Suttons Bay Law

In response to challenging economic times, a number of employers have announced reduced work hours or “furlough” days. Generally speaking, reducing work hours for hourly employees is a safe and fair way to help control labor costs in difficult times. When dealing with salaried employees who are exempt from state and federal overtime pay requirements, the rules become more complicated.

To qualify an employee as “exempt” from overtime pay, an employer must, among other things, pay the employee on a salary basis. This means that exempt employees are paid a predetermined amount for any given workweek regardless of variations in the actual amount of time spent working in that workweek. Just as the employee will not be given extra pay for working more than 40 hours in a week, the employee will not be docked pay for working less than 40 hours in a week. The one exception is that an employer may choose not to pay any salary for a given week so long as the employee truly did no work that entire week.

When reducing work hours, requiring salaried exempt employees to work one less day per week would not in and of itself permit the employer to reduce the employee’s weekly salary by one-fifth. It is safer to require salaried employees to take mandatory unpaid vacations in increments of one full week. The employer must give strict instructions that the employee not perform work (such as handling emails or voice messages) during that week.

Another alternate would be for the employer to implement an actual salary reduction to correspond with anticipated reductions in hours worked. This is permissible so long as the reduction takes effect for a consistent and foreseeable period of time. The employer may not manipulate the salary from week to week in order to correspond with fluctuating work hours.

The bottom line is that employers should not require salaried exempt employees to take unpaid time off in less than one week increments. If you must make salary reductions, you can do so, but those reductions cannot fluctuate from week to week.

Finally, keep in mind that some employee benefit plans require the employee (whether hourly or salaried) to maintain a minimum number of hours worked per week. Employers must be careful not to disqualify an employee from benefit eligibility inadvertently by reducing the employee’s hours.

Wage and hour laws can be confusing. Do not hesitate to contact a Wright Penning & Beamer attorney if you need additional information or clarification.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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In December of 2009, Congress and the President approved an extension and expansion of a COBRA premium subsidy law that was due to expire on December 31, 2009. The program now runs through February 28, 2010, rather than December 31, 2009, and the subsidy period is expanded from nine to 15 months. Additionally, there is no requirement that COBRA coverage begin by February 28, 2010, only that the COBRA qualifying event (involuntary termination of employment) occurs by February 28, 2010, and that the individual is eligible for COBRA coverage.

With this extension come new compliance obligations for employers. For example, employers must comply with new notice requirements regarding the extension that must be met quickly. As the United States Department of Labor outlines in its FAQs, plan administrators must provide, as part of the COBRA election notice materials, a General Notice to all qualified beneficiaries, not just covered employees, who experience a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event. For qualifying events occurring after the December 19, 2009 date of enactment, this notice must be provided within the normal timeframe for providing a COBRA election notice. Some beneficiaries will be entitled to multiple notices.

Employers will also need to calculate any overpayments for COBRA beneficiaries who may have paid their full premiums upon receiving notice that their eligibility for the pre-extension subsidy ran out. Upon calculation of the overpayments, employers will have to decide either to issue refund checks to the beneficiaries or to offset future COBRA premium payments by the amount of the overpayment.

For more information on the notice requirements, as well as additional facts regarding the COBRA subsidy extension in general, please visit:
http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html and
http://www.dol.gov/ebsa/newsroom/fscobrapremiumreduction.html.

As always, feel free to call the attorneys at Wright Penning & Beamer as well.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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I’m pleased to announce that one of Michigan’s premier business journals, DBUSINESS, recently announced its 2010 “Top Lawyers” in metropolitan Detroit - and three of the principals with Wright Penning & Beamer made the list.

DBUSINESS compiles its list as a resource and reference guide for its readers. Selection criteria include:

• legal knowledge
• analytical capabilities
• judgment
• communication ability, and,
• legal experience.

The list was published in the journal’s November/December 2009 edition.

According to the publication, selected lawyers “possess the highest professional ability and ethical standards.”

Dirk Beamer, Lee Flaherty and I were selected this year. Beamer for his expertise in business and commercial litigation; Flaherty for her work with non-profits and charitable organizations, and I was recognized for business and estate planning.

