The Maryland General Assembly passed the Civil Rights Tax Relief Act (HB1169/SB639). The law addresses the taxation disparity between personal injury and employment discrimination plaintiffs: emotional distress damage awards are taxable to the latter but not the former. The disparity encompasses a large number of federal laws relating to employment discrimination and retaliation, including Title VII, the Fair Labor Standards Act, and ERISA. Under the new law, noneconomic damages in employment cases will be a subtraction from income on Maryland tax returns.
Awards and settlements received by personal injury plaintiffs have long been excluded from income tax under federal law. One rationale is that an injured person has not “earned” income by suffering emotional or physical pain or disfigurement. Rather, though the victim can be compensated only by money, he or she did not voluntarily participate in the transaction, and would not have chosen to trade the miserable experience for cash.
Until 1996, employment discrimination victims did not pay tax on compensatory damages for emotional distress. Congress changed the law for employment discrimination and defamation awards, however, via the Small Business Job Protection Act of 1996. Maryland tax law automatically incorporated the taxability characterization of emotional distress damages in employment discrimination cases. Awards for emotional distress in personal injury suits remained free of taxation.
Employment rights advocates have been attempting to roll back this law on the federal level for some time. In the meantime, state by state, some victims are getting relief. Lawyers representing employers did not oppose the new law. They know that cases are easier to resolve if the plaintiff’s compensation is not eaten up by taxes. Damages attributable to punitive damages and lost wages are still taxable.
Assuming the Governor signs it, the law goes into effect as of July 1, 2013.
After a busy and eventful session, the Maryland General Assembly has convened for the year. Several new employment related bills were passed by both houses, and are expected to be signed into law by the Governor.
One new law is titled the Pregnancy Fairness Act (HB804/SB784). Its genesis lies in a recent Fourth Circuit case involving UPS driver Peggy Young, Young v. United Parcel Service, 707 F.3d 437 (4th Cir. 2012). The Fourth Circuit decided that the Pregnancy Discrimination Act did not require UPS to give work accommodations to pregnant workers equivalent to those given to other employees.
Ms. Young worked an early shift for UPS, unloading from the airport shuttle and delivering rush letters and parcels due by 8:30 a.m. Shipments using this more expensive type of delivery ordinarily consisted of letters and light packages.
Young had experienced difficulty becoming pregnant, but in 2006 took leave and had a successful in vitro procedure. Her medical provider advised her not to lift packages weighing more than 20 pounds, as a precaution. UPS refused to allow her to return to work with the restriction. UPS offered this kind of light duty for employees who had suffered on-the-job injuries, for employees entitled to accommodations under the Americans with Disabilities Act, and for employees who had lost their federal driving certification. Young unsuccessfully tried to convince UPS that her restriction would not interfere with her work; she could use a hand truck and other employees had offered to help with the rare heavy package. UPS would not budge, and Young went on a lengthy unpaid leave of absence, losing her health insurance benefits for the remainder of her pregnancy and delivery. She later returned to UPS.
Pregnancy is not a disability under the ADA, so UPS did not have to offer her an accommodation under that law, though it voluntarily did so for other categories of employees. Young has filed a petition for certiorari in the Supreme Court frames the issue as follows:
Whether, and in what circumstances, an employer that provides work accommodations to nonpregnant employees with work limitations must provide work accommodations to pregnant employees who are “similar in their ability or inability to work.”
Maryland’s new law would require employers with at least 15 full time employees to give pregnant women accommodations unless the accommodation would impose an unreasonable hardship. An employee’s request for different hours, job duties, or work location, for example, must be considered; the law imposes an affirmative duty on the employer to explore accommodation possibilities with the employee. Further, if an employee requests a transfer to a less strenuous or less hazardous job during the pregnancy, the employer must grant the request if (1) it would do so for any other temporarily disabled employee, or (2) the woman’s health care provider so advises, and the employer is able to do so without displacing employees or creating a new job. Pregnant workers will be required to support their requests with medical certifications.
Often pregnant employees need simple accommodations, such as more frequent bathroom breaks, water or snacks at their work sites, and flexible hours for doctor’s visits. Moreover, the lifting requirements of many jobs overstate the typical daily tasks. For more serious medical restrictions, the law specifies that leave may be a reasonable accommodation. Nothing in the law requires the leave to be paid.
This new law is expected to ease the burden on the unemployment compensation and social services budgets.
