Posted by marykeating on July 30, 2009 under Employment benefit issues | 
The Department of Labor has kept busy, this time releasing a report from the Bureau of Labor Statistics. The report summaries data from the National Compensation Survey that show the rate of health care coverage through employment insurance, as well as other fringe benefits. The high points should come as no surprise: government and highly paid private sector workers were the most likely to have health insurance coverage through work. Government workers were more likely to have sick leave (90%) than private sector employees (60%). Statistics fans can peruse some detailed tables at the report linked above, or wait until later in the summer when a more detailed analysis will be ready.
Obviously this report is being released in conjunction with the current debate on a national component to the available health insurance coverage. This morning’s Bob Edwards show on satellite radio featured Wendell Potter, a former CIGNA executive who spoke to Congress last month about his experiences in an industry more concerned about its bottom line than the health of its insureds. You can read the testimony here.
One of Mr. Potter’s claims is that insurance companies cull their rolls of sick individuals and families, and
“They also dump small businesses whose employees’ medical claims exceed what insurance underwriters expected. All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year’s premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether – leaving workers uninsured. The practice is known in the industry as ―purging.. The purging of less profitable accounts through intentionally unrealistic rate increases helps explain why the number of small businesses offering coverage to their employees has fallen from 61 percent to 38 percent since 1993 . . . “
As far as I could tell from his interview with the great Bob Edwards, Wendell Potter is not out hawking a book, but is speaking out in reaction to the lobbying efforts of insurance companies trying to avoid a national health insurance option. The small business effect is similar to what I posted about several days ago, here.
Posted by marykeating on under Unemployment compensation |
The federal government announced today that it was sending more relief to the states, in the form of supplements to their unemployment services.
Maryland will receive $1,019,462 to begin a Re-employment and Eligibility Assessment (REA) Initiative. The funding will pay for counseling, assessment, and crafting individual work-search plans for unemployed people whose industries may have dwindled or disappeared.
Posted by marykeating on July 28, 2009 under Federal wage and hour law, Pending legislation |
Speaking of the new minimum wage, which I did a few days ago, there are many exceptions to the requirement to pay minimum wage. One has received some attention lately, the tipped employee or waiter minimum wage, which has been stuck at $2.13 per hour since 1991. When I was in college in the 1970s, I made $2 per hour, earning slightly less than minimum wage at my dining hall drudgery job (paying college students less than minimum wage is also legal). For wait staff to make $2.13 per hour is rather shocking; unless they are in busy high-end restaurants, the minimum wage is probably a significant component of their compensation.
Representative Donna F. Edwards of Maryland recently introduced a law to increase the minimum wage gradually, H.R. 2570. In that law, dubbed the “WAGES Act,” for Working for Adequate Gains for Employment in Services, the minimum wage would be increased to $3.75 per hour three months after enactment of the law. In 2011, the minimum will again rise, to $5.00 per hour, and then keep pace at 70% of the federal minimum wage, or at least $5.50 per hour, by 2012.
According to census figures released by Representative Edwards’ office, “nearly 15% of all waiters and waitresses live below the federal poverty level, while only 5.7% of the workforce as a whole falls beneath this threshold. Minority populations are particularly hard hit by these low wages. According to the Census Bureau’s Current Population Survey (CPS), 22.3% of African-American tipped employees and 18% of Latino tipped employees live in families that are below the federal poverty level.” Women are also disproportionately affected.
Posted by marykeating on July 24, 2009 under Employment benefit issues, Severance agreements |
Have you been offered a severance agreement? Well, congratulations for getting something out of a bad situation, and condolences on the bad situation. What does it all mean?
Severance is offered by some companies as a matter of policy; in many of those cases the severance policy is made according to a written plan with specific rules. That means that the severance plan requires that you be paid based on some formula spelled out in the plan, perhaps a week for every year of service plus accrued but unused vacation. Most of the plans I’ve seen also say the severance will be paid only if you sign an agreement in which you release all claims, agree to keep the agreement’s contents confidential, and agree not to bad-mouth the company.
