Monthly Archives: June 2014

WHY NOEL CANNING MATTERS

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By:  Thomas W. Mackenzie

Last Thursday’s decision by the U.S. Supreme Court invalidating three of President Barack Obama’s recess appointments to the National Labor Relations Board throws into question hundreds of Board decisions issued between the recess appointments made in January, 2012 and July, 2013 when the current five member Board was lawfully confirmed by the Senate. The impact of this decision is three fold.

First, the current composition of the NLRB, three Democrats and two Republicans, will now have to revisit and issue new decisions on hundreds of cases that were decided by the invalidated recess-appointed NLRB which existed for eighteen months. The term of Democrat Nancy Schiffer is due to expire on December 16. Her departure could set up a two to two split between the NLRB’s Republican and Democratic members and create a significant hurdle for the changes envisioned by the Obama administration’s commitment to organized labor. If the Republicans win control of the Senate in the upcoming November elections, they could vote against confirming a new Board member, making significant change unlikely for the balance of President Obama’s term unless that change occurs in the next six months.

Second, the Supreme Court’s decision will likely result in significant delay for employers with cases currently waiting for decision by the Board. The NLRB will have to prioritize its goals and objectives over the next six months. Lindner & Marsack is currently representing employers with cases pending decision before the NLRB. If those cases do not fit the profile which the Democratically controlled majority deem to be a priority, delay into 2015 and beyond is likely. Assuming the Republicans regain control of the Senate, such delay may not be unwelcomed.

Third, logic tells you that the three Democratic Board members, all of whom represented organized labor as practicing lawyers, will likely rubberstamp the decisions of the invalidated Board members. However, sometimes logic falls when confronted by human behavior. It is fair game to question whether the new NLRB can resist the opportunity to put its own fingerprints on some of the prominent decisions that were issued by the invalidated Board. These cases would include the Gannett Co., Inc. decision, which overturned 50 years of precedent and held that employers must continue to maintain dues checkoff provisions requiring the automatic deduction of union dues from employee paychecks even after a collective bargaining agreement has expired. Piedmont Gardens overturned a rule dating back to 1978 that protected the confidentiality of witness statements taken during an employer’s internal investigation into alleged employee wrongdoing. The invalidated NLRB ruled that a blanket exception from releasing these statements to the union upon request no longer existed and instead the employer was required to conduct a balancing test that precluded giving witnesses a guarantee of confidentiality. In Banner Health, the invalidated Board found that an employer violated the law by maintaining a policy prohibiting employees from discussing ongoing investigations into potential misconduct including sexual harassment allegations. This decision, which affects all employers whether unionized or not, again precludes employers from giving a commitment of confidentiality in its investigation. Finally, it is unlikely that the current Board will refrain from casting its own view on the social media cases decided by the invalidated Board. These include the Costco decision (company’s prohibition on disparaging the employer or its employees on social media was unlawful) and Hispanics United of Buffalo (terminations of five employees who responded on Facebook to a coworker’s criticism of their job performance were deemed to be unlawful).

The grand promises by the Obama administration to organized labor have not been fulfilled. “Card check,” whereby an employer could have been obligated to recognize a union as the authorized representative of its employees without a secret ballot election, is dead. Moreover, almost six years into the Obama presidency organized labor has yet to see changes designed to speed up the election process or to provide enhanced access to the company’s email system for union organizing purposes. Although it is not inconceivable that the current NLRB will attempt to fulfill some of these commitments, the Supreme Court’s decision has made that objective more difficult.

If you have questions about anything in this e-alert, feel free to call Tom Mackenzie or any other Lindner & Marsack attorney at 414-273-3910.

 

New Regulations Allow Orientation Period Prior To ACA’s Maximum Waiting Period Before Mandatory Health Plan Coverage

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The Affordable Care Act (“ACA”) requires a “large employer” (50 or more full time equivalent employees) to provide health plan coverage to “full time” employees (30 or more hours per week) within 90 days of hire. On June 25, 2014, IRS, DOL, and HHS published final regulations which allow an employee orientation period of up to 30 days to precede that 90-day waiting period.

Specifically, the final regulations provide that being otherwise eligible to enroll in a plan means having met the plan’s substantive eligibility conditions (for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period). Under the final regulations, after an individual is determined to be otherwise eligible for coverage under the terms of the plan, any waiting period may not extend beyond 90 days, and all calendar days are counted beginning on the enrollment date, including weekends and holidays.

IRS, 26 CFR Part 54, Reg-122706-12, RIN 1545-BL97, p. 6; DOL EBSA, 29 CFR Part 2590, RIN 1210-AB61; HHS 45 CFR Part 147, RIN 0938-AR77.

Saying that, “the Departments do not intend to call into question the reasonableness of short, bona fide orientation periods,” the Regulation adds that, for fear of abuse, they will apply a “clear maximum” to prevent “mere subterfuge for the passage of time.” If an orientation period for training and evaluation is “longer than one month that precedes a waiting period, the Departments refer back to the general rule, which provides that the 90-day period begins after an individual is otherwise eligible to enroll under the terms of a group health plan.” Id., pp. 6-7.

Two definitional elements should be noted:

  1. “[O]ne month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage.” Id.
  2. This rule applies to plan years beginning on or after January 1, 2015. Until then, the proposed regulations will be considered in effect. Under the proposed regulations, an orientation period would be allowed if it “did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.” Id., p. 5. The final version is not considered to be a “substantive change.”

The concern with possible abuse or misuse of this new rule has led to a “bright line” test which simply counts the relevant days with no attention to the details of job requirements and how the employer determines within 30 days whether the new employee can satisfy them.

If you have any questions about this new regulation, please contact Alan Levy, the Lindner & Marsack attorney who focuses on employee benefits.