Effective June 1, 2005 — All Employers Must Comply With New FTC Rule on Disposal of Consumer Report Information and Records

The Rule, 16 CFR Part 682, implements Section 216 of the Fair and Accurate Credit Transaction Act of 2003. It is designed to reduce the risk of consumer fraud and related harms, including identity theft, created by improper disposal of consumer information. It applies to every person over which the Federal Trade Commission has jurisdiction, that, for a business purpose, maintains or otherwise possesses consumer information. Thus any company, regardless of industry or size, that possesses or maintains consumer information for a business purpose is subject to the Rule. Obvious examples are consumer reporting agencies, lenders, insurers, employers, landlords, government agencies, mortgage bankers, automobile dealers and other users of consumer reports.

“Consumer information” is defined as any record about an individual, whether in paper, electronic, or other form, that is a consumer report or is derived from a consumer report. It also includes a compilation of such information. It does not include information that does not identify individuals, such as aggregate information or blind data.

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New March 10, 2005 Requirement – Employers Must Provide a Notice to Reservists of Rights under The Uniformed Services Employment and Reemployment Rights Act

Effective March 10, 2005, employers must provide a notice of the rights, benefits and obligations of employees and employers under the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) to members of the Reserve and National Guard who leave, voluntarily or involuntarily, their civilian jobs for military service (“Reservists”).

Text of the Notice

The Veterans Benefit Improvement Act of 2004 (VBIA) amended the USERRA to require the employers to provide the notice “to persons entitled to rights and benefits under USERRA.” The Department of Labor has issued an interim final rule containing the text of the notice. Employers may meet this requirement by prominently displaying a poster with the notice where they customarily place notices for employees.

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Are All IT Jobs Exempt From Overtime Requirements Under the Fair Labor Standards Act?

Most companies are under a common perception that all jobs involving computers are complex, require exceptional expertise and are therefore exempt from the requirement of overtime pay under the Fair Labor Standards Act. Legally, this is not true. As a preventive measure, companies should audit their workforce to make sure that their information technology workers are properly classified. Failure to do so could cause companies to lose their exemption from paying overtime for all misclassified employees, payment of two to three years of back pay and the payment of double damages.

There are three possible applicable exemptions available to avoid overtime pay for information technology jobs. They are: (1) the computer related exemption under 29 CFR Section 541.400; (2) the administrative exemption under 29 CFR Section 541.200; and (3) the executive exemption under 29 CFR Section 641.100. This article will focus only on the computer related exemption.

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The ADA: Alcohol and Drug Abuse in the Workplace

Alcohol and drug abuse are recurrent problems in the workplace, costing the economy billions of dollars annually in lost production, lost wages, medical expense and injury. Thus employers have an economic selfinterest in confronting alcohol and drug abuse. In doing so, those with 15 or more employees risk incurring substantial liability for discrimination if they fail to comply with the Americans With Disabilities Act (ADA).

The ADA protects job applicants and employees with drug and alcohol problems against discrimination in employment if they are qualified individuals with a disability. A “qualified individual with a disability” is an individual with a disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such person holds or desires. Under the ADA, a “disability” is: (a) a physical or mental impairment that substantially limits one or more major life activities; (b) a record of such impairment; or (c) being regarded as having such an impairment. Alcoholism and drug addiction are disabilities.

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Major Changes in the Tax Treatment of Nonqualified Deferred Compensation Plans, Agreements and Arrangements

On October 22, 2004, President Bush signed the American Jobs Creation Act of 2004. It adds a new Section 409A to  the Internal Revenue Code. Code Section 409A makes fundamental changes to the taxation of amounts deferred under “nonqualified deferred compensation plans.” Under Section 409A, severe penalties will be incurred by participants in a nonqualified deferred compensation plan if the plan fails to meet or is not operated in accordance with Section 409A and the regulations to be issued by the Internal Revenue Service.

Section 409A applies to amounts deferred after December 31, 2004 and earnings thereon, and to amounts deferred and related earnings if the deferral arrangement is materially modified after October 3, 2004. The IRS is required to issue guidance within 60 days after October 22, 2004, providing a limited period of time during which nonqualified deferred compensation plans adopted before December 31, 2004 may be amended to (1) permit participants to terminate participation or cancel an outstanding deferral election with regard to amounts deferred after December 31, 2004, provided those amounts are includable in the participant’s income as earned (or, if later, when no longer subject to a substantial risk of forfeiture), and (2) conform to the requirements of Section 409A for amounts deferred after December 31, 2004.

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DOL’s New Fair Play Overtime Rules

The new Fair Play Rules amend the overtime regulations of the Fair Labor Standards Act. They become effective August 18, 2004. Under the Fair Play rules, workers earning less than $23,600.00 per year-or $455.00 per week-are guaranteed overtime protection.