These kinds of agreements are almost always a condition of the severance offered on an ad hoc basis to someone whose employment has been terminated. Other frequently seen provisions include renewals of the non-disclosure agreements, provision of career placement services, and the ending of all fringe benefits, except, sometimes, health insurance.
To obtain an effective release from some claims of discrimination, the severance agreement must have certain provisions. For example, to release age discrimination claims, an employee must be given a certain time period to consider the agreement, plus a seven-day period to revoke his or her agreement, under the Older Workers Benefits Protection Act.
To release Family and Medical Leave Act claims, the Department of Labor needs to be involved.
The EEOC offers a severance agreement primer at its website, you can find it here.
What’s your next step?
If you are presented with a severance agreement, you need to determine whether the value of what the company is offering is more than the value of your released claims. In addition, if the agreement is not being offered as a part of an employment benefit plan, then there may be room to negotiate a better package, whether “better” means a higher financial payout, or an offer of something less tangible, such as a positive recommendation. Experienced counsel may be of help in figuring out your options.
Posted by marykeating on July 22, 2009 under Employment benefit issues |
The Baltimore Sun reported this morning on a non-scientific poll of small businesses conducted by the Public Interest Research Group. Small businesses often find themselves unable for financial reasons to offer health insurance as a benefit, even where employees pay a portion of the costs of coverage. Local businesses are similarly hamstrung. Those that offer insurance do so as a way of attracting the caliber of employees they need, but apparently are not doing so happily.
The cost of health insurance has risen steadily over the past few decades, faster than inflation; perhaps only college tuition prices have shown a similar independence of the inflation rate. According to the National Coalition of Health Care, premium costs for a family of four topped $12,000 per year. It’s no wonder that many employers do not offer insurance coverage, or require employees to pay an increasing share of it. In an era when wages are not rising, this hurts, though not as much as not having insurance at all. Then, when an employee becomes unemployed, COBRA or its state equivalent requires the employee to pay the entire cost, plus a 2% administrative fee. (But see the limited period of relief that Congress has granted.) Still, COBRA ends after 18 months, after which the employee’s options are often limited to a state health pool, or a private plan.
When did health insurance become a common fringe benefit? It is somewhat arbitrary that the American worker or her family is dependent on a certain type of job (full-time, with a larger company) to enjoy health insurance coverage. Apparently during World War II, the government had to approve wage increases. In order to attract workers some companies added attractive fringe benefits. Unions, likewise, bargained for generous health insurance coverage. Sixty years later, the climate has changed dramatically. Perhaps the time is right for a centrally provided health insurance agency. Then we’ll see how the large companies use the savings.
Posted by marykeating on July 20, 2009 under Sex-based discrimination |
An article in today’s National Law Journal discusses the use of text messages as evidence of sexual harassment. Texting provides an easy means of communication, and it may feel as ephemeral and private as an oral conversation. Phone calls, however, are not usually recorded, and in this state anyway, can’t be recorded legally without the consent of both sides or a court order. Text messages leave electronic footprints, and can be forwarded, retrieved, printed, and saved for posterity.
The article discusses a case in which the “he said-she said” nature of many sexual harassment claims unraveled when the harasser’s text messages were revealed, showing that the claimants were indeed telling the truth about the college coach’s inappropriate activity. Read more here.
Posted by marykeating on July 18, 2009 under Unemployment compensation |
Maryland’s unemployment compensation law was designed to tide over people who became involuntarily unemployed. Until recently, the law applied only to formerly full-time employees, and had a limited time period of 20 weeks. The original assumption, that an unemployed worker looking for work should be able to find a new position within a half year is no longer valid.
