Posted by marykeating on February 9, 2010 under Employment benefit issues, Uncategorized, disability discrimination | 
The Americans with Disabilities Act has faced a formidable battle in achieving its original goals of outlawing discrimination, and improving the employment rates for disabled people. Originally signed into law by the first President Bush, the ADA forbade discrimination against individuals who had a disability, so long as they could perform the essential functions of their job, with or without a reasonable accommodation. One would have predicted that the “reasonable accommodation” language would have led to the most controversy, but in reality, the courts systematically limited the availability of ADA’s protections by narrowing the definition of “disabled,” so few employees qualified.
Congress made some helpful changes last year, specifically legislating around one Supreme Court decision. Yet it remains a difficult law, in part because of the often cited principle that “attendance is an essential function” of nearly every job. So people who are disabled and need a period of recuperation or hospitalization are especially vulnerable when strict attendance policies lead to termination. Often they are told that light duty is not an option (though they report that other people do get light duty), or that they cannot have more leave time.
The EEOC has been pursuing Sears Roebuck for just such a discriminatory policy since 2004. Last week, it reached a large settlement, $6,200,000 with the retailer, which will benefit 235 of its former employees. All 
complained that they were damaged by Sears’ inflexible policy requiring an employee to return to work within one year after an injury, and failed to accommodate their disabilities to enable their return. In addition, Sears is ordered by the Court not to discriminate in the future, must post a notice in its stores for three years explaining the consent decree, and is required to report regularly to the EEOC on the progress of its accommodations of injured employees. The consent decree also alters Sears’ policies of communicating with its disabled employees, and requires a centralized leave management team to oversee the requests for and grants of accommodations.
The success of this litigation may swing the pendulum away from shutting the doors to injured or ill employees. Whether the motivation is fear that the “damaged goods” will never do the job efficiently, that health insurance premiums will rise, or simply to punish the person who has taken “too much” of the sick leave benefits offered, employers will have to watch their policies and practices in light of the Sears decision.
Posted by marykeating on December 25, 2009 under Employment benefit issues |
Yesterday morning, on Christmas Eve, the Senate passed its version of the Patient Protection and Affordable Care Act. Whether the law will be good in the short or long term is now unknown, but it will allow many more people to obtain health insurance who were otherwise considered uninsurable.
And earlier this week, on December 21, the President signed a law extending the COBRA subsidy. The subsidy is available for a maximum of 15 months. As discussed here a few months ago, the COBRA subsidy reduces the premium for the terminated individual to 35% of the full freight; the employer pays the remaining 65%, but receives a dollar-for-dollar credit against withholding taxes, so it’s really just an advance. Employees who were eligible for the original COBRA subsidy can extend their coverage at the reduced cost through February. (These were employees involuntarily terminated between September 1, 2008, and December 31, 2009; now the termination cutoff date is extended through February.) Employees who dropped the coverage as too expensive will be given the option to rejoin the plan.
Posted by marykeating on December 23, 2009 under Employment benefit issues, Maryland wage law |
Workers are entitled to be paid for the hours they work. So, even if they are fired, the employer has to pay for the time spent in its employ. If the worker was pulling a Wally in Dilbert’s company, and working harder on avoiding work than actually doing any work, the employer still has to pay for those hours, and deals with the lack of productivity by firing the “Wally.”
Things get more complicated for other types of compensation. Some people are paid entirely or in large part by commission; others get a significant portion of their annual compensation by bonus. What rights does the departing employee have to commissions for sales brought in before he left? What right does the employee leaving in November have to her year-end bonus, if her numbers were stellar until she was laid off or quit?
The best way to deal with these questions is in advance, with a contract. Highly compensated, gifted salespeople are more likely than other non-union workers to have contracts. The end of the relationship should be addressed in the employment agreement. Unless the employee leaves only because the company goes defunct, there will be some work in progress that may merit commission or partial compensation.
Without a clear provision in the employment contract, the employee should look to the commission structure and any policies that have been written about it. Fortunately, some of the more draconian policies are unenforceable under Maryland law. Consider, for example, a policy that states “no commission is payable unless the employee is currently employed on the date of payment of the commission.” The Maryland Court of Appeals rejected this policy in the case of a salesperson who had performed all of the tasks necessary to earn the commission, other than being present on the date of the payment to him. If the deal has been struck, delivery made, and the client paid the bill, the salesperson has earned that commission. In a structure like this, there will always be some uncompensated work, but when there is nothing left for the sales force to do, the whole commission should be paid. On the other hand, if the salesperson has done only a part of the work to conclude the sale, and someone else must step in to finalize the deal, he can legally be denied the commission.
Questions about bonuses can be murkier. One question is whether anyone should be paid a year-end or Christmas bonus if the worker is no longer employed; another is whether the amount of the bonus can be determined. These questions are related, and usually come down to this: how much of the bonus is based on objective numerical criteria? A court cannot enforce a deal if it has to guess how much a worker’s bonus should have been.
Often, bonuses are paid based on a handful of factors, including the company’s productivity and the worker’s specific goals. Some bonus plans allot a bonus pool to a department, and the manager has the discretion to dole out the bonus among the department members. When an element of subjectivity is allowed to define the amount of the bonus, the unhappy worker cannot mount a claim (unless there is proof that the subjective factor is an illegal one, such as the recipients’ race).
Other bonus plans are almost completely subjective. These may weigh the employee’s attitude and contribution to team spirit, for example. Moreover, they may be intended not just to reward past performance, but to provide an incentive to stay. The amount of these types of bonuses cannot be figured out until they are paid.
