Legal Clinic Legal Developments in HR

Question: I am putting together a high-level presentation for my HR team on the top legal developments in 2013 that will impact how we practically manage employee relations in workplace in 2014. Can you please identify and provide a brief synopsis of the most important employment-related legal developments in 2013 -- something like a Top 10?  I want to make sure I know about all the "biggies."

Wednesday, April 9, 2014
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Answer:  2013 saw many new and exciting labor and employment developments in Supreme Court decisions and federal, state and city statutes. Below is a sample of some of the more interesting 2013 developments that may impact employers this year.

Supreme Court Cases

Same-Sex Rights: United States v. Windsor, 133 S. Ct. 2675 (2013)

In this ground-breaking case, the Supreme Court struck down Section 3 of the Defense of Marriage Act as unconstitutional under the Due Process Clause of the Fifth Amendment. Section 3 of DOMA codified non-recognition of same-sex marriages for all federal purposes. The plaintiff in this case, Edith Windsor, challenged DOMA after being accessed a $360,000 inheritance tax after the death of her same-sex spouse. If Ms. Windsor had been in an opposite-sex marriage at the time of her partner's death, she would have qualified for an exception to the inheritance tax.

The significance of this decision for employers cannot be overstated. Employers must be aware that for purposes of federal laws, same-sex spouses enjoy the same level of protections and privileges as opposite-sex spouses. Shortly after the decision in Windsor, the Department of Labor issued guidance that, for purposes of the Family and Medical Leave Act, the definition of spouse would now encompass same-sex as well as opposite-sex couples. U.S. Dep't of Labor, Wage & Hour Div. Fact Sheet #28F (Aug. 2013). In addition, the DOL announced that, under the Employee Retirement Income Security Act of 1974, the term spouse includes those "who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages."  U.S. Dep't of Labor, Technical Release No. 2013-04 (Sept. 18, 2013).

Definition of "Supervisor" under Title VII: Vance v. Ball State Univ., 133 S. Ct. 2434 (2012)

Vance addressed a split among the United States Courts of Appeals as to who qualified as a "supervisor" under Title VII of the Civil Rights Act of 1964. The definition of supervisor often determines whether an employer can be held liable for harassment under federal law. Some circuits defined supervisor in broader terms as any individual who vests authority to direct or oversee an employees' daily work, while other circuits applied a more narrow defiinition that limited a supervisor to an individual who has the power to "hire, fire, demote, promote, transfer or discipline" an employee. In a 5-4 decision, the Supreme Court adopted the narrow approach.

As a practical matter, this means that employers should re-evaluate which individuals should be granted the power to hire, fire, demote, promote, transfer or discipline employees. Even if an employer is satisfied with its supervisors, it may be necessary to provide additional training about what constitutes Title VII harassment, which could help to avoid unwanted and unnecessary litigation.

Federal Laws

Employer Mandate Delayed

The Patient Protection and Affordable Care Act was signed into law in 2010, and in 2012 the Supreme Court upheld ACA's individual mandate requirement. As many employers already know, the ACA also includes an employer mandate. The employer mandate assesses a $2,000 fee for every full-time employee, excluding the first 30 employees, on employers with at least 50 full-time employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees.

The employer mandate was originally set to begin on Jan. 1, 2014, however, in July 2013 the effective date was delayed because of concerns about the mandates complex reporting requirements. See Mark J. Mazur, Continuing to Implement the ACA in a Careful, Thoughtful Manner, U.S. Dep't of Treasury, Treasury Notes (July 2, 2013). The new effective date is Jan. 1, 2015 for all employers who employ more than 100 employees, and January 2016 for those employers that employ between 50 and 99 employees. See Treasury Fact Sheet, Final Regulations Implementing Employer Shared Responsibility Under the Affordable Care Act (ACA) for 2015 (Feb. 10, 2013). This delay will give some employers more time to prepare for the employer mandate, but employers should be aware that if they reduce their workforce in an effort to avoid the employer mandate, they will lose out on the extension and may face further penalties.