New legislation changed several aspects of the law, in an attempt to provide some relief from the economic crisis. The original assumption, that an unemployed worker looking for work should be able to find a new position within a few months is no longer valid. Claimants are now eligible to receive their benefits for 33 weeks. The state maximum weekly benefit amount increased to $410, while federal stimulus money added $25 more per week to the benefits. In addition, people receiving unemployment compensation during 2009 pay no taxes on the first $2,400 in benefits.
Part-time workers are now eligible for benefits. Until recently, part-time workers were ignored in the unemployment compensation system.
The State Department of Labor, Licensing & Regulation has a good overview of the logistics of applying for benefits or registering as an employer, here.
An important revision to the unemployment law, effective June 1, 2009, eliminated the right of certain employees to receive both severance pay and unemployment benefits. The former law provided that an employee whose job was abolished and whose severance package did not completely replace the salary and fringe benefits payable at the job could receive both the severance and the unemployment. This provision was useful in negotiating severance packages; adding the provision that a job was abolished could help the employee earn more than the granted severance weeks, and also gave the employee a blame-free excuse for being unemployed. This can be helpful in searching for new employment. Now, severed employees are ineligible for unemployment compensation for the weeks for which severance is payable.
Posted by marykeating on July 16, 2009 under Age discrimination, Discrimination in employment |
According to the Washington Post, the Equal Employment Opportunity Commission held a meeting yesterday to address the phenomenon of skyrocketing age discrimination claims.
Age claims in 2008 outstripped 2007 claims by 30%. There is no reason to expect that 2009 will be much different. The biggest difference will be the enhanced difficulty of proving the claims. In the last weeks of its term, the Supreme Court issued several important decisions of interest to employment law practitioners. One of them had less newsworthy facts than the white firefighters case, but will have a far greater impact. In Gross v. FBL Services, the Supreme Court raised the level of proof needed by a discrimination claimant under the Age Discrimination in Employment Act. The Court unaccountably decided that the burden of proof for age discrimination plaintiffs should be higher than that for victims of race, sex, national origin or religious discrimination. These cases are difficult to make into headline news, but the reality is that most workplaces are free of open and hostile discrimination. Every educated person knows better than to spout racist invective. That does not mean that we are truly in a post-racial society, but rather that much of the bias has gone underground. The difficulties of proving that, “but for” the age of the worker, he or she would not have been fired can be insurmountable.
Age discrimination is an odd kind of bias, since it’s not based so much on “otherness,” as racial discrimination might be, as on assumptions that older people are slower, less technologically oriented, or simply in the way of the progression of the young. I have long thought that federal judges, especially, have trouble understanding the dynamic of age discrimination, since they are usually rewarded for their experience and seasoning. No one makes a federal judge retire, and no one (except perhaps a peer) dares to suggest that he is losing any competency. They are almost without supervisors, so they do not have the experience of having their territories restructured, their direct reports reassigned, or other sly methods of interfering with their performance. When these changes are designed to interfere with performance, or have the effect of reducing an older person’s performance ratings, age discrimination may be the motivation. But in these economic circumstances, when restructurings and reductions in force are commonplace, it is not going to be easy to prove bias.
In an earlier era, when the Supreme Court tipped the scales toward employers, Congress reacted with the Civil Rights Act of 1991. Perhaps Congress will take the reins again.
Posted by marykeating on July 15, 2009 under Uncategorized, Wage and hour issues |
You have seen this posted for two years, since Congress began implementing incremental minimum wage increases two years ago. So don’t forget, as of July 24, 2009, the federal minimum wage will increase from $6.55 per hour to $7.25 per hour. You can keep the same poster until something else changes, though.
Minimum wage seems easy enough to understand, but in fact there are many ways in which an employer can make mistakes, whether on purpose or inadvertently. One thing to remember is that states are permitted to impose a minimum wage different from the federal wage. If it’s higher, the state minimum wage controls. Maryland automatically follows the federal standard, so the amount of the minimum wage is equal.
