The Greater Valley Forge HR Law Link

Legislative and Government Affairs

by  Anita V. Dombrowski, SPHR

Once upon a time things actually slowed down over the summer.  That doesn't seem to be true any more.  The pace is a quick as ever and HR resources are continually being stretched further and further.  I am hoping that the legislative information I will bring to your attention in this column will help you keep informed of important information you need to know.

Don't forget to check the Governmental Affairs section of the SHRM website http://www.shrm.org/government/ which has information about new legislation being considered at both the federal and state level.  So, if you have a question about the status of legislation, just check the website.

For 2005, SHRM has targeted Health Care, Workforce Readiness, FMLA, FLSA/Workplace Flexibility and Retirement Security as its public priorities.  It is important that we all express our opinions, both for and against, regarding these and any other issues where our voice as HR professionals needs to be heard.  This section of the SHRM website also has the contact information for your legislative representatives.  It is quick and easy to contact your representative and, as you know, every vote counts! So you need to express your opinion.

In this and future columns, I will be bringing to your attention information you should be aware of in your role as an HR practitioner.  Please be advised there is a lot more information you need to know than what we can possibly put into this column.  I hope to provide at least an overview of important topics with appropriate resources so you don't have to search for information.  Also know, that since I am not an attorney, the information I will be discussing is strictly from my HR practitioner's viewpoint.

This month, the focus is on

The Medicare Prescription Drug, Improvement and Modernization Act  or Medicare Part D

A topic that should be high on your radar screen at the moment is the Medicare Prescription Drug, Improvement and Modernization Act .  Frequently referred to as "Medicare Part D", this Act adds outpatient prescription drug benefits to Medicare effective January 1, 2006.

This new prescription coverage is not free.  For most Medicare participants, an additional monthly premium of approximately $37 will apply.  There are no premiums for Medicaid participants and Medicaid participant benefits differ slightly.

A very brief overview of standard Part D benefits is as follows:

·        $250 Deductible

·        Prescriptions drug expenses between $251 and $2,250 are paid 75% by Medicare and 25% by participant

·        Prescription drug expenses between $2,251 and $5,100 are paid 100% by participant (referred to as the "donut hole")

·        Prescription drug expenses above $5,101 are paid 95% by Medicare and 5% by participant.

There is no automatic enrollment into the program.  Unless covered by Medicaid, individuals must enroll in Part D and select a prescription plan in order to receive this coverage.

There are some important deadlines you need to be aware of regarding this new program.

The initial enrollment period for the Medicare Modernization Act begins November 25, 2005 and ends on May 15, 2006.

If an employer has decided to keep its existing retiree prescription drug program, the employer has the option to apply for a subsidy.  The deadline to apply for this subsidy is September 30, 2005.  For employers applying for the benefit subsidy, there is a separate Retiree Subsidy home page, http://rds.cms.hhs.gov/.

Under the Act, employers currently providing retiree prescription drug coverage must disclose on an annual basis whether its plan is “creditable” or “not creditable.”   Creditable coverage is defined as the actuarial value of an employer's prescription drug coverage equaling or exceeding the actuarial value of standard Medicare Part D coverage. http://www.cms.hhs.gov/medicarereform/CCGuidance.pdf. The  initial notification must be sent out prior to November 14, 2005.  Model language can be found at http://www.cms.hhs.gov/medicarereform/Credcovrg.asp.

The Centers for Medicare and Medicaid Services (CMS) are committed to providing extensive outreach efforts to educate retirees and employers on this new program.  Additional information about the Open Door Forum outreach efforts can be found at the CMS webpage http://www.cms.hhs.gov/medicarereform/.

This article provides the most basic overview of this new plan.  More information and a list of FAQs can be found at the CMS website http://www.cms.hhs.gov/medicarereform/pdbma/employer.asp.  SHRM also has valuable information regarding this new act on the opening page of its website at http://www.shrm.org/.  Last but not least, implementation of new laws and regulations can be very confusing, your employment law attorney can assist with the "how to's" of implementation and answer questions unique to your business or industry.

VISIONS OF WEST WING

VISIONS OF WEST WING

The White House.  The Capital Building.  Lobbying.  Have you ever thought about what you would discuss with your Senator or Congressman if you had the opportunity?

I had that opportunity as an attendee of the 2006 SHRM Employment and Legislative Conference.  I spent 30 minutes with my U.S. Congressman representing the 6th District in Pennsylvania, Jim Gerlach (R).  There were groups of business representatives who only got 15 minutes with the Congressman but I had a full 30 minutes!  It was exciting to be able to share my insight about pending legislation.

I also spent 30 minutes as part of an advocacy group from Pennsylvania with U.S. Senator Rick Santorum (R).

So, what did I say?  In both meetings, I talked about three areas important to all HR professionals:  Health Care Reform, Employment Verification and Retirement Security.

Health Care Reform

SHRM has identified some key health care initiatives.

Health Information Technology:  greater use of technology will reduce costs and reduce errors and inefficiencies in the delivery of care.

Health Care Information:  Better information about our providers’ performance and cost effectiveness of health care services.  We know more about our auto mechanics than we do about our doctors.

Cost Containment:  Both employers and employees have responsibility for controlling health care costs. Cost containment strategies should focus on managing chronic health care conditions that can lead to catastrophic costs.