State Laws

Employers' Right to Social Media

In 2013, many states enacted laws that prohibit employers from requiring or requesting the password to an employee's social media account. In Colorado, employers may not request social media passwords from employees or applicants and may not take adverse action against an employee or applicant for refusing to disclose that information. The restriction is not always absolute; some states such as Illinois allow employers to request access to an employee's "professional" accounts such as Linkedin. This area of workplace privacy law is still developing and many other states have pending legislation to address the issue.

Based on these developments, employers must balance the need to properly vet applicants and ensure that employees are not placing the company in a bad light on social media, with the rights of the employees and the increasingly negative attitude toward an employer's need to access an employee's social media account. The National Conference of State Legislatures maintains a website that details recently enacted and pending legislation concerning an employer's right to social media accounts of its employees. At minimum, employers should review their policies and ensure that they conform to state law.

Accommodations for Pregnancy

In early 2014, New Jersey, New York City and Philadelphia expanded protections to employees affected by pregnancy. While Title VII already prohibits discrimination based on pregnancy, states and cities have expanded the circumstances for which accommodations might be required. Some reasonable accommodations under the amendments include (but are not necessarily limited to) restroom breaks, periodic rest for those who stand for long periods of time, assistance with manual labor, leave for a period of disability arising from childbirth, reassignment to a vacant position and job restructuring.

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An employer may still refuse to provide a pregnant employee with a reasonable accommodation if it would constitute an undue hardship. Factors for undue hardship differ from jurisdiction to jurisdiction, but usually involve looking at the employer's type and size of business, and the cost and nature of the employee's accommodation. Given these developments employers should revisit their personnel policies and procedures on pregnancy and make any necessary changes.

Criminal-Background Checks

Recently, the use of criminal background checks by employers has come under scrutiny from the federal government and some states and cities. In May 2013, Minnesota became the latest state to prohibit an employer's use of criminal background checks as a condition precedent to employment. Minn. Stat. § 181.53 (2013). The Minnesota law took effect on Jan. 1, 2014, and prohibits employers from inquiring into or considering the criminal record of an applicant until the applicant has been selected for an interview or extended an offer of employment. In addition to Minnesota, Indiana and North Carolina, the cities of Buffalo, N.Y., and Seattle passed laws in 2013 that limit an employer's ability to inquire about an employee's criminal record.

Employers who inquire into an applicant or an employee's criminal history should be mindful of the patchwork of federal and state laws, as well as agency guidance and directives limiting the use of criminal background checks. To ensure compliance with these growing restrictions, employers should carefully review (or create) policies regarding the use of criminal background checks when making hiring and employment decisions.

Drug Testing and Medical Marijuana

Medical marijuana laws can present various issues for employers. At least 20 states allow some form of medicinal marijuana use. However, most of these laws are silent as to whether an employer may terminate an employee who is also a medical marijuana patient for failing a drug test. In 2013, a state court of appeals in Colorado upheld an employer's decision to terminate an employee, who was a licensed medical marijuana patient, for failing a random drug test. Coats v. Dish Network, LLC, 303 P.3d 147 (Colo. App. 2013). The court reasoned that the employee was not protected because the statute was silent as to whether an employer could terminate a marijuana patient. The Supreme Court of Colorado granted ceriorari and will decide sometime in 2014 whether an employer may take such action against an employee in Colorado. Coats v. Dish Network, LLC, No. 13SC394, 2014 Colo. LEXIS 40 (Colo. Jan. 27, 2014).

Currently, Connecticut, Delaware, Illinois, Maine and Rhode Island offer protection to employees who are medical marijuana patients and who fail drug tests. This does not mean, however, that an employee cannot be terminated for other reasons related to medical marijuana use. For example, in Arizona an employer may terminate an employee if they "used, possessed or was impaired by marijuana on the premises of the place of employment or during the hours of employment. Ariz. Rev. Stat. § 36-2813. This area of the law is still evolving, and employers should take time to determine if their current drug testing policies are in accordance with the applicable state law.

Keisha-Ann G. Gray is a partner in the labor and employment department of Proskauer Rose in New York and co-chair of the department's employment litigation and arbitration practice group. Proskauer Associate Tulio Chirinos assisted with this article.

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