Nolo’s Employment Law Blog

The Supreme Court is busy these days, issuing its final decisions before beginning its summer recess at the end of this month. Today, the Court announced several employment law cases, including two age discrimination decisions. (The Court also invalidated a California law that prohibited employers who receive state funds from using that money to promote or discourage union organization; I'll write about that case, Chamber of Commerce v. Brown, in a future post).

One of the age discrimination cases, Meacham v. Knolls Atomic Power Laboratory, involved a reduction in force at a government contractor that designs naval nuclear reactors. Managers were asked to score employees for performance, flexibility, and critical skills, and those scores were used to determine which employees lost their jobs. All but one of the 31 employees who were let go were at least 40 years old, and most of them sued for age discrimination.

Among other things, the employees claimed that the scoring system had a disparate impact: Even though it didn't explicitly discriminate on the basis of age, the employees argued that it disproportionately screened out older workers. Knolls countered that its selection criteria for the RIF were "reasonable factors other than age" (RFOA), one of the exceptions to the Age Discrimination in Employment Act, and so were legal.

The argument in this case was over which party -- employer or employee -- ultimately has to prove the RFOA. The Court found that the RFOA is an affirmative defense, which means that the burden is on the employer to prove that its criteria were reasonable. As the Court admits, this case will make it more difficult for employers to defend against disparate impact claims in ADEA lawsuits.

In Kentucky Retirement Systems v. Equal Employment Opportunity Commission, a rare combination of five Justices (Breyer, Roberts, Stevens, Souter, and Thomas) decided that Kentucky's retirement system for employees in hazardous positions (such as firefighters and law enforcement officers) didn't violate the ADEA. This decision is tough to parse, not least because the facts of the case are a bit complicated (and there's math).

Here are those facts in a nutshell: Kentucky's system makes employees eligible to retire when (1) they have 20 years of service, or (2) they have five years of service and are at least 55 years old. Employees who suffer a disability are eligible for immediate retirement. If they haven't met one of the two criteria that usually apply, they are credited with enough additional years of service to qualify them for retirement, up to the number of years they have actually served. Retired employees were paid based on a formula that multiplies their years of service (whether actual or credited after a disability) by a factor of their annual pay when they retired.

The EEOC sued, claiming that the system discriminated against older workers because it allowed younger employees to receive higher payments than older employees with the same length of service. Because employees who were at least 55 only needed five years of service to retire, some younger employees who became disabled had to be credited with more years of service to be eligible for retirement -- which translates into more money. For example, an employee who suffered a disability at the age of 35 after ten years of service would receive credit for an additional ten years of service; an employee who suffered a disability at the age of 50 after ten years of service would receive credit for only an additional five years of service; and an employee who suffered a disability at the age of 55 after ten years of service would be credited with no extra years.

The Court decided in favor of Kentucky and upheld the system. The Court found that Kentucky wasn't motivated by age discrimination, but by a desire to allow those disabled on the job to receive compensation. Because the state's rules were based on pension eligibility rather than on age, the Court found that they should be upheld.

The dissent seems to have the better side of the argument on this one. They point out that the state's pension calculations are explicitly based on age. The state may be able to justify its rules using the equal cost defense, which allows employers to reduce certain benefits to older workers as long as it spends an equal amount on benefits for older and younger workers. But to say, as the majority opinion here does, that the state's system is not age-based seems incorrect. And even if the state has good intentions, as appears to be the case, it doesn't have to disadvantage older workers to achieve its goal of compensating employees who suffer disabilities.

Lisa Guerin

It turns out that taking time off work isn't just a luxury -- it improves our health, the quality and quantity of our sleep, and our reaction times. According to an article by Alina Tugend in the New York Times, "Vacations Are Good for You, Medically Speaking," a study has shown that women who took a vacation only once every six or more years were eight times more likely to develop coronary heart disease or have a heart attack than women who took at least two vacations a year. Another study showed that men who didn't take annual vacations had a 21% higher risk of death from all cases, and were 32% more likely to die of a heart attack.

The article also cites interesting research on how vacations affect our sleep. After a few days on vacation, participants were averaging an hour more of good quality sleep, and registered an 80% improvement in their reaction times as measured by vigilance testing. The benefits continued, though less markedly, after vacationers returned home.

The sleep survey involved vacationers who were flying from the West Coast of the United States to New Zealand for at least a week of vacation. But will more modest vacationing - occasioned by this year's flagging economy and high gas prices -- offer the same rewards? According to an AOL Travel/Zogby survey, more than half of the respondents felt that they had less money to spend on summer vacations this year than last year. Perhaps as a result, a third of respondents were planning to stay with family and friends rather than in a hotel. And, campgrounds around the country are reporting high numbers of reservations. It remains to be seen whether we'll get an extra hour of quality sleep on the ground or the hide-a-bed.

Lisa Guerin

With gas prices hovering around $4 per gallon, a survey by placement firm Challenger, Gray & Christmas reveals that 57% of polled employers are offering alternatives to help employees cope, according to CNN. Strategies include a compressed work week -- four 10-hour days (23%) -- employee carpools (20%), subsidizing the cost of public transportation (18%), and allowing employees to telecommute at least one day a week (14%).

