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Defense of Marriage Act Decision: Potential Impact on Employment Law

Posted on Fri, Mar 29, 2013 @ 09:24 AM

by Jack B. HarrisonJack B. Harrison

The United States Supreme Court recently heard arguments in United States v. Windsor, 133 S.Ct. 786 (2012), a case that turns on the constitutionality of a section of the federal Defense of Marriage Act (DOMA).  The section of DOMA at issue defines marriage for the purpose of federal law, including federal tax and benefits law, as a legal union between one man and one woman.  Specifically, the question before the Supreme Court is whether DOMA violates the equal protection rights of same-sex couples legally married under state law by treating those couples differently than opposite-sex couples for the purposes of federal law.

The factual background of Windsor involves a lesbian couple married legally in Canada.  The couple then moved to New York, which recognized their marriage as valid under New York state law.  Edith Windsor’s spouse subsequently died, leaving her a sizeable estate.  However, because DOMA prohibited the IRS from recognizing her marriage, Ms. Windsor was denied the benefit of the unlimited marital deduction on property left to her by her spouse.  As a result of this impact of DOMA, Ms. Windsor was forced to pay a federal tax bill of over $300,000 on the estate left to her by her late spouse.  Had Ms. Windsor’s marriage been an opposite-sex marriage, she would have been required to pay no federal tax on the estate.  Ms. Windsor then brought a lawsuit against the IRS, asserting that this differential treatment under DOMA violated the Equal Protection Clause of the United States Constitution.  Both the district court and the United States Court of Appeals for the 2nd Circuit found that the section of DOMA at issue did, indeed, violate the Constitution.  The Supreme Court subsequently agreed to hear the case.

Employers in states where same-sex marriage is recognized or who have employees whose same-sex marriage took place in a state where such marriages are recognized generally see the impact of DOMA in the tax treatment of healthcare insurance benefits that the employer provides for employees’ same-sex spouses.  Because federal tax laws are covered within DOMA’s reach, same-sex spouses are not considered a spouse under federal tax laws.  As a result of this, unless a same-sex spouse meets the IRS definition of "dependent," the imputed value of the healthcare insurance benefit provided to the same-sex spouse is taxed as additional employee income.

In addition to tax considerations for employers who are providing healthcare benefits to the same-sex spouses of their employees, employers have had to be concerned about the impact of DOMA on the tax treatment of spousal retirement benefits, on benefit contributions (pre-tax for opposite-sex spouses; after-tax for same-sex spouses), on COBRA eligibility for same-sex spouses, on FMLA leave rights, and on ERISA-controlled retirement plans.  These concerns have forced many employers to find "workarounds" to lessen the impact of DOMA on their employees.  These “workarounds” often involve greater costs and higher administrative burdens for the employer.

In fact, a number of employers joined together to file a “friend of the court” brief in the Windsor case.  In their brief, these employers asked the Supreme Court to affirm the decision of the Court of Appeals finding DOMA unconstitutional.  Among the employers joining in this brief were Amazon, Apple, CBS Corporation, eBay, Google, Microsoft, Morgan Stanley, Thomson Reuters, and the Walt Disney Company.  In their brief, these employers assert that as a result of the operation of DOMA, they are forced to "craft the policies and structure systems that can record gross-up amounts, educate human resources, benefits, and payroll administrators, and manage the dual systems," all to deal with the differential treatment of their employees’ same-sex marriage.  These employers made it clear that it is not in their business interest to be forced to treat their employees differently based on the nature of a particular employee’s marriage.

While making predictions regarding what the Supreme Court may do in a particular case, based on oral argument, is a risky proposition, there were some clear signs in the argument that took place in Windsor on March 27, 2013.  Based on the questions and comments from the Justices during oral argument, it did appear that there were at least five justices who would be inclined to find DOMA unconstitutional.  Justices Kagan, Ginsburg, Sotomayor, and Breyer seemed inclined to find DOMA unconstitutional because of its differential treatment of same-sex couples, while Justice Kennedy appeared concerned that DOMA was an unconstitutional intrusion by the Congress on a matter that had historically been a matter of state’s rights – marriage.  It will be very interesting to see how these positions are articulated in any opinions coming from the Court.

The outcome of the case will undoubtedly affect employers that operate in states where same-sex marriage is legal and, perhaps, will have some broader impact.  A decision from the Court is not expected until June.  We will continue to monitor this matter and provide an update when the decision is issued.

