By Robert Baker

Governor Nathan Deal signed HB 397 this week after two years of intensive negotiations and debate regarding Attorney General Sam Olen’s efforts to reform Georgia’s Open Meetings and Open Records Acts.  The dramatic changes contained in HB 397 will clarify and enhance public access to government meetings and records, and create new obligations for state and local governments.

The significant changes to the Open Meetings Act provisions are:

- The definition of a “meeting” subject to the act is clarified to require that the members of the governing body of an agency must be engaging in “any official business, policy, or public matter of the agency is formulated, presented, discussed, or voted upon;...” Section 50-14-1(a)(3)(A)

- “All votes at any meeting shall be taken in public after due notice of the meeting and compliance with the posting and agenda requirements...” Section 50-14-1 (b)(1)

- Notices must be posted of a regular meeting of an agency “at least one week in advance” and also contained on the agencies website. Section 50-14-1 (d)(1)

- Minutes of executive sessions must be recorded but will not be publicly available unless required in a court proceeding. Section 50-14-1 (e)(2)(C)

- Votes taken in executive session “to acquire, dispose of, or lease real estate, or to settle litigation, claims, or administrative proceedings” will not be binding until a public vote is taken. Section 50-14-3 (b)(1)

- Misdemeanor penalties for willful violations are increased from $500 to $1,000, and civil penalties may be imposed by the courts for negligent violations.  Civil and criminal fines are increased to $2,500 for each additional violation.

The preamble to the new provisions of the Open Records Act declares that “the strong public policy of this state is in favor of open government ... and that public access to public records should be encouraged to foster confidence in government.”   The extensive revision of the Open Records Act now provides:

- An agency may now provide copies of a record instead of providing access to the record.  Section 50-18-71 (b)(1)(B)

- Requests may be made by e-mail or facsimile. Section 50-18-71 (b)(2)

- Reasonable charges may be made for “search, retrieval, redaction, and production or copying costs” and the per page copying fee has been reduced to $0.10.  Section 50-18-71 (c)(1-2)

- An agency must provide an estimate if costs exceed $25 and may insist on payment prior to beginning any work if costs exceed $500.  Section 50-18-71 (d)

- Agencies must produce electronic copies or printouts of electronic records, and the “requester may request that electronic records, data, or data fields be produced in the format in which such data or electronic records are kept by the agency...” Section 50-18-71(f)

- An agency which contracts with a private vendor to collect and maintain public records must make those records available. Section 50-18-71 (h)

- Public employee records are protected except for salary information (Section 50-50-18-72 (a)(21)) as well as trade secret information obtained from a person or business that is required by law to be filed. Section 50-18-72 (a)(34)

For more information, contact Robert Baker at 770.818.4240 or bbaker@fmglaw.com.

By Robert Baker

Georgia Power Files Fuel Case

Georgia Power Company filed a fuel cost case which will reduce fuel costs to all consumers.  The average residential consumer’s bill will decrease by 6% or $8.00 a month.  In its filing the Company stated that it expects the under recovered balance to be fully recovered by March 31, 2012.  In August 2006 the under recovered fuel balance peaked at $995 million.  According to the Company’s pre-filed testimony, “[t]he Company’s fuel costs have declined significantly, primarily driven by decreases in the cost of natural gas and decreases in demand for electricity, coupled with recent mild weather.” [The Recession and natural gas fracking]

In addition to the rate reduction Georgia Power is asking the Commission to include in the fuel cost recovery $41.9 million in natural gas pipeline costs for Plant McDonough and to allow the company to change the Interim Fuel Rider (“IFR”) so that it can implement an automatic increase if the under collected balance is greater than $200 million.  The current IFR permits the company to automatically raise rates without a hearing if the balance is over $75 million but below $100 million.  A decision by the Commission is expected by June 21, 2012.

 Proposed New Fuel Rates

                          Average Rate        Transmission       Primary      Secondary

Winter                  3.2385                  3.1778                  3.2244        3.2484
(Oct – May)

Summer                3.9082                  3.8349                  3.8912        3.9323
(June – Sept)

Sixth Vogtle Construction Monitoring Report Filed – Project Over Budget

Georgia Power Company filed its sixth semi-annual construction monitoring report covering the period of July 1, 2011 through December 31, 2011.  In its filing the Company stated that it may exceed its $6.113 billion certified amount and “seek an amendment to the EPC (Engineering Procurement and Construction) Agreement and the Certificate, . . .”  According to the company’s filing, “[t]here are three broad categories of possible cost increases resulting from submitted and potential change orders.”  Pending change orders from Westinghouse and Stone & Webster, design changes made by the Consortium during the Design Certification Document review process and costs associated with the delays in the commercial operation date are identified as the areas for the potential cost increases. 

What does this mean for all Georgia Power customers?  It means the project construction costs are over budget and the construction phase of the project has just begun.  Hearings in the case begin May 9, 2012.

Renewable Energy Bills Fail in 2012 Legislative Session

Senate Bill 401 and House Bill 520 never got to see the light of day during the 2012 Legislative Session.  Both of these bills would have eliminated regulatory barriers to developing renewable energy resources in Georgia and provided businesses with the opportunity to develop renewable energy options.

Senate Bill 401 would have allowed consumers to develop distributed generation facilities, such as solar photovoltaic systems, by purchasing, leasing or entering into a power purchase agreement.  Forty-three states allow consumers to lease or use power purchase agreements.

House Bill 520 would have increased the amount of customer generated renewable energy that electric service providers would have to purchase from 0.2% of the utilities annual peak demand to 2.5%.  This amendment to O.C.G.A. Section 46-3-56 would have allowed customers to sell their excess generation to their electric service provider.

For more information, contact Robert Baker at 770.818.4240 or bbaker@fmglaw.com.

By Matt Stone

The Georgia appellate courts handed down two important decisions last week.  On March 20, 2012, the Court of Appeals issued an opinion holding that an insurer can create a “safe harbor” where a plaintiff who sends a time-limited settlement demand trying to set-up a bad faith claim unreasonably refuses to assure satisfaction of hospital liens.  Southern Gen. Ins. Co. v. Wellstar Health Sys., Inc., No. A11A2065, 2012 WL 917604 (Ga. Ct. App., Mar. 20, 2012).  On March 23, 2012, the Supreme Court issued an opinion upholding the Tort Reform Act of 2005’s amendment of O.C.G.A. § 51-12-33, requiring apportionment among multiple tortfeasors, even where a plaintiff bears no fault, and eliminating a co-defendant’s right of contribution or set-off.  McReynolds v. Krebs, No. S11G0638 (Ga. Sup. Ct., Mar. 23, 2012).

Time-Limited Demands and Hospital Liens - Southern Gen. Ins. Co. v. Wellstar Health Sys., Inc.

Southern General issued an automobile liability policy with an applicable limit of $25,000.  In September 2007, its insured struck and injured Gray, who treated at Wellstar Hospital and incurred $22,000 in medical expenses.  In October 2007, Wellstar notified Gray and Southern General of its intent to file liens; a month later, it filed liens for the total charges.

After receiving notice but before Wellstar filed its liens, Southern General wrote to Gray’s attorney, offering to settle for its policy limits and to send a check and general release once Gray confirmed that the liens would be satisfied or that he would indemnify Southern General’s insured.  On October 24, Gray’s attorney sent a letter to Southern General demanding payment of its policy limits within five days, citing Frickey v. Jones, 280 Ga. 573 (2006) (no binding settlement where insurer’s response to settlement demand contained an additional term requiring resolution of liens). 

Southern General responded the next day, offering to send the $25,000 settlement check upon receipt of a signed release that included a representation that no liens existed and an agreement to indemnify.  On October 26, Gray’s attorney responded that Gray would sign a general release without an agreement to indemnify.  On October 29, Southern General tendered its $25,000 policy limits to Gray and, on October 31, Gray returned a signed release that did not include an indemnity provision.

Thereafter, Wellstar sued Southern General, alleging that it had ignored Wellstar’s liens and paid Gray in violation of Georgia’s hospital lien statutes, O.C.G.A. §§ 44–14–470, et seq.  Southern General filed a motion for summary judgment, arguing that it had no choice but to accept Gray’s time-limited demand in order to avoid a bad faith claim under Frickey and Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992) (insurer may be found to have acted in bad faith for failing to settle where liability is clear and the claimant’s special damages exceed the policy limits).  The trial court denied the motion and Southern General appealed.

In affirming, the Court of Appeals rejected Southern General’s argument that Frickey and Holt, when coupled with the hospital lien statutes, set-up an insurer to pay in excess of its policy limits because it cannot unconditionally accept a claimant’s time-limited demand and satisfy the hospital liens.  The court first noted the settled principle that an insurer faced with a time-limited demand must accord its insured “the same faithful consideration it gives its own interest” and that the issue is whether the insurer acted unreasonably in rejecting a time-limited settlement demand.  Wellstar, 2012 WL 917604 at *3 (quoting Holt, 262 Ga. at 269).  After noting that an insurer cannot ignore a properly-filed hospital lien, the court went on to hold that:

[I]t is possible for an insurance company to create a “safe harbor” from liability under Holt and its progeny when (1) the insurer promptly acts to settle a case involving clear liability and special damages in excess of the applicable policy limits, and (2) the sole reason for the parties’ inability to reach a settlement is the plaintiff’s unreasonable refusal to assure the satisfaction of any outstanding hospital liens.

Id. at *4.

The court stated that an insurer faced with a claim of clear liability and special damages in excess of the policy limits can invoke the safe harbor by timely offering to tender its policy limits, “subject to a reasonably and narrowly tailored provision assuring that the plaintiff will satisfy any hospital liens from the proceeds of such settlement payment.”  Id.  The court then suggested that:

[T]he insurance company could request that plaintiff’s counsel or a third party hold a portion of the settlement proceeds (in an amount equal to that of the hospital lien) in escrow to allow the plaintiff an opportunity to investigate the validity of the liens and to negotiate with the hospital. And once the relevant lien-resolving documents have been executed by the parties, the held-back settlement funds could then be disbursed to the plaintiff. But if the insurer made such an offer or counteroffer (in a timely and reasonable fashion) and the plaintiff unreasonably refused to give the requested assurance, the insurer is (at that point) under no obligation to tender policy limits directly to the plaintiff. Indeed, a plaintiff who unreasonably refuses to give such an assurance does so at his or her own peril because the insurance company would thereafter have no obligation to negotiate with the hospital or otherwise advocate on the plaintiff’s behalf. Instead, the insurer would be free (at that point) to simply verify the validity of any liens, make payment directly to the hospital, and then disburse any remaining funds to the plaintiff.

Id. at *4-5.  The court, however, warned that making payment directly to a hospital before engaging in good faith settlement negotiations with a plaintiff could expose an insurer to liability under Holt and its progeny.  Id. at *4 n.21.  Finally, the court held that:

[W]hen the failure to settle a Holt-scenario claim is based solely on the plaintiff’s unreasonable refusal to agree to a reasonably and narrowly tailored provision assuring that any hospital liens will be satisfied from the settlement proceeds, that cannot, as a matter of law, constitute a bad faith failure to settle when the insurer is merely attempting to comply with its legal obligations.