Paul Krugman praised the President’s call to raise the minimum wage. Mr. Krugman is not only a cogent opinion writer for the New York Times, but also an economics professor and a recent winner of the Nobel prize in economics. So if he endorses the minimum wage hike, it is worth a look.
The federal minimum wage is very low, at $7.25 per hour. But many states, Maryland included, have a higher minimum wage, at least for some jobs. And using the state differences as a laboratory, economists like Krugman conclude that raising the minimum wage has a positive effect on jobs.
It could be as simple as Henry Ford’s famous experiment in paying workers more than the going rate. By giving automobile employees higher wages than his competitors paid, he enabled them to buy cars. Fords, of course.
In a similar way, the minimum wage workers making a little may be able to use more of their money at fast food places, grocery stores, gas stations, other places where minimum wages might prevail, thereby allowing more hires.
A bill without organized opposition may have reached its year. The Civil Rights Tax Fairness Act, HB 1169/S 639, seeks to equalize the taxation of employment damage awards with those of personal injury claimants for purposes of Maryland taxes. A person who gets money because of a personal injury does not pay taxes on the award: the exchange of money for an injury or ongoing pain is not the same as earning money. A person who exchanges money for the pain of having been racially harassed, however, does pay taxes on those damages. In both cases, the money is not earned income, it is the only, way to compensate someone for an illegal action leading to pain. Employers do not object to this law. It has a tax consequence to the State of Maryland, but it is minuscule.
Maryland’s legislature meets only 90 days every year, unless special sessions are called for emergency purposes, usually budget-related. As in most years, a number of bills affecting the employment relationship are up for consideration. Some will disappear with nary a trace, some will get hearings but little else, and some may even pass. I’ll post about a few of the interesting ones to watch.
To protect the unemployment insurance fund as well as the interests of unemployed people, Senate Bill 51 would override an otherwise enforceable noncompete agreement where the former employee is receiving unemployment benefits. The law would not apply to any contracts that predated October 2013, so the effect of the law would be delayed. Noncompete agreements hinder individuals from obtaining work in their fields, but protect their former employers from poaching contacts made while the former employee was the “face of the company.”
The idea behind this bill, then, is to assume that the restrictive covenants are keeping the unemployed worker from getting a new job. One interesting twist, though, is that the employee must be actually receiving unemployment benefits. That means that someone who quit without good cause, or who had been found guilty of gross misconduct, would not realize the benefit of having their restrictive covenants retroactively voided.
We should expect heavy opposition to this bill from business lobbyists.
Maryland’s Senator Barbara Mikulski intends to prioritize the Paycheck Fairness Act this term of Congress. The number of women senators reached an all-time high after this past election, and women now comprise 19% of the Senate. The bills, H.R. 377 and S. 84, are in committee.
When last considered, the House but not the Senate passed the law. The purpose is to sweep away some of the defenses by employers to their failure to pay women equally for the same job. Women still earn quite a bit less than men, for the same job.
At the same time, though, Senator Mikulski, together with House Representative Rosa DeLauro of Connecticut, asked the President to require government contractors to refrain from retaliating against or prohibiting workers from discussing their pay. While many people do not discuss pay because of culturally-instilled privacy reasons, a person paid less than a peer for doing the same job cannot always find out that she is underpaid, unless she asks.
The National Labor Relations Board already considers prohibitions against discussion of pay and other work conditions to be unfair labor practices, regardless of whether the workplace has a union
The Maryland General Assembly meets for only 90 days per year, unless a special session is needed. The special sessions are always devoted to unresolved critical issues, like the budget, so any employment laws will have to be passed in the winter.
There is time yet to introduce bills, but some come in “prefiled.” Among the interesting possibilities for this year:
A bill would prohibit the state, as a prospective employer, from asking about the criminal record of any applicant, at least until an interview is granted. This may work to prevent whole-scale weeding out of peopel with a criminal record.
A feel-good bill would allow certain employees to take off work without penalty on the day that an immediately family member leaves or returns from active military duty abroad.
A more controversial bill seeks to limit covenants not to compete. Someone who receives unemployment benefits would be freed of a non-compete covenant. This bill takes a simple solution to a complex problem, which can be attractive. An employee can’t get a new job and so dips into the unemployment benefit pool? He’s unbound by the covenant. This law would apply only to situations arising after October 1, 2013.
The General Assembly has a new website, where bills can be tracked.