Health Mandates:  There has been discussion about requiring employers to pay 7-8% of their budgets for health care initiatives.  But what if the employer can provide a program at only 6%?  Such mandates would only increase health care costs.  Employers need to have flexibility to provide programs that work best for them.

HSA/FSA:  We need to encourage greater participation in these programs by 1) allowing FSA funds to roll over each year and 2) encourage the coordination of HSAs with other consumer-driving benefit options.

There are several bills pending for the second session of the 109^th Congress that SHRM supports.

S. 1418 – The Wired for Health Care Quality Act

H.R. 4157 – The Health Information Technology Promotion Act

S. 309 and H.R. 1998 - Flexible Spending Account Rollovers

H.R. 4511 – The Flex Health Savings Account Act

H.R. 1634 and S. 772 -  The WHIP Act.

Employment Verification

H.R. 4437- The Protection, Antiterrorism, and Illegal Immigration Control Act of 2005 requires the implementation of an electronic verification system within two years of the bill becoming law to verify a new hire’s eligibility for employment.   

There is a pilot program currently being tested with 2300 employers participating that has a 15% error rate.  The question is how can this system be up and running within two years to support 5.6 million employers?

The bill mandates a paper I-9 form in addition to the electronic verification and reverification of all previously hired employees as well as significant penalties for recruiting, hiring and referral violations of up to $25,000.

SHRM’s position is that employers need an electronic program that works efficiently.  Why require the paper form AND the electronic verification?  It is important to reduce the number of authorized documents employers use as verification (there are 27 currently).  Make sanctions reasonable to the violation.  Right now the bill increases fines to $5000 per violation for a system that has a 15% error rate.

Retirement Security

Recently we have seen many companies going out of business and dumping their defaulted pension benefit retirement requirements on to the Pensions Benefit Guaranty Corporation (PBGC).   The PBGC is currently facing a $23 billion shortfall because of these plan defaults.  Obviously the system was not set up for such a windfall of defaults.

H.R. 2830 and S. 1783 include provisions for the following:

Define Benefit Solvency: SHRM’s position is that Federal laws should encourage faster funding of unfunded obligations and under funded plans.  Pension promises to employees must be kept and employers should commit to timely disclosure of plan information to participants.

Investment Education:  In programs where the employees are responsible to make their own investment choices, there should be limited or no fiduciary liability to employers who provide investment education to their employees

Automatic Enrollment into defined contribution programs.  Both bills require employers to advise employees of their ability to participate in the pension plan before automatic enrollment into the program.

Individual Personal Savings:  The Economic Growth and Tax Relief Reconciliation of Act 2001 (EGTRRA) will expire in 2011 unless Congress acts to extend it.  If made permanent, EGTRRA would continue pension provisions that increase the amount of money an employer and employee can contribute to a defined contribution plan; allow after-tax deferrals to Roth 401(k) and 403(b) plans; and continue the “catch up” provisions for IRC 401(k), 403(b) and 457 plans for participants over age 50.

Pending Legislation:

H.R. 2830 – The Pension Protection Act of 2005

S. 1783 –Tthe Pension Security and Transparency Act of 2005

P.L. 107-16 – The Economic Growth and Tax Relief Reconciliation of Act 2001 (EGTRRA)

For many HR professionals, keeping up on legislation is very difficult due to our time consuming day-to-day responsibilities.  But, as you can see from the topics above, these are extremely important topics that impact our day-to-day responsibilities in a significant way.

SHRM and GVFHRA will try to keep you aware of proposed legislation so you can write to your Senator or Congressman about your feelings either ‘for’ or ‘against.’ 

You have the power to make it happen.  Write your Senator or Congressman today!

Legislative and Government Affairs

Legislative and Government Affairs

by  Anita V. Dombrowski, SPHR

Once upon a time things actually slowed down over the summer.  That doesn't seem to be true any more.  The pace is a quick as ever and HR resources are continually being stretched further and further.  I am hoping that the legislative information I will bring to your attention in this column will help you keep informed of important information you need to know.

Don't forget to check the Governmental Affairs section of the SHRM website http://www.shrm.org/government/ which has information about new legislation being considered at both the federal and state level.  So, if you have a question about the status of legislation, just check the website.

For 2005, SHRM has targeted Health Care, Workforce Readiness, FMLA, FLSA/Workplace Flexibility and Retirement Security as its public priorities.  It is important that we all express our opinions, both for and against, regarding these and any other issues where our voice as HR professionals needs to be heard.  This section of the SHRM website also has the contact information for your legislative representatives.  It is quick and easy to contact your representative and, as you know, every vote counts! So you need to express your opinion.

In this and future columns, I will be bringing to your attention information you should be aware of in your role as an HR practitioner.  Please be advised there is a lot more information you need to know than what we can possibly put into this column.  I hope to provide at least an overview of important topics with appropriate resources so you don't have to search for information.  Also know, that since I am not an attorney, the information I will be discussing is strictly from my HR practitioner's viewpoint.

This month, the focus is on

The Medicare Prescription Drug, Improvement and Modernization Act  or Medicare Part D

A topic that should be high on your radar screen at the moment is the Medicare Prescription Drug, Improvement and Modernization Act .  Frequently referred to as "Medicare Part D", this Act adds outpatient prescription drug benefits to Medicare effective January 1, 2006.

This new prescription coverage is not free.  For most Medicare participants, an additional monthly premium of approximately $37 will apply.  There are no premiums for Medicaid participants and Medicaid participant benefits differ slightly.