Id. at *5 (emphasis in original).

We should expect that the Wellstar decision is not the end of the line for this issue, as the Georgia Supreme Court has regularly weighed-in on post-Holt and Frickey cases.

Apportionment Upheld - McReynolds v. Krebs

Krebs sustained injuries in a motor vehicle accident and sued the other driver, McReynolds, and General Motors, the manufacturer of the vehicle in which Krebs was riding as a passenger, contending that the vehicle’s design contributed to her injuries.  McReynolds filed a cross-claim against GM for contribution and set-off.  After Krebs settled with GM, the trial court dismissed McReynolds’ cross-claims based on the Tort Reform Act’s amendments to O.C.G.A. § 51-12-33.  McReynolds appealed a jury verdict in favor of Krebs, arguing that O.C.G.A. § 51-12-33(b) requires apportionment of damages only where the plaintiff is partially at fault.  The Court of Appeals rejected that argument and affirmed (McReynolds v. Krebs, 307 Ga. App. 330 (2010)), as did the Supreme Court.

Noting that the previous version of the apportionment statute (before the Tort Reform Act of 2005) applied only where a plaintiff was to some degree at fault, the Supreme Court held that the amendment to O.C.G.A. § 51-12-33(b) requires apportionment of damages where an action is brought against more than one person for injury, even where the plaintiff bears no fault.  McReynolds, No. S11G0638, slip op. at 6.  Accordingly, the court held there was no error in dismissing McReynolds’ cross-claims for contribution and set-off against GM because the statute “flatly states that apportioned damages ‘shall not be subject to any right of contribution.’”  Id.

For more information, contact Matt Stone at 770.818.1411 or mstone@fmglaw.com.

By Ben Mathis and La’Vonda McLean

After several postponements, the National Labor Relations Board (“NLRB”) was moving forward with its posting requirements (“Notification of Employee Rights Under the National Labor Relations Act”), regarding employee union rights with a compliance date of April 30, 2012.

On March 2, 2012, a federal judge in the District of Columbia upheld the right of the NLRB to require notice posting. Importantly, however, the Court struck down the provisions of the regulation making it an Unfair Labor Practice not to post the notice and tolling the six-month statute of limitations for an employer's failure to post the notice. 

The Court Holds the NLRB is Authorized to Require Employers Post The Notice

The National Association of Manufacturers (“NAM”) argued that the NLRB’s notice posting requirement exceeded its authority to order a mandatory posting by all employers. Nonetheless, the Court held the NLRB was granted by Congress the rulemaking authority to require employers to post a notice informing employees of their rights, including union organizing rights.

The Failure to Post the Notice is Not an Automatic Unfair Labor Practice

The NAM also challenged the NLRB’s authority to deem an employer's failure to post the notice to be an Unfair Labor Practice under the Act. The NLRB provision explaining the consequences of failing to post the notice states “Failure to post the employee notice may be found to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed by NLRA Section 7..."

The Court agreed with the NAM that failure to post the notice could not automatically constitute an Unfair Labor Practice. In this regard, the Court found that the NLRB exceeded its regulatory authority, stating “the Board must make a specific finding based on the facts and circumstances in the individual case before it that the failure to post interfered with the employee’s exercise of his or her rights.”

The Tolling of the Six-Month Statute of Limitations Violates the NLRA

NAM also challenged the NLRB’s rule to toll the NLRA’s six-month statute of limitations for failing to post the notice. The NLRB provision states:

When an employee files an unfair labor practice charge, the Board may find it appropriate to excuse the employee from the requirement that charges be filed within six months after the occurrence of the allegedly unlawful conduct if the employer has failed to post the required employee notice unless the employee has received actual or constructive notice that the conduct complained of is unlawful.

The Court deemed this improper. Specifically, the Court noted that the Act authorizes the NLRB to toll the statute of limitations, but that such tolling is not automatic and must be supported by proof on a case by case basis.

Implications of the Court's Ruling

The NLRB's posting requirement has been a lightning rod for criticism by employers that the posting notice is an improper intrusion on employer rights and an implied endorsement by the federal government that unions are encouraged. Most certainly, the decision by the District of Columbia lower court will be appealed, and the outcome remains to be seen. However, if the rationale of the NAM decision stands, it may well be that the posting notice turns out to be the proverbial "toothless tiger." Without the sanction of an automatic finding of an Unfair Labor Practice, most employers likely will face little in the way of an effective penalty if they don't post the new notice. 

For more information, contact Ben Mathis at 770.818.1402 or bmathis@fmglaw.com or La’Vonda McLean at 770.818.4247 or lmclean@fmglaw.com.

By Brad Adler and Anthony Del Rio

On January 6, 2012, the National Labor Relations Board (NLRB) released a decision holding that employers cannot require employees to sign arbitration agreements that bar employees from bringing class (including collective) claims before a judicial body.  D.R. Horton, Case 12-CA-25764 (NLRB Jan. 3, 2012).  The ruling came down 2-0, supported by both Democrat members Chairman Mark Pearce and Member Craig Becker (notably on the final day of his appointment).  Republican Member Brian Hayes recused himself from the case.  The decision applies to all employers/employees covered under the NLRA.  

The NLRB reasoned that, by restricting collective actions, the company was preventing the employees from engaging in concerted activity protected under Section 7 of the NLRA.  The agreement at issue in the decision required both the employee and the employer to agree to bring all claims to an arbitrator on an individual basis.  In addition, the agreement prohibited the arbitrator from consolidating claims, creating a collective action, or awarding relief to a group or class.  The NLRB’s ruling requires the company to rescind the agreement or revise it to permit employees to pursue a class of collective action in a judicial forum.  The Board expressly permitted restricting arbitration to an individual basis, but employees must then be permitted to bring a class or collective action in court. 

The NLRB's decision will certainly be appealed.  Given that the United States Supreme Court recently held that similar arbitration clauses in the consumer setting were lawful (AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011)), there is a reasonable basis to believe that the courts may eventually reverse the NLRB’s decision.  Also, many believe that, while an appeal of the NLRB's decision is pending, courts may be reluctant to strike down or limit arbitration agreements with class claim bars.

Still, until the D.R. Horton decision is decided on appeal, an arbitration clause that bars class actions is subject to judicial attack.  Therefore, many employers are asking whether they should delete the bar against class claims in their arbitration agreements or if they do not, what are the implications for failing to do so.

Most likely, the greatest risk to employers who maintain an arbitration agreement with a class claim bar is that a court would strike down the entire arbitration agreement. In such a case, the employee could bring his individual claim in court.  That risk, however, does not seem great in most jurisdictions given the general judicial policy favoring arbitration agreements.  Also, the risk of the entire arbitration agreement being found unenforceable further can be reduced by including a severability clause providing that, if a court finds any part of the agreement unlawful, the rest still survives. In addition, a provision allowing the arbitrator to reform the agreement as needed to make it lawful further increases the probability that the rest of the agreement would survive even if the agreement had a class claim bar that was found to be unlawful.  FMG's model arbitration agreement contains these provisions.

The downside to deleting provisions barring class claims until the NLRB's decision is definitively decided by the courts is that an employer doing so would once again be subject to class or collective action claims.  For many employers, that is a risk that is too great and eliminates one of the major advantages of arbitration agreements.

Ultimately, many employers, based on their own circumstances, may reach different decisions on what is the best course until the NLRB's controversial decision is fully and finally resolved. The reality is that any employer with arbitration agreements containing class claim bars will need to carefully consider the benefits, risks and practical implications of modifying or not modifying their agreements until the outcome of the class claim issue is settled.

For more information, contact Brad Adler at 770.818.1413 or badler@fmglaw.com or Anthony Del Rio at 770.818.1436 or adelrio@fmglaw.com.

By Matt Stone

In a further effort to reduce distracted driving, the Federal Motor Carrier Safety Administration (FMCSA) has issued rules restricting the use of mobile telephones while driving a commercial motor vehicle (CMV).  The new rules apply to drivers and motor carriers, as well as to school bus operations and vehicles carrying 9-15 passengers not for direct compensation, which are exempt from other FMCSA rules.

Effective January 3, 2012, no driver shall use – and no motor carrier shall allow or require a driver to use – a hand-held mobile telephone while driving a CMV.  To comply with the new rules, it’s important to understand two key points:

• First, use of a hand-held mobile telephone means using at least one hand to hold it to conduct a voice communication, dialing or answering it by pressing more than a single button, or reaching for it in a manner that requires a driver to maneuver so that he is no longer in a seated driving position with his seat belt fastened.
• Second, driving means operating a CMV on a highway, including while temporarily stationary because of traffic, a traffic control device, or other momentary delays.

The only exception is for emergencies:  drivers may use a hand-held mobile telephone (or text) while driving when it’s necessary to communicate with law enforcement officials or other emergency services.  Otherwise, drivers may only use a hand-held mobile telephone (or text) when the vehicle has been moved to the side of, or off, the roadway and stopped in a location where the vehicle can safely remain stationary. 

Drivers may still use a mobile telephone while driving, but they must use a speakerphone or hands-free device and be able to make or receive a call without having to press more than a single button and without having to reach for the phone.

While CB radios are excluded from the new rules, push-to-talk devices are included.  Likewise, the ban includes using a mobile telephone to enter odometer readings, to synchronize electronic technology and to perform text-to-voice or voice-to-text functions requiring more than a single button touch.

Failure to comply can have substantial consequences.  A driver may be fined up to $2,750 per violation and disqualified.  Employers may be fined up to $11,000 per violation. 

Inasmuch as employers are held accountable for the actions of their drivers, the FMCSA advised motor carriers to have a policy or practice in place, making it clear they require compliance with the FMCSA rules.  Therefore, prudent motor carriers will have a policy covering the use of mobile telephones by their drivers (and other company employees).  Such a policy should (a) prohibit the use of a mobile telephone for improper purposes or in a manner that violates federal, state, or local law and (b) establish guidelines for the acceptable use of such equipment.  It’s also a good idea to have drivers sign an authorization, allowing the company to get a copy of their personal mobile telephone records from the service provider in the event of a crash.

If you have questions or would like more information or to discuss drafting a policy that’s right for your company, please contact Matt Stone at 770.818.1411 or mstone@fmglaw.com.

Update: New NLRA Posting Requirements Postponed

On December 5, we published a LawLine Alert informing our readers of new rules regarding employee rights posting requirements.  The National Labor Relations Board (“NLRB”) codified regulations that would require all employers subject to its jurisdiction to post information informing employees of their rights under the National Labor Relations Act.  The previous deadline set to post the information was January 31, 2012.  However, due to challenges to the legality of the regulations, the federal court requested the NLRB delay the enactment of the regulations to allow time for the court to rule on the matter.  The NLRB acquiesced and has postponed the enactment of the rules.  The new implementation date is April 30, 2012.  This marks the second delay for the enactment of these regulations. 

The news release regarding the delay and the required posting are available on the NLRB's website.

The regulations are available at 29 C.F.R. § 104.202.

The original LawLine Alert is available on our website.