Congress will consider a new bill called the Pregnancy Fairness Act, designed to improve the rights of pregnant workers against endemic discrimination. The bill was introduced on Wednesday in the House.
The ways in which courts have limited pregnancy discrimination laws are well described in this article.
The new law would require employers to make reasonable accommodations to their pregnant workers, similar to requirements under the Americans with Disabilities Act. Like the ADA, it would apply only to employers with at least 15 employees.
Pregnancy discrimination appears to be on the rise, based on the calls I have been receiving. The worker who loses her job because she is pregnant is in a triple bind: she loses income, she loses her health care benefits when she needs them most, and she is less likely to be considered for a job, since she will need a leave of absence in the coming months. Many pregnant women are capable of continuing their work through term, but may occasionally need to sit down, visit a restroom more often, or refrain from heavy lifting. If an employee’s job is “Heavy Lifter,” perhaps no accommodations can be considered reasonable. But for most employees some simple consideration can keep them working.
Today is special. Tax returns are due, two days later than usual. And it’s Equal Pay Day! That’s the day in 2012 on which women have earned the same as men did for 2011 work. “Each year, National Equal Pay Day reflects how far into the current year women must work to match what men earned in the previous year.”
The Department of Labor has a section on its website devoted to Equal Pay issues. But despite the law, which has been in effect since 1963, women continue to be paid less than men overall, and less than men for the same job. President Obama’s first signed law was the Lilly Ledbetter Fair Pay Act, to overturn a hostile Supreme Court decision.
Equal Pay act cases are still difficult to prove unless the workers have extremely similar jobs. While I doubt this was the intention of lawmakers, judges have approached equal pay act cases with a lot of skepticism. Two higher level positions are almost guaranteed not to be completely similar, but to pay two vice presidents with similar scope of responsibilities at dramatically different rates is commonplace.
Maryland’s record is better than most; according to Governor O’Malley, “Thankfully, in Maryland we’ve been able to reduce the wage gap between men and women to the fourth-lowest in the nation – and we were recently named the 3rd best State in the US to be a woman.”
But bring into the mix the State of Wisconsin, which has produced some extremely anti-labor sentiments of late.
After trying to rid the state government of unions, Wisconsin decided to attack protection for women (and racial minorities, among other protected categories). Republic state senator Glenn Grothman spearheaded the repeal of the state’s equal pay act law. Senator Grothman rejects studies showing that women are systematically discriminated against. Instead, according to him, “you could argue that money is more important for men. I think a guy in their first job, maybe because they expect to be a breadwinner someday, may be a little more money-conscious.”
Okay; even if that “argument” had any logic behind it, it still does not explain why a man should be paid more for the same job, just because it’s “more important” for him. Should a single mother of four earn more than a young single man living with his parents, because it’s more important for her? Hard to imagine Wisconsin getting behind that one.
No, this seems to be about gender. Men deserve more money, according to these attitudes that, unfortunately (though sometimes more subtly stated) prevail.
The Maryland legislative session just ended. As always, lots of bills were left on the cutting room floor. But a couple of interesting laws will become law if the Governor signs them.
The most newsworthy bill would prohibit employers from asking their employees or applicants to allow access to their social media sites, such as facebook. While cautionary tales abound about employers using the internet to find out what employees post, many people shield some of their information by erecting privacy walls. A state employee was required to give up his facebook password as a condition to returning to work after a leave of absence, triggering the legislation. According to the Baltimore Sun, Maryland is the first state to enact protective legislation, but others are considering similar protections.
A second law seeks to protect employees who serve on juries. Under SB 16 and HB 353, an employer may not schedule an employee for a shift beginning on or after 5 p.m. the day of jury service (or at least four hours of it), or before 3 a.m. the day after jury service.
Finally, a law eases some of the unemployment restrictions. An employee is entitled to unemployment benefits if she quits voluntarily with good cause. The employee has the burden of proof on the good cause, and there are not that many that qualify. A new recognized example of good cause was added to the law, permitting a finding of good cause if continued employment could endanger the safety of the employee, or the employee’s spouse, minor child or parent, if any of whom is a victim of domestic violence. Sometimes a domestic violence victim is safe only if he or she disappears from the reach of the perpetrator. A significant aspect of this law prohibits an employer’s rating record from being charged for the benefits, which should minimize employers’ objections when benefits are sought on this basis.
SB 291/HB 769