Steven H. Schwartz & Associates, P.L.C.

Effective January 31, 2012 NLRB Posting Required

Effective January 31, 2012, the NLRB will require private sector employers, with or without a unionized workforce, to post its official notice of employee rights bulletin. The posting requirement applies to all private-sector employers within the Board's jurisdiction. This includes most private-sector employers, including labor unions, but excludes agricultural, railroad and airline employers, as well as very small employers that conduct an insufficient volume of business to have more than a slight effect on interstate commerce. In most instances, a business volume of $250,000 to $500,000 per year will subject an employer to NLRB jurisdiction. The Notice should be posted in conspicuous places, where other workplace rights notices and company notices concerning personnel rules or policies are customarily posted. A failure to post the notice may subject the employer to an unfair labor practice charge. Although the NLRB has stated it will not be independently auditing employers for complaince.

2010 HIRE Act

On March 18, 2010 the President signed the Hiring Incentives to Restore Employment (HIRE) Act. The new law provides three basic provisions to employers:

1. Private-sector employers that hire employees who have been unemployed for at least 60 days are exempt from having to pay the employers' 6.2% share of the Social Security payroll tax on the respective employees for the remainder of 2010;

2. If the employer keeps the employee on payroll for a continuous 52 weeks, the employer is eligible for an additional tax credit of up to $1,000 after the 52-week threshold is reached;

3. Small business owners may deduct business equipment investments of up to $250,000 in 2010, instead of depreciating the same over time.

Generally, the tax benefit applies only to private-sector employers. There are no limits or maximums on eligible employee hours or wages. The eligible employee may not be a family member and may not replace another worker, unless the replaced worker voluntarily quit or was terminated for cause. For the hiring to qualify for the tax benefit, the employee must sign an affidavit that he has not been employed for more than 40 hours during the 60 day period preceding date of hire.

Court of Appeals Rules that Act 312 Arbitration Panel may Issue an Award for Retroactive Grievance Arbitration

In Ottawa County v Police Officers Association of Michigan ("POAM"), the Michigan Court of Appeals ruled that an Act 312 Arbitration Panel's adoption of the POAM's proposal for retroactive grievance arbitration is not counter to the statute. 281 Mich App 688 (2008). The County, relying on the Court's precedent, argued that Act 312 does not permit an award of non-economic benefits retroactively. The statute, in part, states, "Increases in rates of compensation or other benefits may be awarded retroactively to the commencement of any period(s) in dispute, any other statute or charter provisions to the contrary notwithstanding."

The Court ruled that grievance arbitration was such an "other benefit" as described in the statute. The Court refused to read a requirement that retroactive benefits be only economic, and found that the right to grievance arbitration is clearly a benefit to the bargaining unit members.

American Recovery and Reinvestment Act of 2009 Provides COBRA Premium Subsidies

The Consolidated Omnibus Budget Reconciliation Act ("COBRA") has been amended in part by the American Recovery and Reinvestment Act of 2009 ("ARRA") to subsidize COBRA eligible employees' share (previously as much as 102% of premium). The key provisions to the amendment are as follows:

Employers covered by COBRA are required to pay 65% of COBRA eligible employees' (and their family members covered under the group health plan) health coverage premium. The remaining 35% is to be paid by the eligible individual. The employer is then eligible for a tax credit in the same amount against its quarterly federal employment tax filings.

The subsidy is available to "Assistance Eligible Individuals", which are employees and their respective family members who were covered by the employer group health plan, who were involuntarily terminated between September 1, 2008 and December 31, 2009 and elect COBRA coverage.

The subsidy is available for up to 9 months unless and until the assistance eligible individual becomes eligible for another group health plan or Medicare/Medicaid.

There is retroactive eligibility for the subsidy for assistance eligible individuals who experienced an involuntary termination between August 31, 2008 and February 17, 2009 but otherwise denied or let their COBRA coverage lapse.