A very brief overview of standard Part D benefits is as follows:

·        $250 Deductible

·        Prescriptions drug expenses between $251 and $2,250 are paid 75% by Medicare and 25% by participant

·        Prescription drug expenses between $2,251 and $5,100 are paid 100% by participant (referred to as the "donut hole")

·        Prescription drug expenses above $5,101 are paid 95% by Medicare and 5% by participant.

There is no automatic enrollment into the program.  Unless covered by Medicaid, individuals must enroll in Part D and select a prescription plan in order to receive this coverage.

There are some important deadlines you need to be aware of regarding this new program.

The initial enrollment period for the Medicare Modernization Act begins November 25, 2005 and ends on May 15, 2006.

If an employer has decided to keep its existing retiree prescription drug program, the employer has the option to apply for a subsidy.  The deadline to apply for this subsidy is September 30, 2005.  For employers applying for the benefit subsidy, there is a separate Retiree Subsidy home page, http://rds.cms.hhs.gov/.

Under the Act, employers currently providing retiree prescription drug coverage must disclose on an annual basis whether its plan is “creditable” or “not creditable.”   Creditable coverage is defined as the actuarial value of an employer's prescription drug coverage equaling or exceeding the actuarial value of standard Medicare Part D coverage. http://www.cms.hhs.gov/medicarereform/CCGuidance.pdf. The  initial notification must be sent out prior to November 14, 2005.  Model language can be found at http://www.cms.hhs.gov/medicarereform/Credcovrg.asp.

The Centers for Medicare and Medicaid Services (CMS) are committed to providing extensive outreach efforts to educate retirees and employers on this new program.  Additional information about the Open Door Forum outreach efforts can be found at the CMS webpage http://www.cms.hhs.gov/medicarereform/.

This article provides the most basic overview of this new plan.  More information and a list of FAQs can be found at the CMS website http://www.cms.hhs.gov/medicarereform/pdbma/employer.asp.  SHRM also has valuable information regarding this new act on the opening page of its website at http://www.shrm.org/.  Last but not least, implementation of new laws and regulations can be very confusing, your employment law attorney can assist with the "how to's" of implementation and answer questions unique to your business or industry.

Federal Contract Compliance Programs (OFCCP)

Legislative Update

By Anita Dombrowski, SPHR

A visit to the Office of Federal Contract Compliance Programs (OFCCP) website (http://www.dol.gov/esa/ofccp/) shows a new announcement regarding Executive Order 13201.

Executive Order 13201 (E.O. 13201) requires federal government contractors and subcontractors to post information to advise their employees that under Federal law they have certain rights related to union membership and the use of union dues and fees.

You are probably thinking this isn’t new.  You are correct.  It’s the Beck poster.  The “Beck rights” were brought to our attention in 1988 by the US Supreme Court in Communications Workers of America v. Beck. The Court held that a union may not use union dues on activities that are not related to collective bargaining, contract administration, or grievance adjustment. Employees who oppose paying for any non-representational activities may be entitled to a refund or a reduction of future payments.

The new part is that the OFCCP has begun monitoring federal contractors for compliance checking to see if employers have posted the “Notice of Employee Rights Concerning Payment of Union Dues or Fees” and to see if the E.O. 13201 employee notice clause is referenced in all of the employers’ subcontracts and/or purchase orders entered into on or after April 28, 2004.

Contractors are exempt if their contracts are less than $100,000, they are located in a “right-to-work” state or they do not have a formally recognized union.

According to Leonard Biermann, National Director of Human Resource and Affirmative Action Activities with the National Employment Law Institute, monitoring this compliance initiative will increase onsite visits by the OFCCP.

Make sure your company is in compliance.  Check additional information on the Department of Labor/OFCCP website at http://www.dol.gov/esa/ofccp/

You can download a copy of the poster at http://www.dol.gov/esa/regs/compliance/olms/EO13201posterpg.htm.

An extensive list of Frequently Asked Questions on this topic can also be found at http://www.dol.gov/esa/regs/compliance/olms/EO13201_FAQ.htm.

Q. What is Executive Order 13201?

A. Executive Order 13201 (E.O. 13201) requires Government contractors and subcontractors to post to inform their employees that under Federal law they have certain rights related to union membership and the use of union dues and fees.

Q.What are these employee rights?

A. Under Federal law employees cannot be required to join a union or maintain membership in a union to retain their jobs. Employees who are subject to a union security clause and choose not to be union members may object to the use of their compulsory union dues and fees for union expenditures that are not related to representational activities, such as collective bargaining, contract administration and grievance adjustment. Employees who object to paying for non-representational activities may be entitled to a refund and appropriate reduction of future payments.

Q. Why is the notice sometimes called the Beck poster?

A. These rights are often referred to as "Beck rights" because they were first recognized in 1988 by the United States Supreme Court in Communications Workers of America v. Beck. Under the National Labor Relations Act (NLRA), an employer and a union may enter into an agreement requiring all employees in the bargaining unit to pay periodic union dues or fees as a condition of continued employment, whether or not the employees otherwise wish to become union members. The Court held that a union may not, over the objections of nonmember employees, expend funds collected from their compulsory agency fee payments on activities that are not related to collective bargaining, contract administration, or grievance adjustment.