By David Cole

As the end of the year approaches, it is important for all Georgia employers to be aware of new requirements under the Georgia Illegal Immigration Reform and Enforcement Act of 2011.  For cities and counties, their first annual E-Verify reports are due by December 31st, and their SAVE reports are due by January 1st.  Beginning January 1st, private businesses with 500 or more employees must use E-Verify.  Employers with fewer employees will have to start using E-Verify later in the year or next year.

Contracts for Public Works

Every city and county in Georgia already is required to use E-Verify to verify the employment eligibility of newly hired employees.  Once registered, every city and county has to post its E-Verify number and date of authorization on its website.  If the city or county does not have a website, it must submit the information to the Carl Vinson Institute of Government for it to post on a centralized website.

A city or county also cannot enter into a contract for the “physical performance of services” unless the contractor signs an affidavit swearing that it, too, uses E-Verify for its employees, and that it will only subcontract with parties that do the same.  (There is an exception that allows contractors with no employees to show a state driver’s license if it was issued by a state that verifies immigration status before issuing the license.)  The Attorney General has stated that “physical performance of services” only includes contracts for public works or for the maintenance, operation, and repair of buildings or structures.  The Department of Audits and Accounts also has created form affidavits that can be downloaded here.

Now, under the new law, cities and counties are required to submit a report to the Department of Audits and Accounts certifying compliance with these requirements by December 31st of each year.  This means the first reports are due in just over two weeks on December 31, 2011.  The report must identify the city or county’s E-Verify number and date of authorization and the legal name, address, and E-Verify number of every contractor from the past year, as well as the date of the contract between the contractor and the city or county.  For this year’s report, cities and counties must include contracts entered into between July 1, 2011, and November 30, 2011.  Contracts for December 2011 will need to be included in next year’s report.  The Department of Audits and Accounts has created a form report with instructions that can be downloaded here and submitted by e-mail or mail. 

Private Employers Must Use E-Verify

The new law also requires that, before a city or county can issue an occupational tax certificate or business license, or any other licenses that may be required to operate a business, it obtain an affidavit from the business stating that it uses E-Verify for all of its new hires or that it is not required to use E-Verify.  The Attorney General has created a form affidavit that can be downloaded here.

This means that, eventually, every employer in Georgia with more than 10 employees will have to start using E-Verify.  For employers with 500 or more employees, the requirement goes into effect in approximately two weeks on January 1, 2012.  For employers with between 100 and 500 employees, it goes into effect on July 1, 2012.  For employers with between 10 and 100 employees, it goes into effect on July 1, 2013.  The E-verify requirement will not apply to employers with 10 or fewer employees, but when applying for a business license, they will have to sign an affidavit stating they are exempt from the statute.

Beginning on December 31, 2012, every city and county will have to submit a report to the Department of Audits and Accounts demonstrating its compliance with these requirements.  The report will have to identify every license or certificate issued in the past year and include the name of each business and its corresponding E-Verify number.

SAVE – Public Benefits

Cities and counties also must be sure they are continuing to use the Systematic Alien Verification of Entitlement (SAVE) program.  For every “public benefit” a city or county administers to a person or entity, it must receive an affidavit verifying the person’s lawful presence in the United States.  A form affidavit from the Department of Audits and Accounts can be downloaded here, and a list of “public benefits” published by the Attorney General’s office is available here.  If the applicant states in the affidavit that he is an alien lawfully present in the United States, the city or county must then verify his eligibility through the online SAVE system.

Every year, cities and counties that administer any public benefit must submit an annual report to the Department of Community Affairs that lists each public benefit it administers and identifies whether there are any recipients of such benefits for whom SAVE verification has not been received.  This report must be submitted by January 1, 2012, and can be accomplished by clicking here.

Secure and Verifiable Documentation

Beginning on January 1, 2012, cities and counties must require any person seeking a public benefit, or anything else for which identification is required, to show a “secure and verifiable document.”  A “secure and verifiable document” is defined as one issued by a state or federal jurisdiction, or recognized by the United States government, and which is verifiable by federal or state law enforcement, intelligence, or homeland security agencies.  For ease of reference, the Attorney General has published a list of “secure and verifiable” documents here.

Supreme Court Review

The U.S. Supreme Court agreed this week to rule on Arizona’s immigration law, which could have implications for Georgia and other states that have enacted similar laws.  However, the Supreme Court will only rule on four parts of the Arizona law that require state law enforcement officials to communicate with federal immigration officials and which impose state law penalties for violating federal immigration requirements.  These provisions are separate from the parts of Georgia’s law discussed above, so it appears that the Supreme Court’s decision will not affect these parts of the law and that they will go into effect as planned.  Only time will tell, however, whether the Supreme Court’s ruling will have broader implications.

For more information, contact David Cole at 770.818.1287 or dcole@fmglaw.com.

By Ben Mathis and Jonathan Kandel

After several postponements, the National Labor Relations Board (“NLRB”) recently announced that it is going forward with a new rule requiring most private employers to post notices regarding employee rights under the National Labor Relations Act (“NLRA”).  The posting requirement will be effective January 31, 2012.  Codified at 29 C.F.R. § 104.202, the posting requirement applies to all private employers subject to the NLRB’s jurisdiction.  A common misconception is that only unionized employers are subject to the NLRB’s jurisdiction.  In fact, all private employers except agricultural, railroad, and airline employers are covered by the NLRB. 

The notice must be posted in conspicuous places where it can be readily seen by employees.  This includes all places where notices to employees concerning personnel rules or policies are “customarily posted,” which means any location where other required notices (such as “Equal Employment is the Law” posters) are posted.  In addition, employers that customarily communicate with employees about rules or policies using an intranet or internet site must also post the notice electronically.  The rule provides two ways to post the notice electronically: (1) place an exact copy of the NLRB’s poster on the site; or (2) create a link to the NLRB’s website; the link must read, “Employee Rights under the National Labor Relations Act.”  Either method will comply with the rule as long as the notice is displayed “no less prominently than other notices to employees.” 

The rule also requires the notice to be posted in languages other than English if 20 percent or more of an employer’s employees are not proficient in English and speak another language.  If an employer’s workforce includes two or more groups constituting at least 20 percent of the workforce who speak different languages, the employer must either post the notice in each of the languages or, at the employer’s option, post the notice in the language spoken by the largest group of employees and provide each employee in each of the other language groups a copy of the notice in the appropriate language.

Failure to post the required notice could subject employers to unfair labor practice charges, which are brought by any employee (unionized or non-unionized) to the NLRB.  Possible consequences include tolling of the six month statute of limitations for unfair labor practice charges against the employer and, where the motive for a personnel action is at issue, an inference that the employer took the action for unlawful reasons. 

A poster that includes all of the required information is available for free on the NLRB’s website: www.nlrb.gov/poster.  The poster can be downloaded or ordered from the website and currently is available in 24 languages other than English.  If an employer needs the notice in a language that is not currently available, the employer should request the notice in the particular language from the NLRB.  As long as the request is made, an employer will not be liable for failing to post the notice in a particular language until the notice is available in that language.

For more information, contact Ben Mathis at 770.818.1402 or bmathis@fmglaw.com or Jonathan Kandel at 770.818.1427 or jkandel@fmglaw.com.

By Leanne Prybylski

Yesterday, June 27, 2011, United States District Court Judge Thomas W. Thrash, Jr. signed an Order enjoining enforcement of portions of HB87 that were set to go into effect on July 1, 2011.  The ruling applies to Sections 7 and 8 of the law, which would have allowed state and local law enforcement officers to check the immigration status of persons under certain circumstances involving suspected criminal activity.  As long as the injunction remains in effect, “[s]tate and local law enforcement officers and officials have no authorization to arrest, detain, or prosecute anyone based upon Sections 7 and 8 of HB87.”  See page 45 of the Order.

Judge Thrash’s ruling does not affect portions of the new immigration law requiring businesses to register with and use E-Verify.  Section 3 of HB87, which goes into effect on July 1, 2011, revises and clarifies a current Georgia law, O.C.G.A § 13-10-91, requiring contractors of public employers to register with and use E-Verify prior to entering into a contract to perform physical services.  Section 3 also clarifies the flow down of the E-Verify requirement to all subcontractors and sub-subcontractors on such public projects.  From January 1, 2012 through July 1, 2013, Section 12 of HB87 phases in the requirement for private employers with more than ten employees to register with and begin using E-Verify prior to being issued a business license in Georgia.  It is important to note that employers using E-Verify pursuant to HB87 are only allowed to use E-Verify for verifying the employment eligibility of new employees hired on or after the date the employer registers with E-Verify.

For more information, please contact Leanne Prybylski at 770.818.1404 or lprybylski@fmglaw.com.

Dear Friends,

We are pleased to announce that the attorneys of the Atlanta litigation firm of Flint & Adler, LLP have merged with our law firm.

Founding attorneys Mike Flint and Shira Adler Crittendon have become FMG partners. Scott Rees has joined us as of counsel and Laura Broome as an associate.

Flint & Adler is well known for their outstanding litigation capabilities. They have successfully tried many cases to verdict and have a reputation for being practical and innovative lawyers.  Mike Flint and Shira Adler are among the brightest litigation stars in our area, and we were fortunate to convince them and their firm's lawyers to join the FMG team.

Our newest attorneys have a wide ranging commercial litigation practice. They also have one of the most substantial medical malpractice and allied health defense practices in our region. The addition of these excellent attorneys further strengthens FMG's significant trial expertise and adds to the depth of our business litigation and professional liability practice groups.

We hope you will have the opportunity soon to meet Mike, Shira, Scott and Laura (and their very capable support staff who have joined us as well). They are valuable additions to the FMG family and you will be glad to have them on your team, too.

Regards,

Ben Mathis
Managing Partner

By Ben Mathis and Marty Heller

The OFCCP has issued a notice of proposed rulemaking recommending proposed regulations regarding the affirmative action obligations and non-discrimination rules for protected veterans.  These regulations, if finalized, would affect all employers with a single government contract valued at $100,000 or more and 50 or more employees. 

Initially, the regulations contain new definitions for veterans, and the OFCCP has stated that it will update the VETS 100 form for contractors to use the new definitions. 

The new regulations also contain a new required notice to employees and applicants of the contractor’s affirmative action obligations covering veterans, and this notice must be available in formats understandable to disabled individuals, including Braille.  Contractors also must post an EEO policy statement on bulletin boards in a form that is accessible and understandable to disabled veterans, and this statement must include the contractor CEO’s support for the affirmative action program, and other required language.  In addition to these notices, the regulations also include strict requirements for internal dissemination of the affirmative action obligations. 

The proposed regulations also include onerous job vacancy posting requirements, which require that employers register with each state as a federal contractor interested in receiving veteran referrals, and post jobs according to those requirements.  Contractors also must undertake new outreach efforts, including establishing “linkage agreements” with local veteran employment representatives. 

The proposed regulations require employers to invite applicants to self-identify themselves as a protected veteran prior to an offer of employment.  The OFCCP will then use this information to track pre-offer effectiveness of recruiting efforts and affirmative action requirements.

