NH Labor Department Targets Misclassification of Employees

James W. Craig, the new Commissioner of the New Hampshire Department of Labor, addressed the Labor & Employment Section of the New Hampshire Bar Association on November 19, 2013.  Mr. Craig indicated that his chief enforcement priority is misclassification of employees as independent contractors.  He intends to bring “the hammer down” on those who violate the law.  The Department has freed up two investigators who can respond quickly in the field to potential issues and is making Spanish-speaking investigators more available to facilitate communication in the field.  The Commissioner has hired a new lawyer to assist in prosecuting cases, to avoid adverse results at hearings or reductions in proposed fines.  The Department is also becoming more aggressive in collecting unpaid fines.  The Commissioner cautioned that he is not targeting the “mom and pop” businesses who are trying to do things by the book, but who may have made honest mistakes; he is targeting those who intentionally skirt the law or who are repeat offenders.

RSA 275:4,II essentially treats every person who is engaged in employment as an employee.  Only those who meet all of the seven criteria under the law may be treated as independent contractors.  It is very difficult to meet all of the criteria under the law.  With this emphasis on pursuing offenders and imposing heavy fines, employers should take great care to ensure compliance with RSA 275:4 before treating any worker as an independent contractor.

Flexible Spending Accounts Become More Flexible

Flexible Spending Accounts (FSAs) or Health FSAs for years have let employers provide pre-tax dollars through employee salary reductions or employer contributions to an FSA account that the employee can spend as he or she pleases for qualifying medical expenses.  The down side, especially if the FSA account were composed of salary reductions, was the “use-it-or-lose-it” rule.  This rule meant that unused money in an FSA account was forfeited at the end of the plan year.  Naturally, this led to end of year buying binges by employees who did not want to leave unused FSA money on the table.  Not only did this encourage potentially unnecessary spending but it also prevented employees from setting aside unused funds for a rainy day when a few extra dollars might go a long way to offsetting unexpected medical expenses during the next plan year.

Recognizing this problem, the IRS in 2005 allowed employers to include in their FSA plans a grace period of up to 2 ½ months after end of the previous plan year for employees to spend amounts left in their FSA account.  For the first time, Health FSAs, like Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs), gave employers and employees the ability to moderate spending that was encouraged by the “use-it-or-lose-it” rule.

In late October of this year, the Treasury Department announced a new option that gives FSAs greater flexibility.  FSAs can now offer a $500 maximum rollover option that lets employees spend unused FSA account balances during the next plan year.  Not only does this defuse employee ill will caused by the forfeiture of unused balances, the new rule also lets the employee use the saved money after the expiration of the optional 2 ½ month grace period that was permitted under previous guidance.  Although the employer has to choose between the grace period option and the rollover option (a plan cannot have both options), it is clear that employees who are careful with their FSA money can look forward to managing those funds in a way that maximizes their usefulness, especially where medical expenses in a given plan year exceed the maximum amount (up to $2,500) that can be contributed to a Health FSA.

Overall, this small change is the kind of flexible thinking that makes a Flexible Spending Account a useful way to promote prudent use of healthcare resources.  For those employers who offer Health FSAs, it is a small but not insignificant way to make healthcare more affordable for everyone.

Authored By: Randall Weill, a partner in Preti Flaherty's Labor and Employment Group.

Retaliation in Discrimination Matters: A View from the MCAD

Having spent seven years as Commissioner of the Massachusetts Commission Against Discrimination, I have come to the realization that the charge of retaliation can lead to big and perceived problems for an employer.  I am only going to discuss two of ways that retaliation can impact an employer.  The first relates to an employee who brings a sincere claim of discrimination, harassment or failure to accommodate to the employer's attention.  An employer’s first instinct may be defensive.  The employer is angry at being accused of discriminating against an employee, and takes an adverse employment action against the employee.  The employee then files a claim of discrimination and retaliation against the employer.  The Commission may find a lack of probable cause on the charge of discrimination, but a finding of probable cause on the retaliation.  In order for an employee to prevail on a charge of retaliation, there does not need to be a finding that the employee was discriminated against.  An employer who is confronted with a claim of discrimination, harassment or failure to provide a reasonable accommodation by an employee should listen to the employee’s complaint, conduct a prompt impartial investigation, and take appropriate action.  Following these three steps should reduce the chance of a claim of discrimination and retaliation being filed, and, if filed, increases the chances  the charge of retaliation will also be dismissed.