Personally, I'm surprised telecommuting is so far down the list. All the other options are good ones, but telecommuting has some distinct advantages for employers as well as employees. (Full disclosure: I'm writing this from home, as a telecommuting employee.) Here are just a few of the benefits:

• Recruiting and retaining the best employees. According to the survey, 34% of employers have had a qualified candidate turn down a job because of a long commute, while 40% of jobs could be done telecommuting. Allowing employees to telecommute is an attractive job benefit that will help you attract the best candidates, even if far away. Another study shows telecommuting employees are more satisfied with their jobs, and less likely to leave.


• Decreased costs. Telecommuting may decrease your costs -- for example, if it allows employees to share work space and office equipment.


• Increased efficiency. Employees working at home are free of the distractions of a ringing phone, interruptions by co-workers, and the like. Particularly if working on focused projects, this allows employees to work more efficiently.


• Positive environmental impact. One 2005 study found Americans drive an average of 16 miles each way to work. In addition to reducing commuting times and costs, allowing telecommuting has a positive environmental impact as fewer workers drive to the office.

Alayna Schroeder

Today, the Familes and Work Institute released its "National Study of Employers," a survey of the programs, policies, and benefits U.S. employers provide to address work-life issues such as job flexibility, time off, and health and retirement benefits. One purpose of the study was to identify trends over the last ten years. (The Institute released a similar study in 1998, and another in 2005.)

Its findings? Things haven't changed much, overall. For most of the more than 80 policy options the study surveyed, roughly the same percentage of employers offer them today as did ten years ago. The biggest change is who pays -- the study shows that costs are shifting to employees for these benefits:

• Maternity disability leave. 16% of employers provide leave with full pay for the period of time when a female employee is unable to work due to pregnancy and childbirth, compared to 27% of employers ten years ago.


• Family health insurance benefits. Only 4% of employers pay the full cost of covering family members, compared to 13% ten years ago.


• Retirement benefits. Although most employers contribute to employee retirement plans, the number has declined from 91% to 81%. And far fewer employers offer defined benefit pension plans (which pay out a set monthly benefit upon retirement).

Some programs have become more popular in the last ten years. Employers are now much more likely to provide health insurance coverage for their employees' unmarried partners, for example. They are also more likely to offer employee assistance programs (EAPs), information about elder care resources and services, and flexible hours, allowing at least some employees to change their starting and quitting times.

One of the more interesting findings of the survey is that racial and ethnic diversity at the top predicts a more work-life friendly workplace. The survey looked at four categories of work-life benefits: flexibility, caregiving leaves, child and elder care assistance, and health and economic security (primarily medical, disability, and retirement benefits). In every category, companies with more racial and ethnic minorities in senior positions were more likely to offer benefits.

Lisa Guerin

In addition to health insurance, life insurance, and disability insurance, some employers now make pet insurance available to employees. A 2007 survey by the Society for Human Resource Management (SHRM) found that 5% of responding companies offered pet insurance as an employee benefit. And ABC News reported earlier this year that providers of pet insurance have seen big jumps in their corporate sales.

Perhaps one reason for the growing popularity of pet insurance is the bottom line: It doesn't cost employers anything to provide it. Employees who sign up for the benefit pay the full cost, but usually get a 5 to 10% discount off what they would have had to pay to purchase it on their own. It's not clear how much this helps pet owners defray the sometimes astronomical cost -- $9.8 billion last year, according to the ABC News report -- of pet health care, however. Because many pet insurance policies are chock full of exclusions, they don't always make financial sense for pet owners. Still, they make it possible for many pet owners to afford life-saving treatments that would otherwise be out of reach.

Undoubtedly, some employees consider pet insurance a valuable benefit. If your company decides to offer it, however, make sure it isn't perceived as coming at the expense of benefits for the human family members of your employees. Don't make the same mistake as Palm Beach Community College, which apparently decided to offer pet benefits -- complete with promotional literature from the benefit provider, saying "your pet is a member of your family" -- only 90 days after deciding not to offer domestic partner benefits. Ouch.

Lisa Guerin

In 2006, San Francisco's Board of Supervisors passed an ordinance with an arguably noble purpose: Ensuring that most workers in the city have health insurance. The San Francisco Health Care Security Ordinance required most employers within the city to make minimum health care contributions on behalf of their employees.

The plan was met with some opposition. The Golden Gate Restaurant Association ("GGRA") argued successfully before a U.S. District Court that the plan is preempted by the federal Employee Income Security Act of 1974 ("ERISA"), which specifically limits states' ability to enact laws that "relate to" private-sector employee benefit plans . This week, Supreme Court Justice Anthony Kennedy denied a motion by the Golden Gate Restaurant Association to vacate an emergency stay of the district court's judgment granted by the Ninth Circuit Court of Appeals. In effect, this means the ordinance goes into effect until it is given full review by the Ninth Circuit.

As a hot topic in the close race for the Democratic presidential nomination, health care is likely to stay at the forefront of our minds. And the issue of "pay or play" or "fair share" programs, either by state or local bodies, is its own animal. In 2006, a similar Maryland law (dubbed the "Wal-Mart Bill" because Wal-Mart was the only employer affected) was struck down for violating ERISA. Similar bills have popped up in states around the country, sometimes with similar result. How the San Francisco ordinance will fare remains to be seen.

Alayna Schroeder