Tags: DOMA, Defense of Marriage Act

NLRB Impact: Employer Discipline and Investigations

Posted on Fri, Mar 15, 2013 @ 12:28 PM

by Jack B. Harrison Jack B. Harrison

While the United States Court of Appeals for the District of Columbia Circuit issued an order on January 25, 2013 striking President Obama's recess appointments to the National Labor Relations Board ("NLRB") as unconstitutional (Noel Canning v NLRB, Case No. 12-1115), the NLRB has given no indication that it intends to slow down in its work.  For example, the Board recently rendered two decisions that have importance for employers in the areas of discipline and investigations.

For example, in Alan Ritchey, Inc., 359 NLRB No. 50 (Dec. 14, 2012, published Dec. 20, 2012), the Board held that where a collectively bargained grievance and arbitration system does not already exist, as is normal where an employer and a union are negotiating a first contract, an employer generally may no longer unilaterally exercise discretion in imposing significant discipline upon employees (i.e., suspension and termination). Instead, the Board held that the employer must give the union notice and an opportunity to bargain before imposing such discipline on an employee. This was the first time that the Board had reached such a conclusion.  The Board held that that the imposition of individual discipline in such a context was “inherently discretionary.”

As a result, the Board stated that such discipline represented a mandatory topic of bargaining each time discipline took place. The decision is to be applied prospectively from the date it was issued and will be applied to any newly organized companies without collective bargaining agreements or negotiated grievance procedures in effect.  Under this ruling, however, employers may still impose discipline without first bargaining where an employee’s continued presence would threaten safety, health, or security.

It will be more challenging for employers under Ritchey to impose serious discipline, such as suspension, demotion, or termination, where no grievance and arbitration system is in place. In cases such as this, an employer must notify and bargain with the union before it issues such discipline. This required bargaining potentially might necessitate furnishing the union with information on past discipline or other matters related to the discipline imposed.

In Piedmont Gardens, 359 NLRB No. 46 (Dec. 15, 2012), the Board overruled its long-standing precedent that all written statements by employee-witnesses are automatically exempt from disclosure as long as they qualify as “witness statements.”  Anheuser-Busch, 237 NLRB 982 (1978).  In Piedmont Gardens, the issue before the Board was whether written statements by two charge nurses and a CNA regarding alleged misconduct by another CNA at a continuing-care facility were subject to disclosure to the union.  Overruling its prior holding that such statements were automatically exempt from disclosure, the Board held that it would now apply a balancing test that weighed the union’s need for the information against any legitimate and substantial confidentiality interest established by the employer.  On the specific facts before it, the Board found that one charge nurse’s statement was subject to disclosure, in that it had not been provided under an assurance of confidentiality.

Because the decision in Piedmont Gardens overrules a longstanding precedent and because employers have previously relied on the Board’s holding in Anheuser-Busch, the Board held that its decision will not be applied retroactively. As a result, in cases where the employer’s refusal to provide requested witness statements occurred before December 15, 2012, the NLRB will continue to apply Anheuser-Busch.

As a result of the Board’s decision in Piedmont Gardens, prudent employers should ensure that those who are taking witness statements as part of an investigation provide assurances of confidentiality to those witnesses prior to taking statements from the witnesses.  Additionally, employers should take care to document the employer’s specific concerns about its inability to obtain witness statements in the future if disclosure were to take place.

Tags: NLRB, National Labor Relations Board

The Rise and Fall of the Teamsters National Master Freight Agreement

Posted on Fri, Mar 08, 2013 @ 06:13 AM

Teamsters MagazineA Firsthand Account of the History of the National Master Freight Agreement as Told by Hal F. Franke Through His 50+ Years of Service to the Trucking Industry

by Stephen S. Holmes & Robert J. Hollingsworth

The first National Master Freight Agreement (“NMFA”), the primary labor agreement between the Teamsters Union and the motor carrier industry, was signed on January 15, 1964.  The NMFA was the vision of legendary Teamster President Jimmy Hoffa.  It was truly a revolutionary achievement, as for the first time in our country’s history, an entire industry was tied together under one labor agreement. 

At its highest point, the NMFA reportedly covered some 450,000 trucking related employees. Since the signing of that first NMFA, the Teamster organized sector of the trucking industry has changed dramatically. The current NMFA was signed in 2008 and will expire this year and now covers only a handful of motor carriers.  Attorney Hal F. Franke, who was of counsel with Cors & Bassett since the early 1990’s, spent over 50 years in the field of trucking industry labor relations, working as a representative of management. In this role, Hal gained national prominence and participated in the negotiation of every NMFA from 1964 to the current 2008-2013 agreement. 