The rules simplify the process of determining whether an employee is exempt from the FLSA’s overtime pay requirements under the “white collar” exemptions, i.e., the executive, administrative, professional, computer and outside sales exemptions.

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Three Top Reasons Why Employees Sue

Employment law does not address every imagined wrong, inequality, meritless promotion, mean act or omission that occurs in the workplace. The employment at will doctrine attempts to strike a balance—admittedly falling more adversely on employees. In many instances, a workplace can be like a sandbox/jungle, with no seemingly credible or impartial mediator overseeing an employee’s livelihood and the family’s survival. The employee consequently feels “wronged”.

When an employee approaches a lawyer to remedy that workplace “wrong”, the lawyer is often forced to advise the anguished employee that he or she attended law school, not justice school. Nonetheless, a lawyer’s duty to that complaining client is to look for certain acts, suspect classifications and/or factual patterns that evidence illegal aniums or unlawful motive. Accordingly, companies should plan for the worst, and attempt to avoid the more common minefields with sound policies and training.

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Employers Take Heed: Responding to the New Missouri Concealed Carry Endorsement Legislation

A new Missouri law, effective October 11, 2003, will allow persons who have been issued a concealed carry endorsement to carry concealed firearms on or about his/her person or within a vehicle throughout Missouri. Employers should take heed. In anticipation of this change, employers should consider prohibiting all persons, whether employees or not, from carrying a concealed weapon on company premises or in company vehicles.

Workplace violence is unfortunately part of the employment landscape and should be anticipated and minimized. There are many legal doctrines that create employer liability in this area. Under the common law doctrine of respondeat superior, an employer is vicariously liable for the tortious acts its employees commit within their scope of employment. More specifically, the legal theories of negligent hiring, supervision and retention are premised on the principle that a person carrying on a business through employees is responsible for the harm resulting to employees who are forced to come into contact with other employees who are reasonably foreseeable to cause harm.

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Mandatory Employment Arbitration Agreements-Employers May Not Achieve an Overall Cost Savings

Employment litigation continues to explode, fueled by the passage of the Civil Rights Act of 1991, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act and increased sensitivity to sexual harassment. The number of employment discrimination claims increased by 2200 percent in the twenty-five years from 1969 to 1994, and now account for twenty to twenty-five percent of the federal court docket. Arbitration became an attractive alternative to litigation when a string of United States Supreme Court Cases were handed down in 1991. By 1997, the United States General Accounting Office found that nineteen percent of employers were using arbitration for employment disputes.

Mandatory employment arbitration agreements are entered prior to a dispute via a written contract. Arbitration clauses are commonly found in employment applications, employment manuals, or stand alone agreements. Such clauses require employees to submit any employment dispute to one or more impartial arbitrators for final and binding arbitration. Employment arbitration differs from other commercial arbitration proceedings; a mandatory employment arbitration clause must not remove remedies that an employee would otherwise have if the employee pursued the matter in civil litigation. Those remedies include the recovery of litigation expenses, including expert witness fees, attorneys’ fees, compensatory damages and punitive damages. This unique requirement for employment arbitration clauses is sometimes referred to as the “Remedy Rule.”

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Divorce in the Work Place—Controlling the Release of Employment Records

Martial discord is a growing problem which adversely affects America’s workplace by taxing employee productivity and requiring employers to produce a vast array of employment information and records. In a national sample of men who had been married ten years or less, it was estimated that the work loss associated with marital problems cost employers approximately $6.8 billion per year. Unfortunately divorce is on the rise. In 1994, 4.6 of every 1,000 Americans divorced, with the number of divorced persons quadrupling from 4.3 million in 1970 to 18.3 million in 1996. 43 percent of first marriages end in separation or divorce within 15 years. In 2002 the Census Bureau projected that 50% of first marriages for men under age 45 would end in divorce, and between 44 and 52% of first marriages for women of comparable age would similarly terminate4. With all states reporting except California, Colorado, Indiana and Louisiana, it was reported that in 1998 approximately 1,894,768 persons finalized their divorce5. In 2000 that number increased to 1,914,400. It is understandable then that human resource managers are increasingly involved with lawyers and court proceedings as ever growing numbers of employees get divorced.

Marriage is factually and legally an economic partnership, the dissolution of which involves the distribution of property and the award of maintenance (alimony) and child support. Frequently, the resolution of these complex financial issues are complicated by the fact that one or both parties do not have sufficient information to evaluate his or her rights and do not trust the veracity of the information produced by the other spouse. In those situations, the formal discovery process, including the issuance of subpoenas, is available to compel the production of relevant documents and records which are not privileged. Rule 56.01 (b)(i)(2002).

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