H-1B Applications and Proposed Change in Process

On January 18, the U.S. Citizenship and Immigration Services (USCIS) office of the Department of Homeland Security announced that it reached its cap of 20,000 applications for 2006 on behalf of workers who have advanced degrees from U.S. universities.  The H-1B visa program permits employers to hire highly skilled foreign workers for up to six years.  In August 2005, the USCIS stopped accepting applications for 2006 because it had already reached its 65,000 cap.  The current law exempts up to 20,000 H-1B visa applicants from the 65,000 cap if those workers have an advanced degree from a U.S. university or college.  The USCIS will start to accept new applications for the next fiscal year on Oct. 1, 2006.

On another note, in the December 29, 2005 Federal Register notices, the USCIS presented information about restructuring its business processes by moving to several new types of electronic accounts.  They proposed that the current I-129 form used to petition for an H-1B visa may be replaced by a proposed Form 60.  If you have concerns about this restructuring process, the comment period ends February 13, 2006.  Please send your comments to the Department of Homeland Security, USCIS.  Additional information regarding the comment procedures can be found in the December 29th Federal Register.

FMLA 75 Mile, 50 Employee Rule

In Bellus v PCE Constructors, Inc. (January 17, 2006), the U.S. Supreme Court denied cert leaving the Fifth Circuit’s validation of  §825.111(b) standing.  This regulation states the 50 employee, 75 mile provision of the Family Medical Leave Act is determined by measuring the distance by surface miles (using the shortest route by public roads and waterways) rather than as the crow flies.  For companies with multiple offices, it is important for you to assess if these offices are within the 75 mile radius using the surface miles criteria.

Proposed Elimination of the EO Survey Requirement

Nonconstruction federal contractors might not have to file the Equal Opportunity (EO) Survey according to a proposed regulatory revision published by the Office of Federal Contract Compliance Program (OFCCP). The agency proposal is based on two different studies that question the survey’s value for OFCCP enforcement efforts as well as contractor compliance. Deputy Assistant Secretary Charles E. James for Federal Contract Compliance stated that the survey is “fundamentally flawed.”  Please stay tuned for more information about this proposed revision being enacted.  A notice of this proposal can be found in the January 20, 2006 Federal Register.  The comment period ends March 21, 2006.

OFCCP and the Internet Applicant Rule

As you are aware, the OFCCP recently published new guidelines on its definition of Internet Applicant.  The OFCCP has announced that it will not cite a contractor for failure to comply with these new regulations for the period of 90 days following February 6, 2006.  This grace period is limited to technical recordkeeping violations for contractors who meet specific criteria.  On January 20, 2006, the OFCCP added some additional FAQs to the listed already on the website addressing this aspect of compliance.  You can view these FAQs at http://www.dol.gov/esa/regs/compliance/ofccp/faqs/iappfaqs.htm.

The above information is presented for you to be aware of upcoming changes in laws and regulations that may impact your daily work activities.  It should not be construed as legal advice.  Please contact your employment attorney for additional information relating to your specific situation.

Third Circuit Rules That Employee's Accommodation Request Need Not Be Specific

The Third Circuit Court of Appeals, including the recently confirmed Supreme Court Justice Samuel A. Alito, recently confirmed what most employers already knew: a request for accommodation from an employee does not need to be a request for a specific accommodation in order to require the employer to respond, that is, to engage in the “interactive process.”

In Armstrong v. Burdette Tomlin Memorial Hosp., No. 03-3553, 2006 U.S. App. LEXIS 2243 (3d Cir., Jan. 30, 2006), the Court of Appeals considered the case of an injured employee, Armstrong, who was terminated when he was unable to perform the essential functions of his job.  Armstrong was hired at the Burdette Tomlin Memorial Hospital in 1980 as a shipping and receiving clerk.  He received positive evaluations and regular raises in this position.

In 1993, Armstrong took extended leave for back and neck pain, and returned to work with a doctor's note stating that he could perform only "light duty."  His clerk job was not considered a "light duty" and accordingly, the Hospital informed Armstrong that he would have to bid on other jobs within the Hospital or return to his clerk position with all of its requirements.

Armstrong chose to return to his clerk position, and re-injured himself in 1996.  He went out on leave because of his injury and returned with a doctor's note stating that he could perform only "light duty" work.  When informed again that his clerk job was not considered "light duty" and he therefore could not return to that position, Armstrong produced a note from his doctor stating that he could perform all the essential functions of his clerk job.

In 1997, the Hospital created a linen distribution clerk position.  In 1998, a linen clerk injured his back, thus creating an opening.  The job opening was posted, and Armstrong, believing that the job was more strenuous and apparently fearing that he would be transferred to this position, sent several letters to his supervisor reminding him of his chronic back problems.  Nevertheless, the Hospital decided that distribution stock clerks would share the linen clerk's functions when no linen clerk was on duty.  Armstrong was told that he would be required to perform the linen clerk's position for at least six months.

Armstrong performed the linen clerk job for two weeks before injuring his back and requiring emergency room treatment.  Upon his return to work, he produced a note limiting his ability to work.  Armstrong asked that he be returned to his "old job," but his request was denied.  He produced another doctor's note again limiting his ability to work, and the Hospital informed Armstrong that he could (1) transfer to a mutually agreeable position within the Hospital that took into account his restrictions; (2) apply for temporary disability; or (3) resign.  Armstrong chose to go on disability because he perceived that there were no other jobs available.  When he failed to return to work within a year, he was terminated.