Perhaps most importantly, contractors must implement tracking procedures for veterans similar to the tracking procedures already in place for minorities and females, including (1) for each protected veteran applicant, the vacancy and training program for which the applicant was considered; (2) for each protected veteran employee, the promotion and training program for which the employee was considered; (3) for each protected veteran rejected for employment, promotion or training (applicant and/or employee), the reason for rejection and a description of accommodations considered if the veteran is disabled; and (4) any accommodation which would make it possible to place the disabled veteran in a job. The rules would change the accommodation requirements, so that when an accommodation would cause an undue burden, the contractor must allow the veteran an opportunity to provide their own accommodation, or pay for the accommodation themselves.

The rules similarly contain new requirements for maintaining applicant and hire data on veterans.  Contractors must document and review referral data, applicant data and total hiring data, including: (1) the number of priority referrals of veterans, the total referrals received from employment services systems, and the ratio of priority referrals of veterans to total referrals; (2) the number of self-identified veteran applicants, the total number of applicants for all jobs, and the ratio of protected applicants to total applicants; and  (3) the number of protected veterans hired, the total number of hires, and the ratio of protected veteran hires to total hires.  Additionally, employers must track the total number of job openings, the number of jobs filled and the ratio of job openings to jobs filled.  This data must be documented annually and must be maintained for five years (as opposed to the two year requirement for gender and minority data).   

Finally, the proposed regulations require that an employer set a benchmark for the number of protected veterans to be hired over the next 12 months.  The standards for setting this benchmark are vague and poorly defined. 

Of course, these are only highlights of the proposed changes.  For federal contractors, these are significant changes that will require updates to your affirmative action plans and to your applicant tracking systems.  These proposed rules demonstrate the OFCCP’s new focus on protecting veterans, and the information likely will be used by the OFCCP during compliance audits as another source of shortfalls in hiring and alleged discrimination.  Importantly, these changes are not presently final, and contractors may submit comments to the OFCCP on or before June 27, 2011.

For more information, contact Ben Mathis at 770.818.1402 or bmathis@fmglaw.com or Marty Heller at 770.818.1284 or mheller@fmglaw.com of the Labor & Employment Law Practice Group.

By Ben Mathis & Kelly Morrison

On April 14, the Georgia state legislature passed immigrant legislation (HB87) on April 14, the final day of its 2011 session.  Governor Nathan Deal announced that he approves of and will sign the bill.  HB87 is strict, mandating that, effective July 1, 2013, any private company with more than 10 full-time employees, along with every public employer, regardless of its size, must register with the federal E-Verify program to check the legal status of new hires.  Larger companies will have to implement the bill’s measures even sooner—January 1, 2012 for companies with 500 or more employees, and July 1, 2012 for companies with 100 or more employees. 

According to the bill’s measures, an employee will be counted if he or she: (1) works at least 35 hours per week; and (2) receives a W-2 from the company, as opposed to a 1099 or other tax form.

The bill will be enforced through each municipalities’ business licensing division.  After the applicable dates, any company applying for or renewing a business license must provide proof of enrollment in E-Verify in order to receive or renew their business license.  Municipalities must provide the state with an annual report, confirming that licenses are only being issued to companies who are enrolled in E-Verify.  Audits are to be conducted by the Department of Labor, although funding for these initiatives has been an issue in the past, and it is unclear whether this mandate will be funded in the future.

Additionally, the bill makes “aggravated identity theft” a crime, punishing illegal immigrants for the use of false documentation.  Repeat offenders can receive up to fifteen years of jail time and/or $250,000 in fines.  Additionally, it allows the police to question individuals about their immigration status and mandates sanctions for those who harbor or transport undocumented workers.

Despite the controversial nature of the bill, the measure passed overwhelmingly in both chambers, with a vote of 112-59 in the House and 39-17 in the Senate.  Although a contingent of the Senate attempted to block the portion of the bill mandating use of the federal E-Verify system to ascertain the immigration status of employees, they were unsuccessful, and the bill was passed in its original form.

To read the full text of the bill, please visit: http://www.legis.ga.gov/legislation/en-US/displaybill.aspx?BillType=HB&billNum=87.

For more information, contact Ben Mathis at 770.818.1402 or bmathis@fmglaw.com or Kelly Morrison at 770.818.1298 or kmorrison@fmglaw.com of the Labor & Employment Law Practice Group.

By Ben Mathis and Jonathan Kandel

The U.S. Supreme Court has issued a decision that could leave employers liable for discrimination even if the ultimate decisionmaker has no discriminatory animus.  The Court held that an employer can be liable based on the discriminatory animus of an employee who influences, but does not make, the ultimate employment decision. 

The Court’s decision endorses the “cat’s paw” theory of discrimination, which is used to hold an employer liable for the animus of a supervisor who is not charged with making the ultimate decision.  The theory is named after a 17th century fable in which a monkey convinces a cat to take chestnuts out of a fire and then makes off with the chestnuts, leaving the cat with nothing but burnt paws.  

In Staub v. Proctor Hospital, an army reservist sued his employer under the Uniform Services Employment and Reemployment Rights Act (USERRA), claiming that his discharge was motivated by hostility to his military status.  USERRA prohibits employers from discriminating against a member of the uniformed services on the basis of the membership or an obligation thereof.  38 U.S.C. § 4311.  Under USERRA, discrimination occurs when the membership in, or an obligation to, a uniformed service “is a motivating factor” for an adverse employment action. 

While the case only involved USERRA, the Court noted that USERRA’s “motivating factor” language is very similar to Title VII’s and many other anti-discrimination statutes.   

Evidence in the Staub case demonstrated that the plaintiff’s immediate supervisor and the supervisor’s supervisor were hostile to the plaintiff’s military status and wanted him terminated.  The plaintiff’s supervisor issued a written warning when the plaintiff supposedly violated a work rule.  The warning directed the plaintiff to stay in his work area unless he had permission from his supervisor or the supervisor’s supervisor. 

A few weeks later, the supervisor’s supervisor informed the vice president of human resources that the plaintiff violated the warning’s directive.  After reviewing the plaintiff’s personnel file, including the written warning, the vice president fired the plaintiff for ignoring his supervisor’s directive in the warning. 

The plaintiff challenged his termination through his employer’s grievance process, claiming the written warning was false and motivated by his military status.  Without looking into the plaintiff’s claim of discrimination, the vice president denied the plaintiff’s grievance.  
   
The Court found that the employer could be liable because the supervisors committed discriminatory acts (issuing the written warning and accusing the plaintiff of violating the warning) that were “intended” to cause, and did in fact cause, the plaintiff’s termination.  In so holding, the Supreme Court rejected the employer’s contention that it could not be liable because the ultimate decisionmaker (the vice president) was not motivated by anti-military animus. 

The Court explained that, while the vice president was not motivated by the plaintiff’s military status, the vice president relied upon the supervisor’s discriminatory conduct in deciding to terminate the plaintiff.  

Significantly, the Court refused to adopt a bright-line “independent review” defense. This defense often has been used by employers to insulate discipline decisions approved by higher level managers where employees claim immediate supervisors were biased. Previously, employers could avoid liability by showing that the higher-level manager conducted an "independent review" of the issue and, therefore, the lower-level manager’s alleged discriminatory animus was immaterial. 

The Staub decision seemingly rejects the "independent review" defense. The Court, however, did leave employers with some ability to avoid liability where they can establish that a decisionmaker's investigation resulted in the discharge for reasons unrelated to the supervisor's original biased action.  The Court explained that such a showing could be made if the decisionmaker determines (separate and apart from the supervisor’s recommendation) that the supervisor’s action was “entirely justified.”   

The Staub decision again emphasizes the importance of employers enacting comprehensive complaint procedures for all forms of discrimination (not just harassment) as well as internal grievance procedures.  While the Supreme Court did not provide employers guidance for conducting an adequate “independent investigation,” these procedures likely will enhance an employer's ability to contend that decisions were thoroughly investigated (not just "reviewed"), and a decision rendered without relying upon a particular supervisor's view of a situation.  Similarly, the Staub decision highlights the need for exit interviews.  By conducting such post-employment interviews, employers can ascertain whether an employee believes discrimination was involved and investigate any claims.  Investigating the facts (not just the personnel file) will increase the likelihood of prevailing against a “cat’s paw” discrimination claim. 

For more information, contact Ben Mathis at 770.818.1402 or bmathis@fmglaw.com or Jonathan Kandel at 770.818.1427 or jkandel@fmglaw.com of the Labor & Employment Law Practice Group.

By Bradley Adler and Marty Heller

In an opinion released on January 24, 2011, the Supreme Court held that third parties may have a cause of action for retaliation under Title VII if they suffer an adverse employment action due to their connection with a person who has filed an EEOC Charge.  Thompson v. N. Am. Stainless, LP, 09-291, 2011 WL 197638 (U.S. Jan. 24, 2011).

In this case, an employee, Miriam Regaldo, filed a charge of discrimination against her employer alleging sex discrimination.  Less than a month later, Ms. Regaldo’s fiancé, Eric Thompson, was terminated.  Mr. Thompson filed an EEOC Charge alleging that he was fired in order to retaliate against Ms. Regaldo for filing her EEOC Charge.  The Sixth Circuit Court of Appeals dismissed the case because Mr. Thompson did not himself “engage in any statutorily protected activity” and sought protection under Title VII solely based on his close association with his fiancé.

The Supreme Court of the United States, in an opinion authored by Justice Scalia, disagreed with the Sixth Circuit and found that Thompson was protected from retaliation based on his association with someone who had engaged in protected activity.  The Court, relying upon its increasingly broad interpretation of the retaliation provisions of Title VII under Burlington Northern v. White, concluded that taking an adverse employment action against a close relative of someone who had engaged in protected activity would have the effect of dissuading reasonable workers from engaging in protected activity.  In this case, for instance, the Court noted it had “little difficulty” in concluding that a reasonable worker would be dissuaded from filing an EEOC Charge if he or she knew that their fiancé would be fired. 

In ruling, the Supreme Court addressed the main concern with affording a fiancé protection under Title VII.  The company argued that allowing a fiancé to sue would open the floodgates to retaliation lawsuits from everyone with any connection to a complaining employee.  The Court stated, however, that “we do not think [this concern] justifies a categorical rule that third-party reprisals do not violate Title VII.”

Interestingly, the Court declined to identify a fixed class of relationships for which third-party retaliatory acts are unlawful.  Instead, the Court stated that it will “depend on the particular circumstances” and further elaborated that “firing a close family member will almost always meet the standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so.”

While this ruling is not particularly surprising, the Supreme Court’s refusal to define a class of third parties who may sue under this theory is curious.  The Court’s ambiguous comment about the level of relationship and the type of employment action required to create a cause of action leaves employers in a realm of unknown.  While it seems clear that typical low-level disciplinary actions (such as a written warning) of a friend probably will not be enough to support a retaliation claim, it is uncertain how courts will rule if, for instance, a mere acquaintance is terminated.  This void will have to be filled by Court decisions in the future. 

In any event, this case serves as a good reminder that employers must remain cognizant of the actions they take once an employee has engaged in protected activity.  As with any other disciplinary decision, employers should carefully evaluate whether the action they are going to take, whether against an employee who has filed an EEOC Charge or a close relative of that person, is consistent with their typical disciplinary protocol. 