On the other hand, if a bonus is based solely on the employee’s performance, then an employee who reached her goals in eleven months should not be deprived of the bonus. This is akin to the commission structure, though it’s paid not on one deal but the year’s effort.
If an employer withholds bonuses or commissions without a genuine dispute about whether it has been earned, the employee is entitled to get attorney’s fees for the enforcement action, and can request the court to double or triple the amount owed, under the Maryland Wage Payment and Collection Act.
Bonus or no, enjoy your end of year holidays.
Posted by marykeating on December 2, 2009 under Employment benefit issues, Pending legislation |
The discussion about health care reform has increased awareness of the high cost of health insurance for people who are not in a group plan. While employed and in an employer-sponsored plan, an employee usually gets a reasonable plan for a pretty reasonable price, or even free, depending on the employer’s policies. But then the job ends, whether voluntarily or not. If the employer has at least 20 employees, the departing employee is entitled to COBRA coverage for 18 months, in most cases.
With unemployment still high, Congress is now thinking about extending the COBRA coverage for six more months, for those people who lost their jobs between April 1 and December 31 of 2009. In addition, even better for some, the COBRA subsidy discussed here would be extended as well. The subsidy has the federal government picking up 65% of the cost of the premium, which is repaid to the employer by a credit on the payroll taxes. If passed, the new law will be called the “Extended COBRA Continuation Protection Act of 2009.”
It’s hard to think of an interest group that would oppose this law, other than those who think that the government is subsidizing the unemployed too much.
Posted by marykeating on October 30, 2009 under Employment benefit issues, Pending legislation |
The Secretary of Health and Human Services released a report explaining in very clear language the effect of health insurance reform on the ability of small businesses to offer health insurance. According to HHS’s report, 56,593 small businesses in Maryland alone would qualify for an attractive tax credit. In addition, health insurance reform would end the catastrophe that effects some businesses when insurers hike premium costs as a result of an illness or injury of even a single worker. Small businesses have been rated by their own experience. So when one person of 50 has a serious illness, incurring hospital care, the rates for the business are directly affected. For a huge business, an illness or two does not alter the experience very much, because of the law of averages. But small businesses can be forced into giving up insurance benefits if two people are diagnosed with cancer.
The new law, if it passes, would forbid rating based on health status. In the end, the law of averages across the spectrum of the state or the country will drive insurance prices. In addition, the new law would end the lifetime cap on insurance benefits. This was an issue advocated by the late Christopher Reeve, who would not have made the progress he did without personal resources.
Finally, the law would end the practice of discrimination against women. There are insurance plans that refuse to cover women of child-bearing years, or treat pregnancies as uncovered conditions. (Maryland law is stronger than some states, and does not permit a blanket prohibition against insurance for childbearing.)
The economic hardships that have befallen many employees and businesses have brought some of these issues to the forefront. I hope we have the fortitude to make some much-needed reform to the existing system.
Posted by marykeating on October 24, 2009 under Employment benefit issues, Severance agreements |
I know I’m not the only one who’s a little leery of the charge ahead toward electronic access of health records. I’m not a Luddite, I use technology for hours every day, and can’t completely remember life without the computer. And when I handle a long-term disability case, I LOVE receiving medical records that are typewritten, not written in that arcane code and famously bad handwriting.
But the assumption that every American’s complete health history should be available for nationwide electronic exchange and use scares me a little. HIPAA, the Health Insurance Portability and Accountability Act, governs the disclosure of health information. A new law has added to the mix, called the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), part of the American Recovery and Reinvestment Act of 2009. The law and its regulations erect standards intended to minimize disclosures. This new law also sets out a lot of requirements for notifications that are necessary in the case of a breach of the privacy provisions. Specifically, the person whose privacy has been breached is entitled to notice.
The problems are: what if notice is not given; and what if it is? In the first instance, the person with the divulged health information has suffered a loss of privacy, but may never know. So, enforcement of this law is not going to be easy without whistleblowers or honorable companies holding the information.
In the second instance, privacy is breached, and the person is so notified. Now what is there to do? As of now, only the federal or state government can pursue the discloser and seek penalties. The penalties can get large; for example, for wilful violation which is not corrected, the maximum penalty is $50,000. But this still deprives the individual of control, not to mention the damages. An individual whose health information breach leads to the potential for identity theft can act quickly, and often avoid the worst of the damage. (See the Federal Trade Commission site for a step-by-step guide to dealing with identity theft.) And a violation could lead to a state case for invasion of privacy. Damages are difficult to measure in those cases, though.
This situation is similar to what we often face in considering severance agreements. It is typical for the company and employee to promise not to disparage each other. But what if they do? How do you prove the damages? In some cases, you just have to trust the good faith of the other party, because the prospects of enforcing a promise like that are dim.
Posted by marykeating on August 28, 2009 under Employment benefit issues, Pending legislation |
The Baltimore Sun reported last week on the plight of small employers in the Baltimore area, and the cost of health insurance. Without market power, small businesses have a difficult time providing health insurance to employees. Still, it’s a very popular fringe benefit, and most people believe having health insurance indispensable. That is, until they can’t afford it.
I commented on this last month. Small businesses not only have smaller profit margins, often, but also have less favorable access to affordable health coverage. The new article by Jay Hancock cites this sobering statistic: “in metro Baltimore, … CareFirst and UnitedHealth control nearly 80 percent of the trade. That’s not a market. That’s oligopoly – market failure.” Anecdotally, the article notes that the number of companies offering health insurance for small businesses has diminished, and the rate of increase is in double digits annually, far higher than inflation.
The market conditions create a prescription for failure. I’m dismayed that the public health insurance option appears to be dying in Congress.
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 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.
