Compliance Corner [August2024]
Here is what is new in July
New Federal CHIP Notice for Employers in States with Premium Subsidies
A Summary of DOL Violations and Settlements in July
A Summary of EEOC Violations and Settlements in July
DOJ Initiates Whistleblower Bonus Program vs. Employers
California Supreme Court Seriously Limits Arbitration Agreements
I-9 Expiration Date Extended – sort of
Interactive Engagement All but Required
Retaliation Cases
Massachusetts Pay Transparency & Reporting to begin in February 2025
Privacy Rights in the News
No Cheating
More Discrimination, More Cost
New Federal CHIP Notice for Employers in States with Premium Subsidies
States with health insurance premium subsidies are the following:
California, Colorado, Maryland, Massachusetts, New Jersey, New Mexico, Vermont and Washington State. New York and Pennsylvania are looking at adding that kind of program. Each state has its own particular aspects, but the DOL has issued a new model Children’s Health Insurance Plan (CHIP) Notice, with data current as of 1/31/2024.
For more details about CHIP in their state(s), employers can go to https://www.healthcare.gov/medicaid-chip/childrens-health-insurance-program/.
The model notice and other information is available on the EBSA web page at https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/chipra.
A Summary of DOL Violations and Settlements in July
FLSA: 13 violations brought in 8 states
OSHA: 10 violations brought in 7 states
ERISA: 1 violation brought in 1 state
H-2B Program: 1 violation brought in 1 state
A Summary of EEOC Violations and Settlements in July
Disability Discrimination – 1 case in DMV area, over $1 million in settlement
Race Discrimination – 1 case in Michigan, $30,000 in fines
Retaliation – $50,000 for retaliating against their HR manager of all people. A construction company HR manager investigated a sexual harassment allegation against a general manager and was penalized by the reassignment of significant parts of her job and exclusion from management meetings. Because of the foregoing, she resigned. (That could be interpreted as “constructive discharge” as well.)
Age Discrimination & Retaliation: $295,000 fine against a retailer in each of their locations in Washington State and Oklahoma ($590,000 total).
Harassment & Sexual Harassment – Settlements against separate employers in Texas, California, and New Mexico ($837,000 total).
Disability Discrimination - $75,000 in North Carolina.
Religious Discrimination - $110,000 in Florida.
In addition to the above, EEOC has lawsuits or settlements pending in California, Louisiana and New Jersey.
DOJ Initiates Whistleblower Bonus Program vs. Employers
Effective August 1, DOJ started a pilot program to encourage the reporting of wrongdoing in the private sector. The program provides that a whistleblower who provides the Criminal Division with original and truthful information about corporate misconduct that results in a successful forfeiture may be eligible for an award. There is a required minimum level of $1 million in forfeiture for a submission to be eligible. Additional conditions include the following:
Reports must be related to crimes involving financial institutions, foreign and domestic corruption or healthcare fraud schemes, and
Companies that self-report within 120 days of receiving a whistleblower report internally might be able to avoid prosecution.
Use of the word “might” is noted, as is the absence of any similar provision for the government.
California Supreme Court Seriously Limits Arbitration Agreements
The CA Supremes dealt a serious blow to arbitration agreements, at least in California, by finding “nearly all” of the arbitration provisions in an employer’s arbitration contract were “unconscionable” because they were so one-sided in the favor of the employer. In this landmark case, state law required that the court find both “procedural and substantive unconscionability,” and the court did just that. The procedural problem was that the contract was all one-sided – there was no opportunity for the plaintiff to negotiate any provisions. On the substantive side, the court found three problems: the employer could selectively choose whether or not to arbitrate employee claims, the company placed both procedural and timing restrictions on when an employee could initiate arbitration, and it granted interim attorney fees for whichever party successfully compelled arbitration.
It is noted that the Supreme Court did not vacate the entire agreement but rather remanded it to the lower court with guidance as to what lower courts should consider when faced with such cases, including guidance on severing items deemed by the lower court as unconscionable.
Resulting advice from Cooley Law regarding arbitration agreements is as follows:
Ensure mutuality of claims subject to and excluded from arbitration.
Avoid provisions that substantially deprive the other contracting party of rights available under federal or state law., and
Revise or remove arbitration clauses that reinforce the perception that their arbitration agreements could be viewed as being unfair or one-sided.
I-9 Expiration Date Extended – sort of
The USCIS has extended the official expiration date of the I-9 form to 5/31/2027 – but with a caveat: forms that can be used must have an “edition date” of 8/1/2023, and forms in circulation with an expiration date of 7/31/2026 cannot be used beyond that date.
Interactive Engagement All but Required
When an employee requests leave under the ADA or a similar program, even though the law does not explicitly require it, the enforcing agencies implicitly require that the employer engage in an interactive process with the employee, and look more favorably on the employer’s approach when that is used. Wells Fargo Securities failed to do so, and instead terminated the position of a director who had a legitimate physical reason to request to work from home. The managers involved essentially assumed that the outcome would be the same whether or not an interactive process was used, so they proceeded to what they deemed to be the ultimate outcome – the end of his employment. A jury thought differently and awarded the director $22.1 million.
Retaliation Cases
Bell Textron and a construction contractor in San Francisco have both been found guilty and fined heavily for retaliating against employees for reporting harassment – the former based on race and the latter based on gender identity. The case of the HR manager who was retaliated against (in “EEOC” listings above) was also included in this list.
Massachusetts Pay Transparency & Reporting to begin in February 2025
In a nutshell, employers with at least 100 employees in Massachusetts must file an annual report of their workforce demographics with the state, including “workforce demographic and pay data categorized by race, ethnicity, sex, and job category.” Private employers may substitute a copy of their EEO-1 form in lieu of the state form.
Prior to that, however, effective July 31 (i.e., the end of last month), employers with at least 25 employees in Massachusetts were required to include pay range information in all postings.
Privacy Rights in the News
As you have probably heard, the Attorney General of Texas won a $1.4 BILLION settlement against Meta for obtaining and using private personal information of millions of Texans in training its AI software. Apparently, this went on for 10 years – in violation of Texas law – before it was detected.
Effective June 28, Pennsylvania updated its data breach notification law to include notice
to government agencies and victims for breaches involving over 500 residents;
to the above plus consumer reporting agencies for breaches of over 1000 residents, and
for specific types of information, payment of all costs and fees for credit report and monitoring for 12 months.
Illinois actually made its “Biometric Information Privacy Act” (BIPA) a bit more company-friendly by (1) authorizing the use of electronic signatures, and (2) reversing the ruling by the state supreme court that violations accrue on a “per scan” basis, instead making it on a per-person basis.
No Cheating
EEOC obtained a settlement of $400,000 for a manager who was fired 10 days after he returned from medical leave, which he took for treatment of cancer. The employer, Pilot Air Freight of Georgia, claimed the termination was due to restructuring and the plaintiff’s relatively short tenure, but EEOC countered that people with less service than he had been retained – and then they posted that same position six months after the termination.
Studies have indicated that employees with cancer may experience bias in the workplace, including since the ADA was passed, whether or not their cancer is in remission. It was noted that EEOC reached a settlement of $325,000 with a car dealership for firing a sales person so they didn’t have to pay for his cancer treatment, and a separate settlement with a real estate group for a similar offense.
More Discrimination, More Cost
This time under GINA: A female employee in Oklahoma had a DNA test, which showed that she had a small percentage of African blood. She shared the result with her supervisor, who started using racial insults against her, to the point that she finally had to quit because the harassment was “nonstop.” EEOC sued the employer for violating GINA, and the employee was awarded $2175 in backpay and $45,235 in compensatory damages.