By: Ben Mathis and Jonathan Kandel

The Equal Employment Opportunity Commission recently issued final rules related to the Genetic Information Nondiscrimination Act of 2008 (“GINA”).  Title II of GINA, which became effective on November 21, 2009, makes it unlawful for covered employers to discriminate on the basis of “genetic information.”  In addition, covered employers are prohibited from requesting, requiring, or purchasing “genetic information.”  Title II applies to private and public employers with 15 or more employees.

The regulations address several issues, such as defining “genetic information,” adopting standards for violations of Title II, explaining the applicable record keeping requirements, and clarifying permissible practices.  The new regulations are likely to impact multiple policies and practices, including record retention procedures, wellness programs, work-related medical examinations, and Equal Employment Opportunity Policies.  Employers subject to Title II should review their policies and procedures immediately to ensure compliance as the regulations went into effect on January 10, 2011.    

“Genetic information” is broadly defined to include:

• Information about an individual’s genetic tests;
• Information about the genetic tests of a family member;
• Family medical history;
• Requests for or receipt of genetic services or participation in research that includes genetic services by an individual or a family member; and
• Genetic information about a fetus or embryo carried by an individual or a pregnant family member. 

Explicitly excluded from the definition of genetic information is information about age, sex, race, or ethnicity that is not derived from a genetic test.  “Genetic tests” are tests, such as an analysis of DNA or chromosomes, used to determine whether an individual has genes related to a specific disease or condition.  The regulations include examples of tests that are and are not “genetic tests.”  For instance, HIV tests, cholesterol tests, and drug and/or alcohol screenings are not genetic tests.  

Prohibitions

As stated, Title II prohibits covered employers from discriminating on the basis of “genetic information” and from requesting, requiring, or purchasing “genetic information.”  As for discrimination, the final regulations explain that Title II prohibits the same actions as other federal employment laws (i.e. Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA)).  The regulations specifically adopt Title VII’s standards for “adverse employment actions,” harassment, and retaliation. 

In regards to requesting, requiring, or purchasing “genetic information,” the regulations provide that a “request” includes not only a “deliberate” request, but also actions that are likely to result in obtaining such information, such as conducting an internet search directed to uncovering genetic information or examining an individual’s personal effects for the purpose of obtaining genetic information.  As discussed below, medical inquires and wellness programs may also implicate the prohibition on requesting and/or requiring “genetic information.”

Record Retention

Title II of GINA requires employers to keep “genetic information” confidential.  As such, employers are required to keep “genetic information” in a confidential medical file separate from an employee’s general personnel file.  Moreover, Title II generally prohibits employers from disclosing “genetic information.” 

The regulations provide practical guidance on two related issues.  First, “genetic information” may be kept in the same file as medical information subject to the Americans with Disabilities Act (ADA).  Second, “genetic information” that was acquired before November 21, 2009 does not have to be removed from an employee’s personnel file.  However, removing such information would be best practice as removal would likely prevent inadvertent disclosure. 

Wellness Programs

Wellness programs raise three potential issues with Title II’s prohibition on requesting or requiring “genetic information.”  First, the regulations make clear that employers may offer monetary incentives to employees for participating in wellness programs, but not for providing “genetic information.”  As a result, employers may offer incentives to employees for completing health risk assessments, even those that contain questions about “genetic information,” as long as those questions are clearly identified and the employer alerts the employee that they do not have to answer such questions to receive the incentive.

Second, employers also may offer financial incentives to employees for participating in disease management programs or other programs that encourage healthy lifestyles.  To avoid violating Title II, those programs and incentives must be made available to employees whose current health conditions or lifestyle risk factors put them at risk of acquiring a condition, not just those employees that voluntarily provide “genetic information.”   

Third, an employer that offers a wellness program is prohibited from receiving individualized “genetic information.”  As such, an employer may only receive “genetic information” in aggregate form.  The final regulations, however, clarify that an employer does not violate Title II if identification of specific individuals’ “genetic information” is possible due to the small number of participants, as long as the “genetic information” is provided in aggregate form.  Therefore, employers should notify any wellness program administrators that “genetic information” should only be provided, if at all, in aggregate form. 

Medical Inquiries

Medical inquiries of all types increase the likelihood that an employer may receive “genetic information.”  The most common uses of medical inquiries are post-offer or fitness-for-duty examinations, processing requests for an accommodation under the ADA or for sick leave, and processing requests for leave under the Family Medical Leave Act (FMLA).  The regulations provide that, any time an employer makes a request for health-related information, it should specifically warn the employee and/or the health care provider from whom the information is requested that it is not seeking “genetic information” and that such information should not be provided.  The regulations even provide a model warning, which if used will protect an employer if “genetic information” is provided.  See 75 Fed. Reg. 68912, 68934 (Nov. 9, 2010) (to be codified at 29 C.F.R. § 1635.8(b)(1)(i)(B)), available at http://www.gpo.gov/fdsys/pkg/FR-2010-11-09/pdf/2010-28011.pdf (p.23).

The regulations also provide guidance in relation to post-offer medical examinations/inquiries and fitness-for-duty examinations.  While an employer may conduct such examinations and/or inquiries – consistent with the Americans with Disabilities Act (ADA) – the employer may not request “genetic information,” which includes family medical history.  As a result, all covered employers should review their post-offer medical inquiries and remove any questions that may solicit “genetic information.  In addition, all covered employers should notify all health care providers, which are used for such examinations, that they are not to collect “genetic information” during the examinations.  

Finally, the regulations specifically address medical inquiries in connection with requests for leave under the Family Medical Leave Act (FMLA).  In this regard, an employer explicitly is permitted to obtain “genetic information” in the form of family medical history when an employee requests leave to care for a family member with a serious health condition.  The regulations make clear that the exception also applies to any policy that an employer may have regardless of FMLA or state or local law. 
     
EEO Policies

As stated above, Title II prohibits discrimination, harassment, and retaliation on the basis of “genetic information.”  Accordingly, EEO policies should be updated so that “genetic information” is listed as an additional basis for which discrimination, harassment, and retaliation is prohibited. Related to EEO policies, the regulations also reiterate that GINA, like other federal employment laws, includes a posting of notices requirement.  The EEOC’s most recent update to the “Equal Employment is the Law” poster, which was released late in 2009, includes information about GINA.  Now is a good time for covered employers to confirm that they have the most recent poster.  Poster information: http://www1.eeoc.gov/employers/poster.cfm.  Final Regulations effective Jan. 10, 2011 at http://www.gpo.gov/fdsys/pkg/FR-2010-11-09/pdf/2010-28011.pdf.

By Ben Mathis & Marty Heller

The Federal Register has posted the final rule regarding Executive Order 13496. This Executive Order requires that, beginning on June 21, all contractors and subcontractors who work on a contract with a federal agency must post a notice to employees of their rights under the National Labor Relations Act (NLRA). In addition, all contracts and subcontracts on projects with federal agencies must include a clause in their contract regarding Executive Order 13496.

The regulation applies only to contracts resulting from solicitations issued after the effective date of the final rule and federally funded grants and loans are not covered; only contracts with federal agencies, or subcontracts under a contract with a federal agency are covered by the rule.

The rule itself requires that all private employers post a 11" by 17" poster which explains in detail employee rights under the NLRA. This poster must be posted conspicuously throughout the workplace in all areas where employee notices are usually posted, and in areas where employees may perform work which will contribute to the covered contract. If a significant portion of the employer’s workforce does not speak English, the poster must also be translated into another language. A translation for Spanish and Mandarin language speakers will be available soon on the Office of Labor Management Standards (OLMS) website. If employers need posters in other languages, upon request, the OLMS will provide translated posters in other languages.

In addition, all employers must post the notice on their website or other online posting forum by posting a link to the poster. This link must be posted in the same manner as all other links on the page, and cannot be smaller than other links or somehow given less importance. The electronic posting requirement is in addition to the poster requirement.

The OFCCP will handle compliance evaluation, which will include investigation of employee complaints, and random compliance reviews. If the OFCCP finds a violation, employers may seek conciliation, however, violations may lead to serious sanctions, including suspension or termination of current and future federal contracting privileges.

The rule will not apply to prime contracts worth less than $100,000 or subcontracts worth less than $10,000.

Information about the contract clauses that must be included in contracts and subcontracts, and a copy of the poster are available at: http://www.dol.gov/olms/regs/compliance/EO13496.htm.

By Philip W. Savrin

The Supreme Court of Georgia has answered a lingering question as to whether an insurer can assert coverage defenses when it has defended its insured without a reservation of rights absent a showing of prejudice to the insured.  In World Harvest Church, Inc. v. GuideOne Mutual Insurance Company, Case No. S10Q0341 (Ga. May 3, 2010), the insurer assumed the defense of its insured while telling its insured that coverage was doubtful but would be evaluated.  The insurer continued to defend for almost a year before informing the insured that it would be withdrawing from the defense because there was no coverage.  After the insured retained its own attorneys, the case proceeded to judgment in excess of $1 million.  The insured then sued the insurer in federal court for coverage.

The federal judge found in favor of the insurer because even though the insurer did not issue a reservation of rights, the insured had not shown prejudice as a result of the insurer’s provision of a defense.  The insured appealed to the Eleventh Circuit which found the law uncertain and certified the issue to the Supreme Court of Georgia. 

In its ruling, issued May 3, 2010, the Court first found that although a reservation of rights need not be in writing, it must be unequivocal.  Because the insurer’s statement that it did not believe the claim was equivocal, the defense had been undertaken without a reservation of rights.  To work an estoppel, the Court found that prejudice to the insured is required, citing in part an article authored by Philip W. Savrin and William H. Buechner, Jr.  After reviewing the law, however, the Court expressly adopted the “majority rule” that prejudice results from the defense of the insured without further proof of harm.  In surrendering control of the defense, the Court explained, the insured gives up the ability to decide when and how to assert defenses or seek to settle the case.  Although a previous decision had implied that prejudice must be shown, the Court distinguished that case because counsel retained by the insurer had made an appearance only but had not “defended.”  The Court concluded its analysis with the following holding:

Where, as here, an insurer assumes and conducts an initial defense without effectively notifying the insured that it is doing so with a reservation of rights, the insurer is deemed estopped from asserting the defense of noncoverage regardless of whether the insured can show prejudice.

In the wake of this decision, insurers must take caution to examine each liability claim for coverage at the very outset and issue a reservation of rights whenever coverage is doubtful.  Defending an insured without a reservation of rights can have dire consequences in those cases where coverage does not exist. 

Click here for link to a copy of this important decision.  Click here to send an e-mail to author Philip Savrin.

By Benton J. Mathis, Jr. & Martin B. Heller

The current Administration and Congress continue to make significant changes to employment regulations and laws.  This article summarizes some of the major changes that all employers should be familiar with. 

Health Care Reform

The Patient Protection and Affordable Care Act was signed into law by President Obama on March 23.  There are literally hundreds of changes included in this bill, but a few of the most important changes include: (1) states must create insurance exchanges where citizens may purchase health insurance; (2) nearly every citizen will be required to maintain health insurance or face a fine; (3) companies with 50 or more employees may be subject to large fines if they do not offer health insurance to their employees; (4) employers with 25 or fewer employees may receive a tax credit of up to 35% of their paid premiums if they offer healthcare coverage to their employees; (5) most employers must provide “reasonable” unpaid breaks to new mothers to express breast milk in a private area other than a bathroom.