The Court of Appeals noted that the Hospital sharply disputed Armstrong's claim that he was as physically limited as he claimed, and believed that Armstrong used his limitations to avoid performing certain work.  Indeed, the Hospital produced evidence that Armstrong made less than impressive efforts to perform his job, and that his co-workers disputed Armstrong's characterization of the strenuousness of his job.  Nevertheless, the Court noted that the issue at the heart of the case was not whether Armstrong used his disability to avoid doing work but whether Armstrong genuinely was unable to perform his work.

Armstrong sued the Hospital and the Hospital’s Human Resources Director under the New Jersey Law Against Discrimination (“LAD”), whose requirements mirror those of the Americans with Disabilities Act (“ADA”).  At trial, Armstrong had to establish a four-prong prima facie case to prove his failure to accommodate claim.  Specifically, he had to establish that (1) he had a disability that the employer knew about; (2) he requested accommodations; (3) the Hospital made no effort to help Armstrong find accommodations and was responsible for a communication breakdown; and (4) there were accommodations that the Hospital could have provided that would have enabled Armstrong to perform the essential functions of his job.

Once Armstrong had established this prima facie case, the burden shifted to the Hospital Defendants to articulate a legitimate business reason for their decision.  Once they did that, the burden shifted back to Armstrong to establish that the legitimate business reason advanced by the Hospital Defendants was, in fact, a pretext for discrimination.

As to the second prong of the prima facie test, the trial court asked the jury, "Do you find that [Armstrong] has proved by a preponderance of the evidence that he requested and was denied a reasonable accommodation by the defendants?"  The jury also was instructed that, "[Armstrong] has the initial burden of proposing a reasonable accommodation and the proposal must be reasonable, specific and compatible with the workplace.  Accordingly, [Armstrong] must prove that some reasonable accommodation was available and that he requested it."

As the Court of Appeals noted, this instruction by the trial court required that Armstrong show not only that he requested a reasonable accommodation, but that he specified a reasonable accommodation.  As the Court of Appeals found, this second requirement is not, in fact, a requirement of the prima facie case and inappropriately increases the burden on a plaintiff under the LAD/ADA paradigm.

Moreover, the Court of Appeals wrote that the jury found that the Hospital terminated Armstrong because he was unable to perform the essential functions of the job.  As the Court wrote, "The problem is that was not enough for the Defendants to prevail."  Because the jury found that the Hospital Defendants believed that Armstrong could not physically perform the essential functions of his job, the burden should have shifted to the Hospital Defendants to prove that its belief actually was reasonable.  The Court of Appeals wrote that a "reasonable jury" could have found that Hospital Defendants did not make a good faith effort to assist in finding a reasonable accommodation for Armstrong because the jury may have been led to believe that Armstrong bore the burden of requesting a specific accommodation.  Indeed, the Hospital Defendants conceded that a reasonable accommodation may have existed.  Had they engaged in the proper “interactive process,” Armstrong may have been accommodated.  Accordingly, the Court of Appeals reversed and remanded for a new trial as to Armstrong's failure to accommodate claim.

The lesson for employers is clear: when an employee requests an accommodation, whether in the form of a direct request, presentation of a doctor's note specifying limitation, or in some other manner that puts an employer on notice that an employee is in need of accommodation, the employer cannot require that the employee specify the accommodation needed.  Both the employer and employee must engage in what is called the "interactive process" to address the employee's limitations and examine what accommodations, if any, the employer is capable of offering.  The employer cannot require the employee to identify, on his or her own, jobs within the company that s/he can perform.  Instead, the employer should work collaboratively with the employee through the interactive process, to identify those jobs, if they exist.

Third Circuit Finds Co-Worker Retaliatory Harassment To Constitute Cause of Action

In a case of first impression, and in an opinion written by now-Supreme Court Justice Samuel A. Alito, the Third Circuit Court of Appeals has found that employers can be liable for retaliatory harassment by co-workers that results in a hostile work environment, even when that retaliation does not result in an "ultimate employment decision" such as termination.

In Jensen v. Potter, No. 04-4078, 2006 U.S.App. LEXIS 2316 (3d Cir., Jan. 31, 2006), the Court of Appeals addressed the issue of retaliatory harassment by co-workers.  The appellant, Jensen, argued that after she complained of sexual harassment by a supervisor and that supervisor was terminated, she was subjected to various acts of retaliation by her co-workers.

After the supervisor was terminated, Jensen was transferred to work at the same work station occupied by the supervisor prior to his termination.  This put her in close proximity to those who worked with her former supervisor, and resulted in various forms of harassment.  These acts included references to her in vulgar terms, an effort by one co-worker to startle her, and another co-worker's effort to scare her by driving carts at her at a rapid pace.  Two of her co-workers expressed disagreement with the decision to terminate her supervisor, with one discussing a petition to reinstate the supervisor.  Finally, Jensen's car was scratched with keys, spat upon and doused with a cup of spilled coffee, although it was unclear who performed these acts.

Jensen complained to her branch manager about the behavior and asked to be relocated to a different work station.  The branch manager failed to grant her request and was unable to offer any explanation at deposition for his inaction.  It was a full 19 months after she first complained, and only after she complained to a new supervisor, that her complaints were finally addressed.  The new supervisor, in conjunction with the branch manager and the union, confronted the co-worker responsible for most of the harassment.  The harassment then ceased.