But since not all jobs are subject to the federal minimum wage, Maryland’s minimum can be important. A job not subject to minimum wage under federal law may be subject to the Maryland law. (Federal law applies to jobs affecting interstate commerce; that cuts a wide swath across the economy, but there are occasional exceptions.) In addition, Baltimore City has a minimum wage equal to the federal and state minimum per hour, and affects employers of at least two people. So, in other words, only you self-employed people are completely exempt, and can work for less than minimum wage (but you already knew that). But for certain service contracts with the City, employers must pay at least $10.19 per hour, as of July 1, 2009. A still-higher prevailing wage is payable on city construction contracts.
Under federal law, exceptions to the minimum wage exist for certain categories of workers. For example, workers with disabilities and certain students may be paid less than the minimum wage, for policy reasons supporting employment of the disabled, whose employment level is quite low, and to encourage hybrid learning/working situation. In addition, workers under the age of 20 in their first 90 days of employment may be paid a minimum of $4.25 per hour, to encourage successful first forays into the job market.
Perhaps the most widespread area of confusion and abuse relates to tipped employees. Under federal law, a tipped employee must earn a wage of at least $2.13 an hour if that amount, combined with the tips, equal at least the minimum wage. This exception also requires that the employee keeps all of the tips he receives, and that he or she gets at least $30 in tips per month. In Maryland, the minimum direct wage, paid by the employer, has to be 50% of the minimum wage.
I have occasionally seen employers try to game this exception by not permitting the employees to keep their tips, or cutting the minimum wage to nothing when tips are high. Splitting tips with others in a restaurant, for example, is a tricky area. It does not violate federal law, if it is the regular practice of the establishment, but it does require the payment of the full minimum wage to the servers.
State law may be more protective. Starbucks’ big loss in California of more than $105 million on this issue was overturned on appeal last month. Read more here.
Critical to that decision were two factors: one, that the tips were in pooled plastic tubs, and two, that shift supervisors were not really management employees, and often prepared and served coffee just like the lower level baristas. (Also, this case arose under California law, not the federal Fair Labor Standards Act.)
I’ll talk about overtime issues in another post. That area is even more complex and riddled with exceptions than the minimum wage law.
.
Posted by marykeating on July 14, 2009 under Employment benefit issues |
COBRA has been around since 1986, providing employees with a limited time option to continue with the health insurance coverage that they had while employed. Unless the employee is disabled, the coverage lasts for a maximum of 18 months; for a disabled employee, the coverage extends for 24 months. The coverage ends when the employee obtains alternate coverage or stops paying the entire premium. COBRA also provides an avenue for a newly unemployed person to join a spouse’s or, in limited cases, a parent’s coverage through another employer, without waiting for an open enrollment period. Many newly unemployed people find the premium payment onerous, however, especially if they enjoyed a family coverage policy.
Trying to deal with the state of the economy, Congress gave some premium relief to laid off employees. Under the American Recovery and Reinvestment Act of 2009, employers must pay 65% of an employee’s COBRA payment for employees laid off between and December 31, 2009. While employers will front the cost of the insurance premiums for COBRA-eligible individuals, the federal government will issue a payroll tax credit to the employer to compensate for the portion underwritten by the employer. You can read the law here.
COBRA is available to employees who quit or were terminated for reasons other than gross misconduct. COBRA applies only to employers with at least 20 full-time employees. The subsidy under the With the American Recovery and Reinvestment Act of 2009 phases out as the gross income of the employee rises.
For smaller employees in Maryland, the state mini-COBRA law kicks in. Employees are entitled to continue on health insurance coverage, provided they pay the premium plus, at most, a 2% administrative charge. Smaller employers are also subject to the premium relief system, but do not have to advance the 65% of the premium that larger employers do. Under theMaryland health insurance continuation plan, the health insurance carrier provides the appropriate forms to the laid off employee, and it will accept the 35% premium sent by the former employer. Then the insurance company will then get the tax credit provided by the federal government to cover the 65% premium payment not paid by the unemployed person.