Hire Act Of 2010

New legislation signed on March 18 provides that any private employer hiring a new employee between the present and January 1, 2011 is exempt from paying the employer’s share of the new employee’s payroll tax effective with the employee's first paycheck.  However, the employee must (1) certify by signed affidavit that he or she has not been employed for more than 40 hours during the previous 60-day period ending on the date the individual begins employment; and (2) must not be hired to replace another employee of the employer unless the prior employee left voluntarily or was terminated cause.  A copy of the form affidavit is available at: http://www.irs.gov/pub/irs-pdf/fw11.pdf.

There is also a business credit granted for the retention of these newly hired employees for 52 weeks.  The employer receives the lesser of $1,000 or 6.2% of the wages paid to the retained worker during the 52-week period of employment if (1) the retained worker remains employed for a period of not less than 52 weeks and (2) the worker's wages earned in the second 6 month period are at least 80% of the first 6 months.

President Obama Extends The Cobra Subsidy And Federal Emergency Unemployment Compensation        

Last week, President Obama signed new legislation extending the deadline to apply for Federal Emergency Unemployment Compensation from April 5 to June 2, and extending the claim period from September 4 until November 6, 2010.  The legislation also included an extension to the Federal COBRA subsidy until May 31, 2010.  Congress is still considering another bill which will provide a longer extension for the federal unemployment and COBRA subsidy benefits.   

Final Rule Released Regarding Project Labor Agreements

One of President Obama’s first acts as president was to implement Executive Order 13502 entitled Use Of Project Labor Agreements for Federal Construction Projects.  This Executive Order declared that the federal government’s policy was to encourage federal agencies to require project labor agreements on all federal construction contracts over $25 million dollars. 

On April 13, the Federal Register published final rules implementing this Executive Order.  The final rule reiterates the federal government’s dedication to requiring Project Labor Agreements on large federal construction contracts, and provides factors for agency planners to consider in making a decision whether to require a project labor agreement.  In addition, the final rule allows agencies to require that bidding parties submit a copy of a project labor agreement along with their bid offers.  A copy of the final rule is available at: http://edocket.access.gpo.gov/2010/2010-8118.htm.

EEOC’s New E-RACE Initiative

The EEOC has increased enforcement of its new E-RACE initiative.  This is a renewed effort by the Commission to focus on race and color discrimination.  Recent handouts published by the Commission, along with lawsuits filed by the EEOC, show that the EEOC may be focusing on background and credit checks.  The EEOC is cracking down on employers whose selection criteria, including background and credit checks, has an impact on the selection rate of a particular race or color of applicant and is not related to the requirements of the job.  You can find more information about the EEOC’s E-RACE initiative at www.eeoc.gov/initiatives/e-race. 

Two Pro-Union Members Are Sworn In To The National Labor Relations Board

Over the Easter break, President Obama appointed Craig Becker and Mark Peirce to the National Labor Relations Board via recess appointments.  Becker was a very controversial pro-union nominee, and Congress was not expected to approve his nomination.  Obama also nominated Republican Brian Hayes to fill the final position on the Board, however, Mr. Hayes did not receive a recess appointment.  This means that three of the four present Board members are considered extremely pro-union. Companies can expect major changes in the coming year from the NLRB. 

DOL Renews Focus On Unpaid Interns

The Department of Labor has publicly stated that it intends to renew its focus on Companies which offer unpaid internships to young workers or students.  The Department of Labor has reminded state agencies that in order for internships to be unpaid, they must meet six criteria: (1) the training must be similar to what would be given in school or at an academic institution; (2) the training must be for the benefit of the trainees; (3) the trainees must not take the place of regular employees, and must work under close observation; (4) the employer may not derive an immediate advantage from the trainees; (5) the trainees should not be entitled to a job at the end of the training; and (6) the trainees are not entitled to wages for the time spent training.  Given the DOL’s renewed focus, employers should ensure they are properly classifying interns, trainees and summer clerks. 

President Issues Memorandum Regarding Hospital Visitation For Same Sex Partners           

On April 15, President Obama ordered the HHS Secretary to issue rules requiring hospitals which participate in Medicare or Medicaid to allow hospital visitation rights to same-sex partners.  This order itself did not create any such rights, however, it is a sign that rules and/or regulations will likely be released in the near future granting greater rights to same sex couples.  

OFCCP Publicly Announces Intention To Be More Aggressive

The Office of Federal Contract Compliance Programs (OFCCP) released its new strategic plan in early April, stating that it intends to become more aggressive with employers.  The OFCCP’s new strategy puts a strong burden on employers to be proactive in evaluating their workforce by gender, race, national origin, religion, ethnicity, disability and veteran status, focusing on hires, promotions and terminations.  Along with this new strategy, the OFCCP has received a 28% increase in its 2010 budget.  With investigations on the rise, federal contractors need to make sure that they are self-auditing their hiring, pay and promotion practices for any potential disparate impact on protected classes.  Contractors should also review their Affirmative Action Plans yearly for compliance. 

ICE Begins Audits Of I-9 Forms

In early March, the United States Immigration and Customs Enforcement (ICE) issued notices of inspection for over 180 businesses in the Southeast.  Within the last year, ICE has audited over 650 businesses for I-9 compliance.  Once an employer receives a notice of an ICE audit, they have only three days to prepare the Company’s Form I-9 records, and violations may result in fines from $110 to $1100 per violation.  Now is a great time to make sure your employees are properly and fully completing their I-9 forms.  

By Philip W. Savrin and Jonathan J. Kandel

Six months after hearing oral arguments in Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 2010 WL 1004996 (Ga. Mar. 22, 2010), the Georgia Supreme Court struck down O.C.G.A. § 51-13-1, which had limited damages in medical malpractice cases.  The statute, which was originally enacted in 2005 as part of the Georgia Tort Reform Act, capped a plaintiff’s non-economic damages in a medical malpractice case to $350,000. 

In Nestlehutt, a jury awarded the plaintiff and her husband $1,265,000 after a plastic surgeon negligently performed a laser resurfacing and facelift.  More than 90 percent of the award, $1,150,000, was for non-economic damages, which included pain and suffering and other non-pecuniary losses.  Under the damages cap, the plaintiff’s award would have been reduced by $800,000 to the statutory limit of $350,000.  The trial court refused to reduce the damages, finding O.C.G.A. § 51-13-1 unconstitutional on several grounds.

On appeal, the Supreme Court agreed with the trial court, and held that the statute violated the right to a trial by jury, guaranteed by Article I, Sec. I, Par. XI (a) of the Georgia Constitution. The Court explained that a party has a constitutional right to a jury trial if the right to a jury existed for the cause of action when the Georgia Constitution was originally adopted in 1789.  The Court concluded that medical malpractice suits, albeit not in name, existed in England as early as the Fourteenth Century: a case from 1374 involved a surgeon’s treatment of a wounded hand.  Therefore, the Court concluded, parties in medical malpractice cases have a constitutional right to a jury trial.

In addition, the Court reiterated that the right to a jury trial includes not only fact finding, but also the amount of damages.  The statute’s cap of non-economic damages, the Court explained, “nullifies the jury’s findings of fact regarding damages and thereby undermines the jury’s basic function.”  The Court rejected the defendant’s argument that the caps were constitutional since caps on punitive damages have been deemed constitutional.  Unlike compensatory damages that measure the damages suffered by a plaintiff, punitive damages are awarded “solely to punish, penalize, or deter a defendant.”  The Court distinguished statutes that multiply or add interest to jury awards since those statutes “do not in any way nullify the jury’s damages award” but instead “affirm the integrity of the [jury’s] award.”  The opinion does not appear to leave room for the legislature to enact a new statute to limit non-economic damages for medical malpractice claims.

The Court’s decision stands in contrast to other recent decisions that have upheld provisions of the Tort Reform Act.  For instance, in Smith v. Salon Baptiste, 2010 WL 889557 (Ga. Mar. 15, 2010), the Court upheld O.C.G.A. § 9-11-68, which is commonly known as the Offer of Settlement statute.  Also, in Gliemmo v. Cousineau, 2010 WL 889672 (Ga. Mar. 15, 2010), the Court upheld O.C.G.A. § 51-1-29.5(c), which limits malpractice liability for emergency room doctors to instances of gross negligence.  In none of these cases, however, was a constitutional jury right found to be violated.

By:  Matthew P. Stone and Todd H. Surden

Today, in Smith v. Salon Baptiste, 2010 WL 889557 (Ga. Mar. 15, 2010), the Supreme Court of Georgia upheld O.C.G.A. § 9-11-68, Georgia’s offer of settlement statute.  The statute, which is part of Georgia's Tort Reform Act of 2005, allows a defendant to recover reasonable attorney’s fees and expenses of litigation if he makes an offer of settlement that the plaintiff rejects (expressly or by passage of time), and the final judgment is one of no liability or is less than 75% of the offer.  Likewise, a plaintiff can recover reasonable attorney’s fees if he makes an offer of settlement that the defendant rejects (expressly or by passage of time), and then recovers a final judgment that is more than 125% of the offer. 

In Smith, defendants offered to settle plaintiff’s defamation case for $5,000.  Plaintiffs did not respond, and the offer was deemed rejected.  The trial court subsequently granted defendants’ motion for summary judgment, and then defendants filed a motion to recover their attorney’s fees under O.C.G.A. § 9-11-68.  Plaintiffs argued that the motion should be denied because the statute is unconstitutional, and the trial court agreed.

On appeal, the Supreme Court rejected plaintiffs’ first argument, that the statute violates article I, section 1, paragraph 12 of the Georgia Constitution, holding that this provision does not guarantee a “right of access” to the courts.  Rather, this provision “was intended to provide only a right of choice between self-representation and representation by counsel,” and O.C.G.A. § 9-11-68 does not violate that provision.  The Court went on to say that the statute also does not deprive litigants of access to the courts because it “simply sets forth certain circumstances under which attorney’s fees may be recoverable.”

The Court also rejected plaintiffs’ second argument, that the statute violates the uniformity clause of the Georgia Constitution (Ga. Const. art. III, § 6, ¶ 4(a)) because it applies only to tort claims, not to all civil cases.  Although the Court agreed that O.C.G.A. § 9-11-68 does not apply to all civil actions, it held that the statute “applies uniformly throughout the State to all tort cases.” Therefore, the statute is constitutional and serves “a legitimate legislative purpose, consistent with this State’s strong public policy of encouraging negotiations and settlements.”

It is worth noting that Justice David Nahmias, in his concurring opinion, found that O.C.G.A. § 9-11-68 would also withstand challenges based on due process and equal protection, even though plaintiffs did not raise those arguments in this case.  Justice Nahmais stated that:

The fee-shifting provisions of OCGA § 9-11-68 do not flatly deny anyone access to the courts, as statutes of limitations and repose and other restrictions that have survived judicial scrutiny can be said to do.  Litigants remain free to file and defend tort cases.  There is also little question that § 9-11-68 is rationally related to the State’s legitimate objective of “encourage[ing] litigants in tort cases to make and accept good faith settlement proposals in order to avoid unnecessary litigation.” 