There is a retroactive reimbursement to assistance eligible individuals for premiums paid in excess of their 35% share or the employer may credit future COBRA premium payments.

The ARRA permits assistance eligible individuals to elect different coverage from that which they were enrolled in before involuntary termination.

The ARRA requires employers provide notice of the reductions in premiums to all individuals with a COBRA qualifying event for the September 1, 2008 through December 31, 2009 period, regardless of the reason for the qualifying event and even if the individual has denied or let COBRA coverage lapse.

Genetic Information

The recently enacted federal Genetic Information Nondiscrimination Act of 2008 ("GINA") will become effective November 21, 2009. GINA will broadly prohibit discrimination on the basis of genetic information in employment and health insurance. GINA will also amend the Fair Labor Standards Act concerning child labor, increasing penalties for such violations.

GINA will likewise amend existing statutes, including Title VII of the Civil Rights Act, Health Insurance Portability and Accountability Act ("HIPAA"), the Employee Retirement Income Security Act ("ERISA"), and the Internal Revenue Code. The term "Genetic Information" will include an individual's genetic tests, the genetic tests of the individual's family members, and the manifestation of a disease or disorder in a family member. A "Family Member" is defined to include an individual's spouse or dependent child by birth or adoption, and certain other relatives of such individual, individual's spouse or dependent child.

The enforcement scheme and penalties for violation will be similar to the existing amended statutes. Additional guidance from the enforcing agencies will be forth coming.

Realizing the Promise of Arbitration

In the mid-1990's, alternative dispute resolution, particularly arbitration, was considered by many plaintiff and defense attorneys to be the answer to costly, lengthy litigation. Courts embraced the concept of arbitration and found ways to encourage parties to submit to arbitration, especially in low dollar claims or in highly technical, complex disputes. Arbitration was promised to be faster, more rational and considerably less expensive than traditional litigation. For the plaintiff, it promised a guarantee of a "day in court" and avoidance of summary disposition. For the defendant, it promised a fair hearing conducted by an experienced, independent attorney, rather than a jury which might be more disposed to rule based on sympathy rather than evidence.

Ten years later, has the bloom come off the rose? Many attorneys shy away from arbitration for various reasons. Some arbitration groups charge substantial fees, without regard to the amount of the administrative support required. Some defense lawyers worry that the arbitrator will merely "split the baby", rather than rule for one side or the other. Other attorneys complain that arbitration is no more expeditious than litigation, citing to experiences where arbitrators required detailed pre-hearing orders that must adhere to the Federal Rules of Civil Procedure, or allowed unbridled discovery or gave consideration to motions for summary disposition based upon technical defenses.

These types of problems may be avoided by a comprehensive arbitration agreement which would return arbitration back to its intended objectives. While no means exhaustive, the following is a checklist of issues that plaintiffs and defense attorneys could consider before an arbitrator is selected, or when corporate counsel drafts an agreement with an arbitration clause. If these items are included in the arbitration submission, the arbitrator is bound to follow these requirements and not impose his own sense of "industrial justice":

Will depositions be allowed? If so, how many?
Will interrogatories be allowed? If so, what is the limit?
How long will discovery be permitted?
What is the penalty if a party is non-compliant during discovery?
How long from the initial filing of the arbitration claim until an arbitrator must issue a decision?
If the arbitrator makes an error of law, does the losing party have the right to appeal?
Will a transcript be required? If so, who pays for the transcript?
Is there a default mechanism if one party does not attend the hearing or file an appearance?
Is there a default mechanism if one party does not pay the arbitrator's fee?
Is the arbitrator required to write a "reasoned" opinion, describing the rationale for his decision?

Parties can take control of the arbitration process to ensure that it provides a fair, expeditious process. The best way to ensure such a process is to prepare a detailed arbitration agreement that specifically defines the arbitrator's authority on these matters. By following this approach, attorneys and parties would realize the advantages of arbitration over traditional litigation.