Sadly, Hal Hal F. Franke, Sr.passed away in September of 2012.  He was preceded in death by Cors & Bassett attorney Paul R. Moran, who was also a leading labor lawyer in his day, and passed away in 2009.  Hal and Paul were long time friends who worked together on many of the major Ohio trucking labor cases.

Cors & Bassett has had a long history in the practice of labor and employment law and representation of motor carriers, which continues to this day.   In honor of Hal’s and Paul’s life and their years of service to the trucking industry, Cors & Bassett members Stephen S. Holmes and Robert J. Hollingsworth have co-authored an article on the history of the NMFA.  This colorful history is written from the viewpoint of Hal who was interviewed extensively by the authors and who gave the authors access to the many thousands of pages of historical notes and documents accumulated by him during his time in the industry. 

To view the article in its entirety, along with photos of Hal, please click here. If you would like a hard copy of the article, please email Steve at ssh@corsbassett.com or Bob at rjh@corsbassett.com.

Tags: Teamsters, National Master Freight Agreement

Department of Labor Clarified the Terms "Son" or "Daughter" Under the FMLA

Posted on Fri, Mar 01, 2013 @ 01:16 PM

by Jack B. HarrisonJack B. Harrison

On January 14, 2013, the Department of Labor (DOL) issued a clarification of the definition of "son or daughter" under the Family and Medical Leave Act (FMLA).  Administrator's Interpretation (AI) No 2013-1.  The clarification makes clear the DOL position regarding whether an eligible employee may take FMLA leave to care for an adult child who is incapable of self-care because of a disability.  The clarification made it clear that such leave may be taken without regard to how old the child was when the disability commenced.  The clarification also applies to the FMLA's military caregiver provision.

Under the FMLA's definition of a "son or daughter," an adult child (i.e., one who is 18 years of age or older) must have a mental or physical disability and be incapable of self-care because of that disability.  The regulations issued by the DOL incorporate the Americans with Disabilities Act's (ADA) definition of "disability," namely a physical or mental impairment that substantially limits a major life activity (as interpreted by the EEOC).  However, even where the adult child is disabled under the broad definitions of the ADA, the child must be incapable of self-care because of his or her disability in order to meet the definition of son or daughter under the FMLA.  The regulations define "incapable of self-care because of mental or physical disability" as being when an adult son or daughter "requires active assistance or supervision to provide daily self-care in three or more of the ‘activities of daily living' (ADLs) or ‘instrumental activities of daily living' (IADLs)."  Where the other requirements of the FMLA are met, a parent is entitled to take FMLA leave to care for a son or daughter 18 years of age or older, if the adult son or daughter (1) has a disability as defined by the ADA; (2) is incapable of self-care due to that disability; (3) has a serious health condition; and (4) is in need of care due to the serious health condition.  Only when all four of these requirements are met is an eligible employee entitled to FMLA-protected leave to care for his or her adult son or daughter.

The DOL further clarified that the age of the son or daughter at the onset of a disability is not relevant in determining a parent's entitlement to FMLA leave.  "An employee is entitled to take FMLA leave to care for a son or daughter with a serious health condition who is 18 years of age or older and incapable of self-care because of a disability regardless of when the disability commenced."

This clarification by the DOL impacts the military caregiver provision of the FMLA.  Under that provision, a parent of a covered service member who suffered a serious injury or illness is entitled to up to 26 work weeks of FMLA leave in a single 12-month period if all other requirements are met.  In the clarification, the DOL acknowledges that the service member's injury may last beyond the single 12-month period covered by the military caregiver leave entitlement.  The expanded definition of a disability under the ADA, as well as the clarification that when an adult son or daughter's disability commences is irrelevant in determining whether he or she qualifies as a "son or daughter" under the FMLA, may allow parents of adult children who have been wounded or sustained an injury or illness in military service to take FMLA leave beyond that provided under the special military caregiver leave provision of the statute, as long as all other FMLA requirements are met.

As a result of this clarification, with the DOL incorporating the broad ADA definition of "disability," employers will likely see an increase in the number of adult children who can be classified as disabled and for whom parents may take FMLA-protected leave to provide care if the adult child is incapable of self-care at the time of the FMLA.  Prudent employers should make sure that personnel who manage and process leave requests are trained on the new interpretation. Employers should also reexamine the method they utilize to compute FMLA leave to determine if, in light of the recent expansion, a different computing method might benefit the company.

Tags: Department of Labor, Americans With Disabilities, FMLA