A second source of retaliation claims involves an employee who believes that he/she is about to be fired.  To protect from being fired, the employee goes to the employer, alleging discrimination, harassment or failure to provide a reasonable accommodate by the employer.  The employee knows that by alleging a claim of discrimination, that the employer could be faced with a claim of retaliation as well as claim of discrimination, if the employer terminates the employee after being informed that the employee believes that he/she exercising a protected activity.  This course of action by the employee does not mean that you still cannot move forward with the termination.  An employer’s best defense to avoid such a charge is to document, document, document.  If employer documents the issues it has with an employee and informs that employee of the problems informally throughout the employment and during the review processes, an employer may end up with a better employee and/or reduce the risk of having a charge of discrimination and relation filed against it.  It will also, if a charge of discrimination and retaliation is filed, increase the probability that the charges will be dismissed. 

Interview with new MHRC Counsel Barbara Archer Hirsch

On October 7, 2013, Barbara Archer Hirsch took over the position of Commission Counsel from John P. Gause at the Maine Human Rights Commission, after winding down a long career in private practice.  Born in Portland, Barbara attended Harvard University and the University of Maine Law School.  Following law school, Barbara clerked for Judge Conrad K. Cyr of the United States Court of Appeals for the First Circuit.  We caught up with her shortly after she settled into her new job:

For our followers not familiar with your background, outline your bio for us.

I’m a native Mainer – I grew up in Portland, and graduated from Deering High School.  I left for Harvard knowing two things: I would never live anyplace smaller than Boston, and I was going to be a doctor.  As you can see, things didn’t exactly go according to plan!  I moved back to my hometown, and spent a couple of years teaching nursery school and figuring out what I really wanted to do.  That led to law school, which I loved.  I clerked for Judge Cyr right after law school, and then entered private practice, where I spent the next 15 years focusing mostly on employment law and civil rights issues.  On a personal level, I have two wonderful children from my first marriage, and am a blissful newlywed – I was remarried this summer.

So what's your first month as Commission Counsel been like?

It’s been incredibly busy!  I’ve been learning all of our processes from start to finish, and have developed incredible respect for our five investigators.  I remember grumbling about Investigator’s Reports now and then in private practice, particularly with regard to how long it took to get a decision after filing a charge.  Now that I know what goes into them, I regret being so quick to judge!  I started in my position just as the Commission published a proposed rewrite of its employment regulation, so I’ve also gotten a quick lesson in legislative rulemaking.  I recently served at my first Commission meeting.  I started that day searching for a copy of Robert’s Rules of Order and ended it by running the public hearing on our new proposed rules.  I’ve been to dozens of Commission meetings over the years, but I can tell you now that the experience of representing the Commission itself is nothing like the experience of representing a client in front of the Commission.  I need to know all the arguments that the parties might make in any case on the agenda – we just published the December agenda, which has 51 cases on it – and be prepared to answer legal questions about any of them.  It’s demanding, challenging, exhilarating . . . and I’m going to sound a little sappy here, but it’s an honor to be given the chance to do the work, and I hope to rise to the occasion.

Any surprises?

I was surprised at how different the Commission’s work is behind the scenes.  The amount of time, effort, and caring invested in each case and in trying to reach a just result is a bit humbling.  I was also surprised by the range of issues that can come up in any given day – I thought I had seen a lot in private practice, but there are new issues and twists to the Maine Human Rights Act that come across my desk on a very regular basis.

How you do hope to leverage your experience in private practice in your new position?

I practiced in front of the Commission throughout my time in private practice, so I understand how the process is perceived by outside counsel, as well as by Complainants and Respondents.  I hope to use my knowledge to improve our processes and our work product, and make them more user-friendly.  I represented both Complainants and Respondents in employment discrimination cases while in private practice, so I think I have a better perspective on the issues faced by all of our constituents, as opposed to a lawyer who worked only for employers or only for employees.  Of course, employment is just one piece of what I do now, so I will need to translate that experience into the housing and public accommodation arenas as well.

Do you have any areas of interest that you're especially interested in or committed to?

I’ll mention just a couple.  The first is LBGT issues.  There have been huge strides made in attaining equal treatment for gay and lesbian individuals, but there is still a lot of work to be done to educate employers and public accommodations on what is and isn’t legal.  The transgender population, in particular, remains tremendously vulnerable.  We’re very lucky to have just received a grant which will allow our Executive Director to do outreach programs throughout the state focusing on LGBT issues in fair housing, and I’m looking forward to seeing that project move forward. We also received a second grant for our Executive Director to do outreach to Mainers who have limited English proficiency; this is a fantastic opportunity to reach underserved people who are part of our communities. Another area I feel strongly about is in the area of disability discrimination: I feel that “invisible” disabilities - like depression, PTSD, or traumatic brain injury, all of which are common among our returning veterans - are still incredibly misunderstood, which results in discriminatory treatment. Again, it’s an area where education is necessary, both for individuals struggling with these disabilities and for those who work with them.

What regulatory developments can be expected from the Commission over the next 12 months?

