FW: Legal Briefs for HR #4 - 2009

-May 5, 2009-

Welcome to Legal Briefs for HR, an update on employment issues sent to over 4000 HR professionals, in-house counsel and business owners to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you?d like to be added to the list and you?re in!  Back issues are posted on my firm?s website at www.munckcarter.com under E-Newsletter.  Welcome to new subscribers who attended my speeches for Odyssey One Source and the Fort Worth chapter of the National Association of Women in Construction!

1. This Little Piggy Here are just a few of the websites that may become useful to you as we all watch and hold our breath as the swath of H1N1 (swine flu) expands.  For workplace safety advice, go to www.osha.gov/Publications/OSHA3327pandemic.pdf.  For medical information, including the locations of reported cases, go to www.cdc.gov/swineflu/. Dust off your FMLA policy and take note of the changed definitions (underlined below) that took effect on January 16.  For example, a serious health condition may qualify under ?continuing treatment? if it lasts more than three consecutive, full calendar days and also involves at least two in-person health care provider visits within the first 30 days of incapacity OR one in-person health care provider visit within the first seven days of incapacity plus a regimen of continuing treatment.  Where FMLA does not apply, take a look at your absence control and paid time off polices and be mindful that unpaid leave for many folks is a big incentive to come to work sick, which you do not want them to do.  And don?t forget the FLSA regulations that limit your ability to dock exempt workers? salaries when they are absent without jeopardizing the exemption.

2. A Different Kind of Swine Heads up, employers in IL.  The IL Supreme Court held that under the state anti-discrimination law, an employer is strictly liable for the hostile environment created by a supervisor, even where the alleged victim did not work for the harasser and he had no authority to affect the terms and conditions of her employment.  Sangamon County Sheriff?s Dep?t v. IL Human Rights Commission ( IL S. Ct. 4-09).  In this case, a male sergeant/supervisor sent a female records clerk a letter, purportedly from the state health department, informing her that she had a communicable disease.  He claimed it was a practical joke, but the court was not amused and said ?Not only are supervisors the ?public face? of the employer, but employers are in the best position to train supervisors and make them aware of the law prohibiting sexual harassment.?  Most employers are mindful of the potential for strict liability where the supervisor harasser engages in the quid pro quo variety of harassment (i.e., conditioning term(s) of employment on receipt of sexual favors), but all should note the trend at the state level to use that same standard (rather than a negligence standard) when the harassment is of the hostile environment variety.  In any case, your best offense and defense is to [1] have a well-written and widely disseminated policy that prohibits such behavior; [2] include a procedure for reporting violations in the policy that does not force the alleged victim to start the process by reporting it to his or her supervisor; and [3] train your staff on this issue, especially your managers and supervisors. 

3. Thank You, Supremes! The days when Texas employers muttered ?Why bother?? when asked if they would try to enforce a noncompete against a former employee are becoming a faded memory.  In late 2006, the Texas Supreme Court put on their practical hats by holding that a noncompete could become enforceable when the employer provided the trade secrets or special training which served as consideration for the employee?s promise not to compete.  Before then, if the employee?s  written promise to not noncompete and the employer?s offer of secrets/training didn?t occur at the same time, there was no enforceable noncompete.  Now, fast forward to April 2009 for more good news.  A tax manager tried to get the noncompete he?d signed with his former employer declared unenforceable by pointing out that the agreement did not expressly state that he would be provided with confidential info.  The court took a dim view of this argument and pointed out that [1] the nature of his duties as tax manager required that he be given access to all sorts of company and customer confidential info; and [2] in his employment agreement, he promised that he would not use or disclose confidential information obtained while he was employed.  That promise made no sense unless he was, in fact, given confidential info.  The Court sided with the employer and explained that the employer?s implied promise in the employment agreement to provide confidential info was good enough and the parties had entered into an ?otherwise enforceable agreement? which is one of the requisites for enforcing a noncompete restrictive covenant in Texas.  Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding (TX S. Ct. 4?09)  Take that, tax man!

4. A Taxing Situation Employers with employees serving in the U.S. military who are offering those employees gap pay (i.e., the difference between their civilian and military paycheck), take note.  The IRS changed the rules regarding tax treatment of these payments, eff. January 1, 2009.  These payments are wages for income tax purposes, but employers are not required to withhold and remit social security and Medicare taxes (FICA). Ers will put the amount of payment in Box 1 of the ee?s Form W-2.  These amounts are subject to withholding for federal income tax and should be reported on Form 941.  The ee who receives these payments will report them on Line 7 of Form 1040.  If the ee is receiving large sums over time and is worried about accruing a big tax bite, he or she can make quarterly estimated tax payments.  The IRS suggests using the Electronic Federal Tax Payment System (EFTPS) to facilitate that process.

5. Third Time?s a Charm? There is another delay in implementation of a regulation intended to force certain federal contractors and sub-contractors to enroll in E-Verify and begin using it within 30 days of being awarded a contract.  The rule was to take effect on January 15, but has been pushed to February 20, May 21 and now to June 30.  In the meantime, there is activity at the state level relating to E-Verify as follows:
1. The Rhode Island  Superior Court has upheld the Governor?s right to require that all persons and businesses, including grantees, contractors and their subcontractors and vendors doing business with the state use E-Verify to verify employee eligibility to work in the U.S.
2. The Governor of Nebraska signed a bill (L.B. 403) that requires public employers and those who receive state/local contracts or tax incentives to use E-Verify on all newly hired employees, effective October 1.
3. Texas has a bill pending (H.B. 266) which, if passed, will force government entities and businesses who contract with them to use E-Verify or a similar federal program on all new hires.  The Texas AG has opined that the bills presented in this legislative session (unlike the ones in the 2007 session) would likely pass constitutional muster.