During this time, Jensen suffered a variety of problems as a result of the harassment, including panic attacks and asthma attacks that caused her to go the emergency room.  She also used sick time to deal with the stress caused by her co-workers' behavior.  Based upon the totality of events, Jensen sued for discrimination on the basis of sex, and retaliation despite the fact that she suffered no job action such as a demotion, decrease in pay or benefits or termination.  The trial court granted summary judgment to the employer, and Jensen appealed.

In considering whether a cause of action exists for retaliatory harassment where no “ultimate employment decision,” such as termination, occurs, the Third Circuit Court of Appeals noted a split among other Circuit Courts.  While most have found that Title VII prohibits severe or pervasive retaliatory harassment, two Circuit Courts have held that a cause of action arises only where the retaliation results in an "ultimate employment decision."

The Third Circuit Court of Appeals opted to join the majority of other Circuit Courts.  In concluding that an employee need not establish an "ultimate employment decision" in order to establish retaliatory harassment under Title VII, the Court set forth the prima facie case that an employee must establish to meet her initial burden, holding that an employee must show that (1) she suffered intentional discrimination because of her protected activity (in this, case, complaining about harassment by her supervisor); (2) the discrimination was severe or pervasive; (3) the discrimination detrimentally affected her; (4) it would have detrimentally affected a reasonable person in like circumstances; and (5) a basis for employer liability is present.

The Court's wording of the second prong - requiring either severe OR pervasive behavior - is significant because it recognizes that a single act of harassment may be sufficient to establish retaliation.  While this was previously established by the Pennsylvania Supreme Court in its 2004 decision, Pennsylvania State Police v. Suders, 542 U.S. 129 (2004), the Jensen Court was the first Third Circuit decision to adopt this standard.

In finding that retaliatory harassment occurred in Jensen’s case, the Court noted that much of the harassment about which Jensen complained was not, on its face, indicative of retaliation.  Indeed, much of it appeared to reflect simple dislike of Jensen by her co-workers.  The Court pointed out that her co-workers were permitted to give her the "cold shoulder" without running afoul of the law.  They also were permitted to express disagreement with the decision to terminate her supervisor, without such disagreement amounting to "retaliation."

Nevertheless, the Court found that several of the vulgar comments directed to Jensen referenced her actions leading up to her supervisor's termination.  The Court also found that one individual who harassed Jensen had been her friend prior to her supervisor's termination.  Finally, the Court noted that Jensen's car had not been vandalized prior to her supervisor's termination.  While in isolation these incidents may not amount to retaliatory harassment, the Court found that in context, they were indicative of harassment stemming from her complaint about her supervisor.  Moreover, the Court found that Jensen endured the harassment 2-3 times per week over the course of 19 months, sufficient to constitute "severe" or "pervasive" harassment.

Of final significance is the fact that the Court found that the employer's action in meeting with the accused harasser was adequate to the extent that the harassment ceased.  However, the employer's 19-month delay rendered the employer's response anything but "prompt" or "adequate," and the Court noted that an effective response must be both.

The lesson for employers is clear: you may be liable for retaliatory harassment by an employee's co-workers that results in a hostile work environment, even if that harassment does not result in "ultimate employment action."  To the extent that an employer learns of any possible harassment by co-workers in response to an employee's complaint, the employer should take action as quickly as possible to investigate and remedy that harassment.  This will require an analysis by the employer as to whether the alleged retaliatory behavior reflects mere employee reaction to the complaint, or purposeful actions by a co-worker of the complaining employee to create a hostile work environment.  Employers also would be wise to promulgate anti-harassment policies that, among other things, warn against retaliation for any good faith complaints of harassment.

PA Superior Court Creates Exception To At Will Employment for Smaller Employers

It is rare that a new public policy exception to “at will” employment in Pennsylvania is found, but the Pennsylvania Superior Court recently did just that in a manner that appears to contravene legislative intent.  The Pennsylvania Human Relations Act (“PHRA”), which prohibits, inter alia, discrimination upon the basis of sex, applies only to employers with four or more employees.  Nevertheless, in Weaver v. Harpster, No. 394 MDA 2005, 2005 Pa. Super. LEXIS 3622 (Pa. Super., Oct. 21, 2005), the Court held that there is a public policy exception to “at will” employment for employers with fewer than four employees.  Specifically, the Weaver Court wrote that employees who have no recourse under the PHRA can still pursue remedies in court for discrimination, even when they work for employers too small to be covered by the PHRA.

In Weaver, the plaintiff was hired as an administrative assistant and office manager.  She alleged that during her employment, she was subjected to sexual harassment and eventually resigned, claiming that the harassment was intolerable and that her employer failed to take any remedial action.

The plaintiff attempted to have the Pennsylvania Human Relations Commission (“PHRC”) investigate her claims of discrimination, since the PHRA requires that an individual “exhaust” her administrative remedies by filing a complaint with the PHRC prior to initiating litigation in court.  The PHRC declined to do so, asserting that no remedy was available to the plaintiff because her employer employed fewer than four employees and thus was not subject to the PHRA.  The plaintiff then initiated legal action in the Pennsylvania Court of Common Pleas, alleging sexual harassment, discrimination and harassment in violation of the PHRA, constructive discharge in violation of the PHRA, wrongful discharge, and assault and battery. 

