website to get the message across, Stich said.

https://www.workforce.com/2019/11/07/eggnog-paid-time-off-holiday-perks/

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IRS Announces 2020 Employee Benefit Plan Limits

Recently the Internal Revenue Service (IRS) and the Social Security Administration announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2020. In the article linked below, we compare the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2019 and 2020.

Access the full article.

https://www.employeebenefitsblog.com/2019/11/irs-announces-2020-employee-benefit-plan-limits/

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McDermott, Will and Emery, LLP

Ninth Circuit Considers Rehearing in ERISA Arbitration Case

The Ninth Circuit signaled that it might rehear Dorman v. The Charles Schwab Corp., where earlier this year it held that a mandatory arbitration provision required arbitration of an ERISA fiduciary-breach claim.

Access the full article.

https://www.employeebenefitsblog.com/2019/11/ninth-circuit-considers-rehearing-in-erisa-arbitration-case/

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DOL Issues New Proposed Rule for Electronic Disclosures of Retirement Plan Notices

The Department of Labor (DOL) issued a proposed rule that, if finalized, would expand its existing guidance and liberalize rules for electronic disclosure of retirement plan notices under ERISA. The proposed rule, which sets forth a notice and access safe harbor, would permit electronic disclosure as the default method of delivery while permitting participants to opt out and continue to receive paper disclosures.

Access the full article.

https://www.employeebenefitsblog.com/2019/10/dol-issues-new-proposed-rule-for-electronic-disclosures-of-retirement-plan-notices/

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Responses to Gender Pay Inequity: A Quick World Tour

Most major jurisdictions have pay equity laws, but their approach is far from uniform. Global companies need to evaluate compliance with these laws on a country-by-country basis whilst simultaneously addressing their compensation policies globally.

A sample of the rules across several countries helps to identify trends that can drive effective global policies.

Australia

The Australian Workplace Gender Equality Act of 2012 mandates equal pay for equivalent or comparable work. There are annual reporting requirements for employers with 100 or more employees. Those reports must include the following indicators: gender composition of the workforce, gender composition of governing bodies, and equal compensation between men and women.

Employers are penalised by being publicly named if they fail to lodge a public report on time, or inform employees or other stakeholders that a public report was lodged, or give the requested compliance data under the Act.

Canada

The law varies across Canada; several Canadian provinces have pay equity laws in place, such as Ontario’s Pay Equity Act of 1987. There is also pending federal legislation that would require public and private employers with at least 10 employees to

  • Identify job classes predominated by men or women
  • Evaluate the value of work performed by job classes that are male or female predominant
  • Compare compensation associated with job classes that are male or female predominant and are of similar value
  • Identify female-predominant job classes requiring an increase in pay as compared with male  predominant job classes performing work of similar value
  • Identify when pay increases are due

These pay analyses will need to be included in a Pay Equity Plan. Employers need to post notices regarding Pay Equity Plan obligations and progress, provide employees with the opportunity to comment on the Plan, and file annual statements with the Pay Equity Commissioner.

China

There are no direct rules or measures in China to address pay equity. China does have in place general principles for eliminating pay gaps, but those do not specifically focus on gender pay disparities, and there is no duty for employers to assess and report on gender wage differentials.

France

President Macron’s administration has declared equality between men and women to be a “great national cause.” France enacted new legislation in September 2018 that requires employers with at least 50 employees to publish information each year on gender pay gaps and the actions they have taken to address them.

Employers also receive an “equal pay rating” based on the following factors:

  • The pay gap between men and women, which is based on average full time compensation within equivalent job functions
  • The difference between men and women who have received raises, other than as a result of promotion
  • The difference in compensation between men and women who have received promotions
  • Whether or not the employer has complied with the existing legal obligation to give a pay rise to employees when they return from maternity leave, if pay rises were granted during their maternity leave
  • The proportion of men and women in the list of the 10 most highly paid employees within the company.

If the employer’s equal pay rating falls below a certain level, the employer must adopt corrective measures. If the problem persists for three consecutive years, a financial penalty may apply.

Germany

The German Wage Transparency Act, which came into effect in January 2018, gives employees at companies that have over 200 employees the right to find out what their co-workers of the same level and opposite gender are earning. Although employees cannot obtain earnings information for a specific employee, a company must provide average earnings for employees of the opposite gender, with the caveat that there must be at least six comparable employees at that level.