As a founding shareholder of the firm I’ve focused my practice areas primarily in planning for business entities including family businesses, estate planning for business owners, individuals, families with special needs children, and succession planning for family cottages and farms. Through these practice areas our firm has become a leading resource for individual and business clients.

Beamer oversees our firm’s diverse litigation practice, focusing primarily on business and commercial litigation. He spearheads the firm’s efforts in insurance law, unfair competition, trademark infringement, employment matters and contract disputes. Dirk has litigated in state and federal courts across the country. He also counsels business owners and managers concerning employment practices and management.

In addition to her work with non-profits, Lee Flaherty is well versed in real estate, business law, estate planning and probate. Lee’s business expertise encompasses the support of ongoing businesses, business purchases and sales, and representation in commercial real estate transactions. Her estate planning practice focuses on the preparation of a wide variety of trusts and other documents to assist clients in avoiding probate, preserving assets and minimizing taxes.

I take pride in my colleagues’ accomplishments and wanted to share this good news with you. As a firm we continue to strive daily to deliver the highest quality legal services to our clients throughout Michigan and beyond.

Dan A. Penning

Tags: Agribusiness, Business Management/Law, Business Succession, Cottage Law, Employment Law, Estate Planning, Know it Now, Personal Management, Special Needs Children, Suttons Bay Depot by Dan Penning
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In Michigan, an employer could be held liable for an employee’s actions while traveling if the trip involved a service or benefit to the employer. This is true even if the employee is driving his or her own vehicle, especially if the employee is traveling on business or to an important business meeting. Generally, if an employee has a primary place of business, an employee’s actions while traveling to and from that location do not expose the employer to liability. But in a recent case, the Michigan Court of Appeals considered that an employee’s normal place of employment could be her vehicle.

In the case, the employee had struck another woman with the employee’s own vehicle while “going to work.” Because the employee’s job entailed traveling in her car 60% of the time, the Court determined that she could have been acting within the scope of her employment at the time so as to impose liability on the employer for the other woman’s damages. The Court reasoned that “driving to work” is different for employees who travel significantly than it is for someone who works at one primary location.

Rulings such as this could open the door for more attempts to hold an employer liable for actions of an employee while traveling. Maintaining detailed travel records for employees might help employers defending such cases. Also, comprehensive general liability insurance policies should be reviewed to make sure coverage extends to these situations.

Dan A. Penning

Tags: Employment Law, Know it Now, Michigan Court of Appeals by Dan Penning
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Amendments to Family Medical Leave Act (FMLA)

On October 28, 2009, President Obama signed into law the National Defense Authorization Act for Fiscal Year 2010 (”NDAA”). Although the NDAA is a defense appropriations law, it includes amendments to the family military leave provisions of the Family and Medical Leave Act (”FMLA”). These recent changes to FMLA deal primarily with qualifying exigency leave and military caregiver leave.

Qualifying Exigency Leave
The NDAA expands the exigency leave available under the FMLA to eligible family members of active-duty service members, and also amends the FMLA to provide eligible employees with up to 12 workweeks of leave during the designated 12-month FMLA leave year when the employee’s son, daughter or parent (who is a “covered military member”) is on active duty or call-to-active-duty status for one or more qualifying exigencies. Prior to these amendments, FMLA qualified exigency leave applied to Reserve and National Guard members only, and not members of the regular Armed Forces. Qualifying exigency leave includes: short-notice deployment; military events and related activities; child care and school activities; financial and legal arrangements; counseling, rest and recuperation; post-deployment activities; and any other event the employer and employee agree is a qualifying exigency.

Military Caregiver Leave
Additionally, the NDAA extends eligibility for military caregiver leave to the families of veterans, not just current members of the Armed Forces. Caregiver leave provides eligible employees, who are the spouse, son, daughter, parent or next of kin of covered military members of the Armed Forces, including members of the National Guard or Reserves, 26 workweeks of leave during a 12-month period to care for that military member, who because of a serious injury or illness, is undergoing medical treatment, recuperation, or therapy, is in outpatient status, or is otherwise on the temporary disability retired list. The law extends the 26 weeks of leave to family members of veterans who are undergoing medical treatment, recuperation, or therapy for a serious injury or illness at any time during the period of five years preceding the date on which the veteran undergoes that treatment. Therefore, the caregiver would be able to take up to 26 weeks of leave to care for a veteran for up to five years after the military member leaves military service.