Amendments to the FMLA

The President has recently signed the National Defense Authorization Act (Fiscal year 2008) which includes provisions amending the Family and Medical Leave Act to provide (1) up to six months of leave for family members caring for military veterans injured while on active duty in the Armed Forces and (2) 12 weeks of leave to family members of armed services personnel called up to active duty under certain circumstances.

The amendments cover leaves to care for members of the Armed Forces, including the National Guard or Reserves, who have suffered a serious injury or illness in the line of duty while on active duty, that may render the members medically unfit to perform the duties of their office, grade, rank, or rating. It applies broadly to servicemembers who are undergoing medical treatment, recuperation, or therapy, are in outpatient status, or otherwise are on the temporary disability retired list, for a serious injury or illness. For this type of leave, the legislation expands the definition of covered employee to include the "next of kin," or nearest blood relative, of a covered servicemember.

The final legislation also contains a provision providing up to 12 weeks of leave because of any "qualifying exigency" arising out of the fact that a covered employee's spouse, child or parent is on or has been called to active duty in the Armed Forces. This provision provides 12 weeks of leave to the immediate family of servicemembers called to active duty and complements state family military leave laws that provide for shorter duration of leave or only cover spouses of servicemembers.

Employers should amend their FMLA policies to provide employees with notice of these new leave entitlements.

Six Things to Look for In Your Next Employment Contract

Employees often view the terms of their employment only in dollars and cents. While getting the highest compensation for what you bring to the table in knowledge, skills and ability is important, often the terms of the employment agreement may add to the value of an offer or, conversely, make it less appealing or even hazardous to your career. This article will explain some of the common aspects of employment agreements and hopefully dispel some common myths employees have in regard to the terms of their employment.

Contracts come in different versions. For executives and key personnel, some contracts are comprehensive, multi-page documents labeled "employment agreement" or a similar name. Other agreements are in the form of an offer letter. For salespersons, the contract may be in the form of a sales commission or non-compete agreement.

At Will vs. Just cause Employment

A common erroneous belief some employees have is that they cannot be terminated from a job unless they perform inadequately. This is simply not true. Employment in Michigan and other states is presumed to be "at will" unless the parties agree that its not. This means that the employee and employer can end the employment relationship for any reason or no reason at all, without any advance notice. Because of a series of cases that occurred in the 1980's and 1990's, employers zealously protect their employment "at will" rights in employment contracts. Therefore, if you see such language in an employment agreement, you are, generally speaking, not being offered a promise of employment forever.

On the other hand, the "just cause employment" relationship offers the employee some job protection, promising the employee a job as long as the employee adequately performs or as long as it is economically feasible for the employer. However, this must be agreed upon by the parties and is rarely offered outside of the unionized workforce.

Non-compete Agreements

Employers frequently require employees to enter into agreements limiting the employee's ability to work for a competitor, operate a competing business and solicit employees or current or prospective clients within a certain amount of time after departing the employer's business. Courts will enforce non-compete agreements that they find to be reasonable.

Non-compete agreements require reasonableness of the agreement in four respects. The agreement must 1) protect the employer's reasonable competitive business interest, 2) be reasonable in duration, 3) be reasonable in the geographical area in which it restrains competition and 4) be reasonable as to the type of employment or line of business prohibited.

Generally speaking, a reasonable non-compete agreement will be just restrictive enough to protect an employer's legitimate business interests while allowing the employee to earn a living. Employees must be particularly careful in their consideration of these agreements because they can effectively block the employee from working in a specific business for a substantial amount of time, generally a term of several years.