The trial court dismissed all claims except for the assault and battery claim.  In doing so, the court wrote that the PHRA was the exclusive remedy for employment discrimination based on sex.  Since the plaintiff’s employer employed fewer than four individuals, the court found that the plaintiff had no legal recourse.  The court based its opinion in part on a Pennsylvania Supreme Court case, Clay v. Advanced Computer Applications, 559 A.2d 917 (Pa. 1989).

On appeal to the Superior Court, the plaintiff sought reversal of the dismissal of her discrimination and harassment claim, as well as her constructive discharge claim.  The Superior Court, in addressing the trial court’s opinion, found that Clay was an inappropriate case for comparison.  The Superior Court noted that in Clay, the plaintiffs failed to exhaust their administrative remedies by filing a complaint with the PHRC, and therefore were barred from seeking any remedies in court on that basis.  The Superior Court wrote that, “it is clear that subsequent to Clay, the rule continues to be that exhaustion of administrative remedies is a necessary precondition to an employee’s attempt to prove a ‘clear mandate of public policy’ in order to bring a cause of action for sexual discrimination.”

The Superior Court noted, however, that the Clay Court did not conclude that the PHRA was the exclusive remedy for sexual discrimination.  Indeed, the Clay Court wrote that the PHRA provides that if the PHRC dismisses a complaint or fails to reach a conciliation agreement within one year of the filing of that complaint, a complainant still may seek recourse in court.

The Weaver Court found that the PHRC rejected the plaintiff’s claim within one year – indeed, one month – of filing.  Furthermore, the Weaver plaintiff argued that she had a constitutional right to be free from discrimination, as set forth in the Pennsylvania Constitution.  The plaintiff also argued that the PHRA “bestows a right to be free from discrimination based on sex in the workplace,” thereby indicating a legislative intent to prevent workplace discrimination.  The plaintiff argued that this, in conjunction with the Pennsylvania Constitution’s protection of equal rights, means that sex discrimination “constitutes a legal injury whose recompense is mandated by the remedies clause” of the Constitution.

The Weaver Court agreed, and expressed doubt that the legislature would prohibit discrimination through both the state Constitution and the PHRA, yet deny any remedy to those individuals who happen to work for employers with fewer than four employees.  The Court wrote that,

To prevent an employee who is alleging sexual harassment from pursuing her claim in court only because her employer has less than four employees appears a direct contravention of a clear public policy on grounds both quixotic and arbitrary.

The Court rejected the employer’s argument that the plaintiff’s arguments were better directed to the legislature than the courts, writing that it did not view the PHRA’s restriction to employers with four or more employees to constitute a “tacit endorsement of sexual discrimination” against those employees working for smaller employers.  Accordingly, the Weaver Court found that there was a public policy exception to “at will” employment when an employee is otherwise precluded from bringing suit under the PHRA because his or her employer has fewer than four employees.

The conclusion to be drawn from this decision is that Pennsylvania employers need to behave as though they are subject to the restrictions and requirements of PHRA, regardless of their size.  Employers are also reminded that, unlike Title VII or other federal anti-discrimination laws, the PHRA provides for individual liability of supervisors under certain circumstances.

The OFCCP Finalizes A Definition Of "Internet Applicant"

As internet technology has become an integral part of the job application process, particularly with the advent of jobseeker websites such as Monster.com, employers who are subject to the Office of Federal Contract Compliance Programs (OFCCP) regulations have struggled to keep up with the OFCCP's requirements for reporting applicant data.  Specifically, how does an employer define an "applicant" or meet its reporting requirements when it is receiving dozens, hundreds, or even thousands of resumes in response to a posting on a job website? 

Under the old regulations, it was not clear who constituted an "applicant" or how an employer was supposed to collect data on applicants, particularly when so many internet applications were disregarded by the employer, or were too numerous to make data collection feasible. 

More than 18 months after proposing amendments to the regulations defining a job applicant, the OFCCP issued a final regulation on October 7, 2005, setting forth the following basic guidelines.

An "internet applicant" is any individual who meets all of four of the following criteria:

1.  the individual submits an expression of interest in employment through the internet or other electronic data technology;

2.  the employer considers the individual for employment for a particular position;

3.  the individual's expression of interest indicates that the individual possesses the basic qualifications for the position; and

4.  at no point prior to receiving an offer from the employer does the individual remove him- or herself from further consideration, or otherwise indicate that s/he is no longer interested in the position.

While these new regulations will not eliminate all confusion, they narrow the circumstances under which employers must report applicant information.  Given the deluge of uninvited and unqualified resumes that many employers receive, these new regulations are a welcome change.

Supervisor Can Be Disciplined More Harshly Than Non-Supervisor

A question that occasionally arises in the context of a sexual harassment investigation is whether the same punishment must be meted out to all employees who are involved in the subject incident(s).  The Third Circuit recently provided some guidance, opining that employers may hold supervisors to a higher standard - and thus subject them to more stringent punishment - than employees.

In Corbett v. Sealy, Inc., No. 03-4190, 2005 U.S. App. LEXIS 4473 (3d Cir. 2005), the plaintiff was a 16-year veteran employee of Defendant Sealy, having worked his way up from laborer to supervisor.  One of the employees under his supervision was Kathy Kreibel, an individual identified by Corbett as a "verbally crude" employee who "frequently used foul, vulgar, and explicit language."  Corbett had complained to Sealy on one occasion about Kriebel's sexual harassment of another employee, but Sealy had taken no action.