These changes, presumed to be effective immediately, will once again require employers to update their FMLA policies and inform proper personnel accordingly.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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Statistics from the Equal Employment Opportunity Commission (”EEOC”) confirm what many of us lawyers defending businesses already knew: the number of discrimination charges filed against employers continues to grow each year. In the current economic climate, employers are more vulnerable than ever as terminated employees look for any recourse that might soften the economic blow of losing a job.

Before pursuing a lawsuit under state or federal anti-discrimination laws, employees must first pursue administrative relief with the State Department of Civil Rights or the EEOC. Once a claim or “charge” is filed, the employer will be notified and given the opportunity to file a written response. An investigation then ensues, which results in a written determination on whether discrimination occurred.

Many employers fail to appreciate the potential implications of a poorly handled EEOC investigation. They tend to process the initial request for information and response in the same way they might handle an application for unemployment or worker’s compensation benefits. Consequently, the response is often relegated to, and drafted by, a bookkeeper or office manager who lacks training in this area. Not infrequently, the same manager who mishandled the termination process in the first place is assigned the job of addressing the EEOC charge.

This lack of attention can needlessly extend what should be a straightforward investigation. Worse, it may generate a paper trail of careless, potentially harmful statements that will be attributed to the employer if the employee ultimately files a lawsuit. Worse still, a poorly handled investigation may convince the EEOC that discrimination did occur and that the EEOC should step in itself to bring a lawsuit against the employer on the employee’s behalf. What started as an irritating bit of “paperwork” has become a two-headed monster well beyond the employer’s ability to control.

Now more than ever, it is imperative that employers be cautious, informed and proactive when dealing with employee discipline and termination. Seek counsel before you act. And if you do receive notice that a charge of discrimination has been filed, give it undivided and immediate attention. If you fail to do so, it most certainly will demand that much more time and attention in the days and weeks to come.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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Two recent decisions from the 6th Circuit Court of Appeals in Cincinnati show how careful employers must be to avoid discrimination claims and violations of the Family and Medical Leave Act (FMLA). In the first case, Sanford v. Main Street Baptist Church Manor, Inc., the Court found that the employer had not taken sufficient steps to protect against sexual harassment in the workplace. In the second, Hunter v. Valley View Local Schools, the federal appeals court ruled that an employee may bring a claim under the FMLA so long as she can show that her use of FMLA leave was at least a “factor” in the employer’s decision to take adverse action against her.

In Sanford, the Plaintiff-employee sued the employer for an alleged sexually hostile work environment. As a defense, the employer argued that it had exercised reasonable care to prevent and correct any sexual harassment that the employee might have suffered. Normally, if supervisors and superiors take appropriate action, the employer will not be held liable based on inappropriate remarks or comments “on the floor” that might be offensive to other co-workers. But the decision in Sanford makes clear that employers cannot escape liability if they have not taken actual steps to weed out and discourage intimidating or harassing behavior. Specifically, the judges from the 6th Circuit were concerned that the employer’s handbook did not force supervisors to report harassing conduct. Nor did it offer a process for informal or verbal complaints. Nor did it give the employee the option to bring a complaint to someone else in management where the supervisor was the alleged harasser. Finally, the Court took note of the fact that the employer had not conducted any sexual harassment training in the workplace. For all of these reasons, the Court determined that the employer had not shown “reasonable care” to prevent sexual harassment in the workplace.

In Hunter, the Plaintiff-employee had returned to work with certain medical restrictions after being out on FMLA leave. The employer forced her to take an unpaid medical leave for up to one year. She sued, arguing that the forced leave was unlawful retaliation for her exercising her right to leave under the FMLA. The employer argued that, even if her FMLA leave had been one reason for forcing her to take unpaid medical leave, it was not the only reason. Because the medical restrictions limited her ability to perform, the employer claimed it had a legitimate reason to require the medical leave.