Additionally, companies with over 500 employees are required to publish reports regarding any pay disparities they may have, along with their efforts to lessen those disparities.

United Kingdom

UK employers with at least 250 employees must publish the following information:

  • Mean and median gender pay gaps
  • Mean and median bonus gender pay gaps
  • Proportions of men and women receiving a bonus payment
  • Proportion of men and women in each quartile pay band.

United States

The US Equal Pay Act of 1963 (EPA) prohibits employers from paying employees differently based on their sex for performing equal work in the same establishment under the same or similar working conditions. Title VII of the Civil Rights Act of 1964 also bans sex discrimination in compensation in any form.

The United States did not historically have pay data reporting requirements but, in April 2019, a federal judge ordered the Equal Employment Opportunity (EEO) Commission to implement without further delay its proposal to collect pay data in the EEO-1 report required by Title VII and filed annually by employers with 100 or more employees.

Where laws elsewhere rely on disclosure, US law has historically relied on litigation. Litigation is predominantly driven by individuals, rather than government agencies, but now often includes either collective actions under the EPA, or class actions under Title VII, both of which raise the stakes significantly in terms of dollar exposure for employers. One of the best-known is Kassman v KPMG LLP, an ongoing class action brought by approximately 10,000 female employees alleging they faced disparate pay and promotions.

Beyond US national laws, over 40 states and territories have enacted their own pay equity laws. Amongst the most stringent are California, Delaware, Massachusetts, Oregon, New York, and Puerto Rico. Additionally, at least 11 states have enacted salary history bans preventing employers from requesting salary history information from job applicants. As with national laws, enforcement is largely by private lawsuits.

Global Compliance

There are clearly trends that are apparent from this quick global tour, which may help improve overall compliance.

One trend is the increase in countries making public disclosure (not just to employees or the government but to everyone, including shareholders) of gender pay disparity the core principle of their attack on gender-based pay inequality. This “name and shame” policy forces businesses to actively manage pay equity to limit brand damage. This approach is paralleled in the United States by shareholder resolutions that demand such disclosures.

Although there is a focus on avoiding litigation risk (US law), “shame” (UK and Australian law), and administrative burdens (Canada’s proposed federal law), businesses need to think carefully before acting.

The most obvious solution to pay inequality is to do a pay study and fix any disparity. It is, however, counterproductive if the company conducting the pay study does not have a detailed and evidence-based process in place for addressing any problematic findings from the study, and if it has not carefully considered what, if anything, should be privileged. There is a legal and employee relations minefield for ill-conceived studies and corrective actions that could create claims of reverse discrimination, which is illegal in the United States. Rudebusch v Hughes, for example, permitted Title VII claims of white, male professors challenging pay equity adjustments for female and minority professors, resulting in a jury verdict for the plaintiffs. Quick studies and quick fixes only exacerbate the problem.

Instead of knee jerk reactions, businesses need to follow the lawmakers’ lead to identify and rectify the structural impediments to equality in order to have real, lasting effect.

The component of French law that addresses wage increases during maternity leave is illustrative, since absences from the workforce owing to family responsibilities is part of the persistent wage disparity between men and women. The German law requiring salary disclosures empowers underpaid women to take steps to ask for a raise. Similarly, those US states that prevent questions about previous salaries are designed to avoid the “market defense” or “market replication” of sex discrimination in pay.

The global trend towards closing the pay gap is an opportunity for businesses to develop and implement proactive policies that recognize the source of the problem and tackle it head on.   Some examples include the following:

  • Address the gap in experience that invariably arises due to women, far more often than men, taking time off to handle family responsibilities.
  • Standardize starting compensation for the position, rather than the person; i.e., new hires or promotions each receive the same compensation package. From that point, each could earn more based on performance.
  • Follow the US’ example and ban asking for prior salary when hiring or promoting. A further embellishment may be to ban salary negotiations, which studies show disadvantage women.
  • Make pay transparent, which requires managers to rationalize and explain pay, while permitting employees to ask how to equalize the pay of similarly situated colleagues.

This article was originally publish in the latest issue of McDermott’s International News.

https://www.employeebenefitsblog.com/2019/10/responses-to-gender-pay-inequity-a-quick-world-tour/

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Prepare for Talks with Canadian Employment Insurance Officers

In Canada, HR professionals and employers need to navigate the country’s employment insurance program after firing employees.
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