In October, 2000, Corbett, Kreibel and a third employee were joking around when Corbett feigned a vulgar gesture.  Kreibel allegedly laughed and goaded him, although Corbett did not actually make the threatened vulgar gesture.  The third employee then made a gesture similar to Corbett's.

The following day, Corbett assigned Kreibel to a task that was not ordinarily part of her job.  She complained and told Corbett that someone less senior than she should perform the task.  She eventually relented, but complained to her union about the assignment, as well as the incident with Corbett and the third employee on the previous day. The union contacted Sealy's Vice-President about the incident.

The following day, Sealy's Vice-President of Human Resources investigated the incident, including interviewing Corbett, and informed Corbett at the end of the day that his story was corroborated by witnesses.  Several days later, however, the Human Resources Vice President informed Corbett that other witnesses claimed that Corbett had actually engaged in the alleged vulgar gesture.  Corbett denied doing this.  Corbett also was accused of "retaliating" against Kreibel "by looking at her in the wrong manner," and was suspended with pay while Sealy worked to conclude its investigation.

Several days later, Sealy concluded its investigation, determining that Corbett had made an "inappropriate gesture."  Corbett was terminated for violation of the company's sexual harassment policy, while Kreibel had a letter emphasizing Sealy's anti-harassment policy placed in her file.  The third employee involved in the incident was given a warning letter for his actions.

Corbett subsequently sued on the grounds of reverse discrimination in violation of Title VII, claiming that he had been treated more harshly than Kreibel because he was male.  Under the Third Circuit Court of Appeals' decision in Iadimarco v. Runyon, 190 F.3d 151 (3d Cir. 1999), the burden of proof in a reverse discrimination claim is only very slightly modified from the burden in a "standard" discrimination claim, requiring that an aggrieved employee show that some people are being treated less favorably than others based upon a trait protected under Title VII.

The trial court found that Corbett failed to establish a prima facie, or initial, case of discrimination, and thus failed to establish his initial burden of proof.  The trial court rested its decision upon the facts that (1) the third individual involved in the incident, who was male, was treated less harshly than Corbett; (2) Corbett was treated more harshly than Kreibel because he was a supervisor; and (3) Corbett failed to make Sealy's Human Resources Vice-President, who investigated the incident, aware of Kreibel's previous alleged sexually harassing behavior.

On appeal, the Court of Appeals affirmed the trial court's decision, but used a different legal analysis.  The Court first held that, under the lenient standard for a prima facie case, Corbett had in fact established his initial burden of proof because, among other things, he was treated more harshly than Kreibel. 

The Court found, however, that Sealy had articulated a legitimate business reason for its treatment of Corbett because Corbett was a supervisor, while Kreibel was not.  The Court wrote that, "Sealy could reasonably hold management to a higher standard than laborers. This nondiscriminatory reason is supported by Sealy's treatment of [the third employee involved], a laborer who was reprimanded in the same lenient fashion as Kriebel even though he was male."

Corbett could still prevail in his lawsuit, however, if he could show that the company's reason for treating him more harshly was merely a pretext, or cover, for a discriminatory reason.  In support of this argument, Corbett pointed to Kreibel's participation in the incident by laughing and goading him.  Corbett argued that based upon her behavior, Corbett's alleged sexual harassment was not unsolicited, and that the anti-harassment policy precludes only unsolicited harassment.

The Court rejected Corbett's claim, holding that nothing in the policy indicated that it precluded only unsolicited harassment.  To the contrary, the policy specifically precluded behavior defined as "verbal or physical conduct that denigrates or shows hostility or aversion toward an individual...."  Moreover, Corbett made his gesture prior to Kreibel allegedly laughing and goading him.  Thus, his harassment was unsolicited at the moment it was made since Kriebel had not yet expressed any feeling one way or the other about the gesture.

The lesson from the Corbett case is three-fold.  First, supervisors can be held to a higher standard by virtue of their position as supervisors.  This is logical, given the United States Supreme Court's decision in Faragher v. City of Boca Raton, 524 U.S. 775 (1998).  Therein, the Court held that employers are vicariously liable when a supervisor engages in sexual harassment.  The Faragher Court also held that employers are automatically liable when a supervisor's harassment involves a tangible employment action, such as termination or demotion, against an employee.  The Faragher Court recognized that supervisors are in a unique position to impact an employee's professional status in a way that co-workers are not.  Holding supervisors to a higher standard of behavior therefore makes sense.

Second, merely because a co-worker appears to participate in the harassment does not negate a supervisor's responsibility to adhere to and uphold an employer's anti-harassment policy.  Supervisors set a standard for the workplace, and employees look to supervisors to guide their own behavior.  Behavior that appears to be welcome by some employees but that violates employment policies should not be condoned.

Finally, supervisors must not be afraid to warn or reprimand "victims" of sexual harassment who actively participate in the harassment.  While no employee who is an unwilling participant should be reprimanded, likewise no employee who actively participates in harassment should escape without being addressed.  An employee's inappropriate behavior with co-workers in one situation might be indicative of problematic behavior when that employee interacts with other employees.  Moreover, what the employee finds acceptable today may not be acceptable tomorrow, and could result in a complaint that the employer was aware of the behavior and failed to correct it.  In short, if an employer becomes aware of a situation in which an employee is participating, it is appropriate to warn, or possibly discipline, him or her as well.