Nor can a credible argument be made, at least on the record of this case, that the statute substantially impedes, or “chills,” litigants from filing and pursuing their claims, in violation of equal protection.

The majority opinion, together with Justice Nahmias’ concurring opinion, will likely impact tort litigation in Georgia because they remove uncertainty about the viability of the offer of settlement statute.

By Dana Maine and William J. Linkous, III

Yesterday, a panel of the Eleventh Circuit Court of Appeals issued a decision providing guidance on the evidentiary support necessary for enacting an adult entertainment ordinance.  The decision supports a government’s reliance on studies and empirical evidence of negative secondary effects when adopting these ordinances, and makes it more difficult for adult entertainment establishments to attack such ordinances with competing evidence.

In RLV Flanigan’s Enterprises, Inc. of Georgia v. Fulton County, Georgia, No. 08-17035, 2010 WL 520542 (11th Cir. 2010), the panel upheld the constitutionality of Fulton County’s Adult Entertainment Ordinance banning the sale, possession, or consumption of alcohol in adult entertainment establishments in the county.  The opinion reversed the decision of the district court, which found the ordinance unconstitutional.  Moreover, the Court came to a different conclusion than a prior Eleventh Circuit panel which found the evidence the county produced to support a previous ordinance insufficient. 

The Eleventh Circuit in Flanigan’s held that the county now had sufficiently supported its ordinance with evidence in the form of studies from foreign (non-Fulton County) jurisdictions, its own study, and live witness testimony from citizens, including the chief of police and the chief judge of the juvenile court.  The Eleventh Circuit noted deficiencies with the adult entertainment club plaintiffs’ evidence that allegedly challenged the negative secondary effects findings.  In particular, it determined that data relating to the low number of 911 calls at various businesses was not convincing because it undercounted “victimless” crimes such as prostitution that are rarely reported. 

The Eleventh Circuit emphasized that the evidentiary foundation upon which a local government relies in enacting an adult entertainment ordinance need not be perfect; it need only be reasonable.  The Court also held that it was not the role of courts to second guess the legislative prerogative of local governments, as long as the government has some reasonable justification for legislation which incidentally suppresses protected speech.

This opinion is critical to defense of adult entertainment ordinances in jurisdictions that have had clubs operating for some period of time.  In these locations, if the government attempts to pass a more restrictive ordinance, plaintiffs often rely on data showing a history of average call volumes to these locations to counteract the negative secondary effects evidence.  The Eleventh Circuit effectively extinguished this route of attack. 

Please contact Dana Maine at Direct Dial: 770.818.1408 or dmaine@fmglaw.com or Bill Linkous at Direct Dial: 770.818.1282 or blinkous@fmglaw.com for more information on this decision.

Yesterday, the U.S. Department of Transportation (DOT) announced a federal guidance that prohibits commercial motor vehicle drivers from texting while driving. The prohibition is effective immediately and carries civil or criminal penalties of up to $2,750. This guidance is the latest step in the DOT's ongoing effort to address distracted driving. The full text of the DOT's press release appears below:

DOT 14-10
Tuesday, January 26, 2010
Contact: USDOT Public Affairs
Tel: 202-366-4570

U.S Transportation Secretary Ray LaHood announced federal guidance to expressly prohibit texting by drivers of commercial vehicles such as large trucks and buses. The prohibition is effective immediately and is the latest in a series of actions taken by the Department to combat distracted driving since the Secretary convened a national summit on the issue last September.

"We want the drivers of big rigs and buses and those who share the roads with them to be safe," said Secretary LaHood. "This is an important safety step and we will be taking more to eliminate the threat of distracted driving."

The action is the result of the Department's interpretation of standing rules. Truck and bus drivers who text while driving commercial vehicles may be subject to civil or criminal penalties of up to $2,750.

"Our regulations will help prevent unsafe activity within the cab," said Anne Ferro, Administrator for the Federal Motor Carrier Safety Administration (FMCSA). "We want to make it crystal clear to operators and their employers that texting while driving is the type of unsafe activity that these regulations are intended to prohibit."

FMCSA research shows that drivers who send and receive text messages take their eyes off the road for an average of 4.6 seconds out of every 6 seconds while texting. At 55 miles per hour, this means that the driver is traveling the length of a football field, including the end zones, without looking at the road. Drivers who text while driving are more than 20 times more likely to get in an accident than non-distracted drivers. Because of the safety risks associated with the use of electronic devices while driving, FMCSA is also working on additional regulatory measures that will be announced in the coming months.

During the September 2009 Distracted Driving Summit, the Secretary announced the Department's plan to pursue this regulatory action, as well as rulemakings to reduce the risks posed by distracted driving. President Obama also signed an Executive Order directing federal employees not to engage in text messaging while driving government-owned vehicles or with government-owned equipment. Federal employees were required to comply with the ban starting on December 30, 2009.

The regulatory guidance on today's announcement will be on public display in the Federal Register January 26 and will appear in print in the Federal Register on January 27.

The public can follow the progress of the U.S. Department of Transportation in working to combat distracted driving www.distraction.gov.

For more information or to discuss how these regulations may apply to your business, please contact Matt Stone in our Transportation Law Practice Group at 770.818.1411 or mstone@fmglaw.com.

By:  Kelly E. Morrison

On Saturday, December 19, President Obama signed H.R. 3326, a defense appropriations bill with a continuation provision that will let involuntarily terminated workers seek the temporary 65% Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy extension until February 28, 2010.

Congress created the COBRA subsidy program earlier this year, when it included the provision in the American Recovery and Reinvestment Act of 2009 (ARRA).

Under the original extension, the 65% subsidy was slated to last 9 months, with an application cut-off date of December 31.  Now, not only will the application cut-off date be extended to February 28, 2010, but the continuation subsidy will be extended from 9 to 15 months.  

In addition to extending the eligibility period and the duration of COBRA benefits, the H.R. 3326 COBRA subsidy extension provision will make a number of changes in the subsidy program rules.

Specifically, the subsidy extension provision:

- Requires that employers send a special notice (within 90 days of the enactment of the extension) describing the new subsidy provisions to all “assistance eligible individuals” who have been on COBRA on or after November 1, 2009, or whose qualifying event is an “involuntary termination” of employment occurring on or after November 1, 2009;

- Allows for a 60-day period for the retroactive payment of premiums for “assistance eligible individuals” whose subsidy period expired November 30 and who failed to pay their premium for December coverage.

- Allows employees who are involuntarily terminated before February 28, 2010, but receive COBRA coverage that starts after February 28, 2010, to apply for the subsidy.

The U.S. Department of Labor, the U.S. Department of Health and Human Services, and the Internal Revenue Service may issue further guidance concerning the subsidy extension.

If you have any questions, please contact one of our Labor & Employment attorneys.

By Bradley T. Adler and Jonathan J. Kandel

     The Equal Employment Opportunity Commission (“EEOC”) recently updated its “Equal Employment is the Law” poster.  All employers subject to federal antidiscrimination statutes like Title VII of the Civil Rights Act, the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”), and the Genetic Information Nondiscrimination Act (“GINA”) are now required to post the new poster.  This effectively includes all companies with fifteen or more employees.

     The new poster encompasses the recent amendments to the ADA and the new Genetic Information Nondiscrimination Act.

     On January 1, 2009 the ADA Amendments Act (“ADAAA”) became effective, significantly changing the interpretation of a disability under the Act.  First, while the ADAAA does not change the definition of disability, it mandates that the term “be construed in favor of broad coverage of individuals.”  Second, the ADAAA makes major changes to the interpretation of the Act, prohibiting courts from considering mitigating measures, except eyeglasses and contact lenses and permitting courts to consider impairments that are episodic or in remission.  Third, the law lowers the threshold for “regarded as” claims by only requiring proof that the employer perceived the employee as suffering from an impairment.  Finally, the ADAAA includes major bodily functions, such as functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions, as major life activities.

     On November 21, 2009, the Genetic Information Nondiscrimination Act became effective.  Title II of this Act prohibits discrimination in employment on the basis of “genetic information,” which means “information about such individual’s genetic tests, the genetic tests of family members of such individual, and the manifestation of a disease or disorder in family members of such individual.”  The law also makes it unlawful to retaliate against an employee that has opposed genetic discrimination.  Furthermore, this Act prohibits employers from acquiring genetic information from employees, except in very limited circumstances.

     Employers may want to consider either revising their current EEO policy to include a reference to genetic information, or adding a GINA policy.

     Employers can download a supplemental poster to post alongside the old, 2002 version.  In addition, employers can download a new 2009 version to replace the older one.  Finally, posters can be ordered from the EEOC Clearinghouse.  All three options are available at http://www1.eeoc.gov/employers/poster.cfm. 

     On October 28, 2009, President Obama signed into law the National Defense Authorization Act of 2010.  Section 565 of the Act amends the Family Medical Leave Act (“FMLA”) by expanding the provisions enacted in 2008 for family members of military personnel.  At the beginning of 2008, Congress created two kinds of leave for family members of military personnel: “exigency leave” and “military caregiver leave.”  The new law not only expands the number of employees qualifying for leave, but also expands the circumstances under which employees may take leave. 

     The new law expands the FMLA exigency leave coverage in two ways. 

     First, exigency leave is now available to family members of reservists, retired military personnel, and active duty personnel.  The old law only provided exigency leave to eligible employees whose family member (meaning the employee’s parent, spouse, son, or daughter) was on active duty or had been notified of an impending call or order to active duty either as a member of the Reserves or National Guard, or as a retired member of the Regular Armed Forces.  Now, exigency leave is also available to family members of active duty service members.

     Second, exigency leave is now available to family members of military personnel deployed to a foreign country.  The old law required the military personnel to be deployed “in support of a contingency operation,” which is defined at 10 U.S.C. § 101(a)(13).  The new law does not include the “contingency operation” requirement.

      Furthermore, the FMLA military caregiver leave was expanded to permit leave in additional circumstances.  Under the old law, a family member could take FMLA leave to care for a member of the military, including the National Guard or Reserves, but only for injuries or illnesses incurred while serving on active duty.  The new law permits employees to take caregiver leave for their family member’s injuries or illnesses that existed prior to active duty, if the injury or illness was aggravated by active duty. 

      The Secretary of Labor will likely issue new regulations to carry out the amendments.  Look for additional E-Alerts regarding new regulations. 

      The full text of the FMLA amendments may be found here. The amendments are located at Section 565, on pages 120-124.

By:  Phil Savrin and Darl Champion

     The Georgia Supreme Court has issued an important decision on an insurer’s exposure to extra-contractual damages when rejecting a settlement demand within policy limits.  In Fortner v. Grange Mut. Ins. Co., Case No. 209G0492, 2009 WL 3334632 (Ga. Oct. 19, 2009), the insured was sued for injuries received in a car accident.  The insured had two liability policies:  one with Grange Mutual Casualty Company that had a $50,000 liability limit, and annother with Auto Owners Insurance Company that had a $1 million limit.  The plaintiff made a limits demand to Grange Mutual contingent on Auto Owners paying $750,000.  Grange Mutual agreed to pay its $50,000 limit, but only if plaintiff dismissed the claims against the insured.  The plaintiff regarded Grange Mutual’s offer as a rejection of the demand and proceeded to trial, where he obtained a $7 million judgment against the insured.