Sales Formulas/Closed Sales

For the commission-based employee, the sales formula is probably one of the most important terms of the employment contract. In light of this, it is surprising how often employees waive parts of their commission simply by failing to closely analyze and monitor the payment of their commissions. Employees are often owed substantial commissions because of the "life of the part" doctrine. The basics of this doctrine are that, where the employee finds a prospective client who begins ordering a particular item, the employee is to receive a commission based on the sale of that item for as long as the client orders it from the employer, even after the employee leaves employment. An exception to this is a written "closed sales" agreement. Under this exception, the employment agreement/sales formula contains language that limits the employees' commissions to sales which are closed on the date of employee termination.

Assignment of Inventions

The "assignment of invention" clause is common in the scientific, academic and creative fields of employment. These agreements should be limited in scope to the employee's field of practice and should be limited to the duration of employment with the employer. Beyond the scope of the assignment, employers may have the right to any invention created with their materials or while on employer's time (i.e., on the clock).

Limitation of Employment-Based Lawsuits

There are two basic, but powerful, limitations employers generally place on employment-based lawsuits. First, employers sometimes place a contractual limitation of the time in which to sue for events that occurred during employment. Courts have enforced time limits as little as six months. Under this agreement, events occurring beyond the six-month limitation would be barred.

Second, some employers prefer that all claims against them be placed in the forum of arbitration and, therefore, place binding arbitration language in the employment agreement. Employers disagree as to whether this is preferable. Some believe that arbitrators "split the baby" and, in the process, disobey the law. Others simply prefer to avoid costly litigation and/or possible class-action suits. In either event, both of these limitations could seriously hamper an aggrieved employee's lawsuit against the employer.

It is easy to understand how just a bit of tweaking of contract language can render an employment agreement more or less valuable to the employee. With this in mind, the employee should keep a vigilant eye out for the opportunity to negotiate and fine-tune the agreement to his or her liking and, if need be, consult an attorney.

Michigan Codifies Garrity Rights for Law Enforcement Officers

On December 29, 2006, Michigan enacted M.C.L. 15.391, codifying the protection of involuntary statements made by law enforcement officers. Such protection has been in place since the Supreme Court's ruling in Garrity v. State of N.J., 385 U.S. 493 (1967). In Garrity, the Court ruled that public sector employees are in fact under duress and deprived of free choice when asked to either incriminate themselves or forfeit their jobs. Therefore, the use of such statements is prohibited in a subsequent criminal proceeding as involuntary self-incrimination.

The new Michigan law defines an "involuntary statement" as a statement made by the officer under threat of dismissal or other employment sanction. "Law enforcement officers" include emergency dispatch workers and local corrections officers. As in Garrity, involuntary statements may not be used against the officer in a criminal proceeding. Additionally, such statements are confidential and may not be disclosed without establishing one of the following: 1) officer written consent, 2) search warrant, subpoena, or court order, 3) collective bargaining or administrative or legal proceeding involving the officer's employment status or to defend the officer or law enforcement agency in a criminal proceeding, or 4) with limited use by legal counsel in a civil action against the officer or law enforcement agency.

Clarification of Garg and Evidence of Discrimination Occurring Outside the Statute of Limitations

Prior to the 2005 decision of Garg v Macomb County Cmty Mental Health Servs, Michigan subscribed to the continuing violations theory of discriminatory acts. 472 Mich 263 (2005). This meant that aggrieved employees could file a claim for discriminatory or retaliatory acts that occurred beyond the three-year statute of limitations by showing them to be related to acts that occurred within the statute of limitations, so as to create a pattern of harassment. The Court in Garg ruled that continuing violations theory no longer exists under Michigan law but left open whether acts falling outside the statute of limitations may be used as background in support of claims made within the statute of limitations.

In Ramanathan v Wayne State Univ Bd of Governors, WL 28416 (Mich Ct App, 2007) the Michigan Court of Appeals recently held that, absent clear guidance from the Supreme Court, the admissibility of these past acts as evidence is subject to the discretion of the trial court under the rules of evidence (e.g. relevance, overly prejudicial). Therefore, how an employer treated employees and employee complaints in the past could be critical in a lawsuit concerning current work conditions.