As I mentioned, we just held the public hearing on our proposed new rules.  We’ve proposed a complete repeal and replace of the employment regulation, which updates the regulations and incorporates concepts from our federal counterparts where our laws are substantially equivalent.  The other new rule we proposed was an amendment to our procedural rule which deals with mediation.  We’re eager to move our mediation program forward, and the new rule allows us to do that.  We’ll be charging participants a small fee in order to cover the cost of the mediator, although there will be waivers available for parties who are unable to pay even the modest charge.  It’s a great opportunity to settle disputes early on, with highly trained and professional mediators. Our program offers this benefit at a bargain price compared to what private mediators charge, and we hope people will take advantage of it.

ADA: Testing and Transfer Accommodations

In Montemerlo v. Goffstown School District No. 2013 DNH 134 (DNH decided October 4, 2013) the United States District Court for the District of New Hampshire clarified certain burdens imposed on the employee and employer when addressing multiple accommodations under the ADA.  The Court’s opinion is a reminder of the importance of engaging in the interactive process and highlights the importance of written job descriptions.
 
A school teacher who requested an accommodation to test her blood during the work day filed suit claiming she was denied a reasonable accommodation.  The Court rejected that claim finding that the District had agreed to provide her with coverage when she needed to leave the class room to test.  The Court found it unreasonable that the teacher never requested coverage but filed suit because she wanted to test her blood in her classroom.

The teacher also requested a transfer to an open position that she believed was more consistent with her disabilities.  The District did not respond to the transfer request.  The Court declined to grant summary judgment for the District.  The Court began the analysis by noting that “a disabled employee does not have a right to a transfer to a new position simply because she is disabled [, but the] request to transfer must in fact address the disabilities that prompt the request.”  The District asserted the request for a transfer to a new position was not a request for accommodation because it had provided a reasonable accommodation (the coverage for blood testing), but the Court held “the duty to provide a reasonable accommodation is a continuing one, however, and not exhausted by one effort.”  Because the District failed to respond to the transfer request and thus did not engage in the required interactive process, the District could not show it was entitled to judgment on that claim.  The District also argued that the letter requesting the transfer was not specific and did not provide the required notice.  The Court rejected this argument finding that the issue should be examined in light of the District’s long-standing awareness of the teacher’s disabilities.

This case serves as a reminder that an employee’s request for accommodation under the ADA is sufficient if it directly and specifically gives notice of the need for accommodation and explains how the request is linked to a disability.  The Court will inquire whether the employer knew or reasonably should have known that the reason for the employee’s request was her disability; the employer cannot make its decision by narrowly considering the employee’s request as the Court will examine the totality of the employer’s knowledge.

A written job description identifying the essential functions of the position are important to the analysis of what reasonable accommodations are available, and the absence of a job description may make it more difficult on the employer to determine how to respond to an accommodation request.  It is the employee’s burden to show that she is a qualified individual, which demands the employee establish she possesses the requisite skills, experience, education and other job related requirements for the position and that she is able to perform the essential functions for the job with or without reasonable accommodations.  A job description will make the essential functions clear and will guide the employer’s decision.

When Timing Isn't Everything: Court Finds that Timing of Termination Alone Fails to Establish Pretext for Retaliation

In many retaliation cases, the timing between a protected activity and an adverse employment action is an important factual issue.  To a large degree, this is a matter of common sense.  After all, when we think of cause and effect, we often think in terms of time and tend to assume that contemporaneous events are more likely to be related to each other than events occurring at more distant intervals.  It is no surprise, then, that employees often use (and courts often accept) evidence of close timing between a protected activity and an adverse employment action to satisfy the basic elements of a retaliation claim.

Yet evidence of temporal proximity only goes so far, as a recent decision from the U.S. District Court for the District of Massachusetts illustrates.  In Wagner v. Baystate Health, Inc., a hospital lab assistant claimed her employer retaliated against her for taking FMLA leave by reprimanding her six weeks after returning from leave and then terminating her two weeks later.  The court found that the timing between the lab assistant’s leave and her discipline was sufficient to make out a “threshold” claim for retaliation and that a reasonable jury, looking just at the chronology without any other explanation, could conclude that the hospital retaliated against the lab assistant for taking FMLA leave.  However, the court found that the timing alone was insufficient to establish retaliation once the hospital provided a reasonable explanation for its actions.  In this case, the hospital explained its actions by pointing to a history of increasingly negative performance evaluations and the lab assistant’s failure to improve her behavior even after being put on a performance improvement plan.  Given the hospital’s explanation for the sequence of events, the court found the lab assistant needed to provide some additional evidence, other than timing, to show how the hospital’s explanation was invalid.
 
Wagner provides additional support for the proposition that an employee must show more than temporal proximity to overcome an employer’s legitimate non-retaliatory explanation for an adverse employment action.  At the same time, the decision serves as an important reminder for employers to document employee performance and any resulting disciplinary issues.  In the absence of this documentation, a disgruntled employee may have a better shot at convincing a judge that, in fact, “timing is everything.”