In a significant ruling, the 6th Circuit determined that a plaintiff may bring a claim for retaliation under the FMLA if his use of FMLA leave was one of the factors that caused the employer to take an adverse employment action – even if the other factors were lawful. Thus, in “mixed motive” cases under the FMLA, employers will not be able to defeat claims simply by showing they had a legitimate basis for their decision where improper bases also entered the decision-making process.

In difficult economic times, employees are more likely than ever to pursue any plausible basis for economic recovery. Employers should review their employee handbook and their employment practices very carefully to minimize the risk of unwanted and unintended employment claims.

Dan A. Penning

Tags: Employment Law by Dan Penning
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If your company has a federal contract, you should take notice of the federal government’s requirement that all federal contractors use E-Verify to check the employment eligibility of newly hired workers. A coalition lead by the U.S. Chamber of Commerce and the Society for Human Resource Management (SHRM) has filed an emergency request seeking to delay the rule’s implementation. Unless they obtain a last minute reprieve, the requirement will take effect today. For more information on how E-Verify will work and what it will mean for your business, go to The United States Citizenship and Immigration Services’ (USCIS) website, or join the webcast hosted by SHRM this Thursday at 2:00 p.m. eastern time by visiting http://www.shrm.org/multimedia/webcasts/Pages/legislativewebcast.aspx.

Tags: Employment Law by Dan Penning
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In response to concerns that people are declining to take medically valuable tests for fear they will face discrimination or invasions of their personal privacy, the federal government has passed the Genetic Information Nondiscrimination Act (”GINA”). GINA’s purpose is to prohibit discrimination on the basis of genetic information with respect to health insurance and employment. Title II of GINA, which takes effect November 21, 2009, relates specifically to employer practices, and prohibits employers from using genetic information for hiring, firing, promoting, or otherwise discriminating against an employee based on the employee’s genetic information.

GINA does not apply to employers with 15 employees or less, but state laws may impose additional conditions beyond GINA. As with many other federal laws, GINA establishes baseline regulations for employers nationwide, but individual states are permitted to impose stricter regulations above and beyond that provided by federal law.

Genetic information includes the individual’s genetic tests, genetic tests of family members, genetic tests of a fetus or embryo of the individual or family members, manifestation of a disease or disorder in family members, and the request for, or receipt of, genetic services or participation in clinical research. While there are exceptions to the information an employer can request or require, employers should now take greater caution when dealing with employee’s genetic information, and should consult an employment attorney to ensure compliance with both GINA and applicable states laws.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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The Equal Employment Opportunity Commission (EEOC) enforces most employment related civil rights laws including Title VII, the Americans with Disabilities Act (ADA) and the Age Discrimination and Employment Act (ADEA). Given the ailing economy and increased job cutbacks, the EEOC expects discrimination claims to rise.

On July 15, 2009, the EEOC issued a written guidance intended to help both employers and employees understand what it looks for when deciding whether to challenge the validity of waivers and releases of claims by former employees. The EEOC guidance points out key issues to watch.

First, regardless of the type of discrimination claim, the guidance reminds employers and employees that a waiver will not be enforced if it was not knowingly and voluntarily given. Thus, it is crucial that employees understand that they have the right to refuse to sign the waiver. For this reason, it is equally important that employees be receiving some tangible, additional benefit (typically severance pay) when signing the waiver that is over and above what they would otherwise receive at termination. The release document must make it clear that the release is part of what is being given by the employee in return for severance pay.

Second, because the waiver must be knowing and voluntary, the EEOC will look much more carefully at situations where employees were not encouraged to consult with an attorney. Employers should never engage in “strong-arm” tactics such as insisting that a release be signed immediately.

Third, employers need to understand that – while an employee may be asked to surrender the right to sue and the right to recover damages – a release will not be effective if it tries to prohibit a discharged employee from filing an age discrimination charge with the EEOC. In our practice, we recommend releases that state expressly that the employee retains the right to file an administrative charge but also make clear that the employee cannot expect to profit personally by doing so.

Whether discharging a single employee or administering a group layoff, employers should always look for opportunities to obtain knowing and voluntary waivers of claims by the terminated employees. Given the benefits a valid release provides and the liability risks if the release is not enforceable, employers should always take the time to ensure that each release is tailored to meet the needs of the particular circumstances presented.

Tags: Employment Law, Know it Now by Dan Penning
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