March 2009 Archives

March 30, 2009

More Troops to Afghanistan Bring More Responsibilities for Employers

President Obama recently announced that he will send 4,000 additional troops to Afghanistan, on top of the deployment of 17,000 troops announced last month. Many of those deployed will be members of the National Guard and Reserve, most of whom must leave civilian jobs to serve in the military. According to Employer Support for the Guard and Reserve, members of the Guard and Reserve make up almost half of our country's total military force. As of last week, figures released by the Department of Defense showed that more than 700,000 members of the Guard and Reserve have been activated since 9/11.

When these service members return from duty and go back to their civilian jobs, they have fairly extensive employment rights. The Uniformed Services Employment and Reemployment Rights Act (USERRA) gives returning members of the Guard and Reserve the right to be restored to the position they would have held if they hadn't served -- that is, their former position, plus any additional seniority, promotions, raises, and so on they would have received had they been continuously employed. The most significant protection USERRA provides kicks in after reinstatement: Employees who return from military service are no longer at-will employees for up to one year. They may be fired only for just cause. 

A recent case from Connecticut shows just how costly it can be for employers to disregard USERRA. Michael Serricchio was called to active duty in the Air Force after 9/11. He left his job as a financial adviser at Prudential Securities; when he returned two years later, the company had been acquired by Wachovia and Serricchio was offered a position with a much lower rate of compensation than his previous job. A jury found that Wachovia had violated USERRA by failing to restore Serricchio to his previous position.

That left it to the Court to put a dollar amount on Serricchio's damages. The figure the court came up with was $778,906, plus interest, plus attorney fees and costs. And that's not all: The court also found that Serricchio was entitled to reinstatement, with a monthly salary of $12,300 for the first nine months, after which he will be entitled to the same amount as a draw against commissions for a few months, after which he will have to generate his own income from his client accounts. (You can find the opinion on damages, as well as an earlier opinion from March 2008 summarizing the issues in the case, here; use the caption search for "Serricchio.")

Recently enacted provisions of the Family and Medical Leave Act (FMLA) also provide some protections related to military service -- not directly to those who serve, but to their family members. The new provisions allow family members of Guard and Reserve members who are called to active duty to use FMLA leave to handle "qualifying exigencies," including arranging child care, helping the military member with legal matters such as making a will, or attending counseling sessions. The FMLA also now allows family members to take up to 26 weeks of leave to care for a family member who is seriously injured or becomes seriously ill while on active military duty. (These family military leave provisions are summarized here.) As more troops are deployed, we'll see how these new rights are interpreted and enforced by the courts.

March 25, 2009

More Enforcement Coming for Wage and Hour Cases

The New York Times reported this morning on a forthcoming report from the Government Accountability Office (GAO) that reveals serious problems in enforcement at the Wage and Hour Division of the federal Department of Labor, which enforces the minimum wage, overtime laws, and child labor laws. Apparently, undercover agents posed both as workers with serious claims of labor violations and as employers with little inclination to solve those problems, and nine out of ten cases were mishandled.

Generally, calls from workers went un-returned, the division failed to investigate serious allegations, and workers were often told to file lawsuits rather than rely on the division to enforce their rights. Here are some of the lowlights (you can read the full report here):

  • Five of the cases were never even entered into the division's database.
  • In two of the cases, the division recorded that the employer had paid back wages -- even though it had not.
  • The division closed one case after the employer offered to pay $1,000 before the statute of limitations ran; the employer owed more than $200,000 in unpaid overtime.

The Times reported that the Wage and Hour division will hire 250 more investigators -- increasing its staff by one third -- to improve its enforcement.

March 21, 2009

California Unemployment Rate Reaches 10.5%

According to data released yesterday by California's Employment Development Department (EDD), 10.5% of Californians are unemployed -- which means able to work, available to work, looking for work, and not working at all. Behind the percentage points are almost two million people out of work, and fewer than half of those are currently collecting unemployment benefits. Over the past year, California's construction industry has seen the largest percentage of job losses, while employment in the fields of education and health services has actually grown a bit.

The numbers are echoed by recent figures on mass layoffs compiled by the federal Bureau of Labor Statistics, which show that California had the largest number of new claims for unemployment as a result of mass layoffs, in which at least 50 employees lose their jobs. In fact, California lost more than twice as many jobs in mass layoffs than any other state. And none of these numbers include those sometimes referred to as "underemployed," such as those who have taken part-time positions because they can't find a full-time job, those who have accepted a job that pays much less than a previous position, and those who are still working but have experienced hour or wage cuts.

For those of us who still have jobs and are wondering how we can help friends, relatives, and colleagues who haven't been so lucky, the New York Times published a great article by Ron Lieber today, called "Not Laid Off? How to Aid the Less Fortunate".

March 3, 2009

COBRA Expansion in the Stimulus

The stimulus package -- formally known as the American Recovery and Reinvestment Act of 2009 (ARRA) -- includes a provision (PDF) that benefits those who have lost their jobs in the recent economic downturn: some help with their COBRA payments to continue their health care coverage. Before the ARRA, those who lost their jobs could continue their employer-provided health insurance through COBRA only by paying the full premium. Now, the federal government will subsidize almost two-thirds of the premium amount for up to nine months for certain eligible former employees. Here are a few basic facts on the new law:

Who's Eligible: Those who are involuntarily terminated from September 1, 2008, through December 31, 2009, are eligible for the subsidy, as are their spouses and dependent children. Even those who initially turned down COBRA coverage are eligible: Employers must give them a second chance to elect COBRA coverage by sending them a notice of the new special election period.

Length of Subsidy: The subsidy lasts for up to nine months. However, the subsidy will end sooner if (1) the employee becomes eligible for coverage under another group health care plan, or (2) the maximum period for COBRA coverage -- measured from the date the employee was first eligible, not the date the subsidy began -- ends (this limit applies whether or not the employee actually elected COBRA when first eligible to do so).

How the Subsidy Works: Under the new rules, the eligible former employee may be required to pay only 35% of the premium. The employer must pick up the remaining 65%, for which it may claim a subsidy credit against its payroll taxes on IRS Form 941, Employer's Quarterly Federal Tax Return. If the employee pays less than 35% of the full premium because the employer picks up most of the tab, the amount the employer may claim as a credit is less.

For more information, check out:

  • the IRS page on the new rules
  • the Department of Labor's page on the new rules (which should soon include model forms employers may use to inform employees of the subsidy and their election rights), and
  • the excellent resources available from the Society for Human Resource Management on the subsidy, starting with this comprehensive article (some resources may be available only to members).

Nolo's article New COBRA Rules: Stimulus Package Subsidizes Continued Health Insurance also has more information about eligibility for this health insurance subsidy.