     The insured then assigned its claims to plaintiff, who sued Grange Mutual directly for unreasonably rejecting the limits demand.  The claim was brought under case law that holds an insurer liable for the full amount of a judgment if it unreasonably refuses to pay policy limits, thereby placing its own pecuniary interests above those of the insured in forcing the case to trial.  Stated otherwise, the insurer can play with its own money but not with the insured’s.  The bad faith case itself proceeded to trial, where the jury was instructed that an insurer faced with a policy limits demand can avoid liability by tendering its policy limits.  This instruction was based on Cotton States Mut. Ins. Co. v. Brightman, 276 Ga. 683, 580 S.E.2d 519 (2003), where a policy limits demand was conditioned on the acceptance of a demand on another insurer as well.  In that situation, the Supreme Court had reasoned, the insurer could avoid liability by tendering its policy limits and allowing the plaintiff to negotiate with the other insurer.  Even if the case does not settle, the insurer would be doing everything within its control to meet the plaintiff’s demand. 

     Based on the instruction provided, the jury returned a verdict for Grange Mutual, finding its response to the policy limits demand was reasonable.  Plaintiff appealed to the Court of Appeals, which affirmed the verdict.  Fortner v. Grange Mutual Cas. Co., 294 Ga. App. 671, 669 S.E.2d 658 (2008).  The Supreme Court granted certiorari review, however, and reversed.  The Supreme Court focused on the fact that the condition imposed by Grange Mutual of dismissing the insured would have required plaintiff to forego access to the $1 million Auto Owners policy.  The jury instruction was erroneous because it did not account for the conditions imposed by Grange Mutual.  The Supreme Court expressed no opinion on the reasonableness of that condition but simply vacated the judgment in favor of Grange Mutual based on the erroneous instruction.

     Although Grange Mutual’s conditions may have made acceptance impractical, the insurer may have been motivated to put the insured’s interests above its own by agreeing to pay the limit only if the insured was protected as well.  It is unclear from the opinion whether Grange Mutual attempted to obtain a limited release under O.C.G.A. § 33-24-41.1, which allows automobile liability insurers to tender their limits in exchange for a release of the insurer and any personal liability of the insured, leaving other insurers only exposed to liability.  An offer under this statute might have been viewed differently by the Supreme Court.  Nevertheless, insurers should be wary of responding to demands within policy limits with any conditions at all.  As this decision shows, even conditions beneficial to the insured can create grounds for extra-contractual liability if the conditions would have an adverse effect on the plaintiff.

By Benton J. Mathis, Jr. and Kelly E. Morrison

On August 26, 2009, paving the way for full implementation on September 8, 2009, the US District Court for the District of Maryland upheld the Department of Homeland Security’s (DHS) E-Verify federal contractor rule, which requires certain federal contractors and subcontractors to register for and use the federal government’s Internet-based electronic verification system called E-Verify (Chamber of Commerce v Napolitano, No AW-08-3444, 8/26/09).  The Obama administration has backed implementation of the rule following the court’s decision.

Background

The E-Verify federal contractor rule implements Executive Order 12989, as amended by President George W. Bush on June 6, 2008, which directs all federal departments and agencies to require contractors, as a condition of each future federal contract, to agree to use E-Verify for all persons performing work within the United States on that federal contract. 

The final rule is further explained and expanded upon in the Federal Acquisition Regulation (FAR), the principal set of rules that govern the “acquisition process” through which the federal government purchases goods and services.  The final FAR rule inserts a clause into prime federal contracts with a period of performance longer than 120 days and a value above $100,000 requiring the use of E-Verify. For subcontracts that flow from those prime contracts, the rule extends the E-Verify requirement for services or for construction with a value over $3,000.

Opponents of the rule, including a coalition of business groups, filed suit in December 2008, challenging the legality of the Executive Order and related federal regulations. According to the business opponents, the Illegal Immigration Reform and Responsibility Act of 1996 (IIRIRA), which created the E-Verify program, states that “the Secretary of Homeland Security may not require any person or other entity to participate in the pilot program.”  Therefore, business opponents argued, the program should be voluntary, not mandatory.  The district court found that the rule was not mandatory because, “[t]he decision to be a government contractor is voluntary and…no one has a right to be a government contractor.”

Implementation

Starting September 8, federal contracts awarded and solicitations with a period of performance longer than 120 days and a value above $100,000 must include a clause requiring federal contractors to use E-Verify. The same clause will also be required in subcontracts over $3,000 for services or construction that flow from those prime contracts. These contractors and subcontractors must confirm that all new hires and existing employees directly performing work under federal contracts are authorized to work in the United States.

To ensure compliance with the new rules, federal contractors and sub-contractors should take the following steps in anticipation of the September 8, 2009 effective date:

• Determine whether you are a federal contractor or sub-contractor required to enroll.  If a contract under FAR (1) includes some work in the United States, (2) has performance terms of 120 days or more, and (3) has a value threshold in excess of $100,000, enrollment in E-Verify is required.  Only sub-contracts for services or construction with values in excess of $3,000 that are necessary to the performance of a prime federal contract that is itself subject to the E-Verify requirements require enrollment.[1]

• If required to enroll, determine whether you are already enrolled in the E-Verify program as a federal contractor – even if already enrolled in E-Verify, an entity may not be enrolled as a federal contractor.  If not enrolled in any respect, you must register and enroll within thirty (30) calendar days of receiving the qualifying federal contract award here.

• If already enrolled in E-Verify but not as a federal contractor, return to the E-Verify online system to modify enrollment to reflect status as a federal contractor.  In addition, the “Memorandum of Understanding” must be signed and completed (completion of the Memorandum will also be required for new enrollees).  A copy of the Memorandum is available here.

• After the effective date of September 8, 2009, if currently performing a federal contract as defined above, a contractor must initiate verification of all new hires within three (3) business days after the date of hire (a grace period of ninety (90) days exists for those contractors who were not already enrolled in E-Verify, however).

It is advisable to work closely with counsel during performance of federal contracts and the periods before and after.  Several restrictions on the use of E-Verify with associated penalties exist.  For example, a company that is not classified as a federal contractor may not use E-Verify on its incumbent employees, but only on new hires.

Additional Resources:

E-Verify Quick Reference Guide, is available here.

Frequently Asked Questions Before Your Company Enrolls in E-Verify, is available here.  

“How Do I Use E-Verify” Guide for Employers, is available here.

     The Secretary of the Department of Homeland Security announced yesterday that the DHS intends to propose a regulation rescinding the Social Security “no-match” rules.  The no-match rules provide steps for employers to take when they receive letters informing them that an employee’s name and social security number do not match the social security administration’s records.  These rules, which were promulgated in 2007, were never implemented due to several legal challenges.  DHS Secretary Janet Napolitano released a statement noting that the no-match notices may take months or even longer to inform employers about a problem, and significantly, most of the problems were simply typographical errors or unreported name changes.   

      In this same press release, Secretary Napolitano announced that the DHS intends to implement the Federal Acquisition Regulation E-Verify amendment which requires that some federal contracts include clauses requiring the use of E-Verify for all employees working under the contract.  E-Verify is a free web based verification system which compares an employee’s employment eligibility information from their Form I-9 against government databases in order to verify that the employee is authorized to work in the United States.  Prior to this press release, it was not clear whether the DHS would continue to support E-Verify and the Federal Acquisition Regulation, which were implemented by an Executive Order by President George W. Bush in October of 2008.  

      The regulation, which is scheduled to go into effect on September 8, 2009, requires some federal contractors and subcontractors to use E-Verify.  The rule applies to federal contracts which contain a term of longer than 120 days and are for an amount of more than $100,000.  The rule also applies to subcontractors working under a federal contract whose contract is for services or construction, if the contract has a value of at least $3,000.  This regulation will encompass all federal contracts fitting within the above requirements, including money provided under the American Recovery and Reinvestment Act (stimulus package).  There are limited exceptions for contracts involving items that are commercially available and considered “off the shelf,” as well as contracts for food and agricultural products shipped in bulk, and contracts for work to be performed outside of the United States. 

      This regulation has already been postponed four times since its originally scheduled implementation date of January 15, 2009.  In addition, there is a pending lawsuit in the District Court of Maryland challenging the constitutionality of the regulation.  Nonetheless, this press release confirms that the DHS is committed to the use of the E-Verify system.  Employers often criticize E-Verify, claiming that its results are inaccurate.  Secretary Napolitano addressed the concern that E-Verify results are often inaccurate, and promised that the DHS will continue to improve E-Verify, stating that new initiatives are underway to improve the Federal database accuracy and enhance E-Verify’s privacy protections. 

      In a related matter, the United States Senate approved an amendment extending the use of the E-Verify program through September 30, 2012.  The E-Verify program was scheduled to expire on September 30 of this year.   

 If you have any questions, please contact one of our Labor & Employment attorneys.

As most insurers and self-insureds are aware, Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 took effect this year and imposes stiff penalties for failure to take certain steps when settling cases where Medicare has paid benefits on behalf of the claimant.  Specifically, every Responsible Reporting Entity (RRE) must register with the Centers for Medicare and Medicaid Services (CMS), which administers the program, and thereafter report on all claims with a Medicare beneficiary (including a decedent) resolved, in whole or in part, by settlement, judgment, award, or other payment.  Failure to comply may result in monetary penalties of $1,000 for each day of non compliance with respect to each claimant.

Freeman Mathis & Gary recently published an article discussing the new law, its requirements, and suggestions for ensuring compliance.  CMS, however, has issued an "ALERT" that changes the implementation dates for RREs to register and report claims.  Previously, RREs were required to complete the registration process by June 30, 2009 and to begin mandatory reporting on July 1, 2009.  RREs now have until September 30, 2009 to complete their registration, and mandatory reporting now begins on April 1, 2010.

On Tuesday, the Employee Free Choice Act (“EFCA”) was reintroduced in Congress. The bill was sponsored by Senator Tom Harkin (D-MA) and Representative George Miller (D-CA), the House Education and Labor Committee Chair.  If passed, EFCA would dramatically change union practices in the United States in several ways, but there are two key issues employers should know about.

No More Secret Ballot Elections.  First, EFCA would change the union election process.  Under current law, union organizers must submit a petition to the National Labor Relations Board (“NLRB”) showing that at least 30 percent of employees have signed valid authorization cards designating the union as their bargaining representative.  The NLRB then conducts a secret-ballot election where employees vote whether or not they want to join the union.  If a majority of employees vote for the union, then the NLRB certifies the union as the bargaining representative for employees.  Under EFCA, this process would change so that the NLRB would be required to certify a union, without a secret-ballot election, if a majority of employees sign valid authorization cards designating the union as their bargaining representative.  This will eliminate the secret ballot process if unions can persuade enough employees to sign authorization cards and likely will result in the certification of more unions.

Mandatory Arbitration If No Agreement Is Reached.  Second, EFCA would change the way employers and unions reach an agreement.    The National Labor Relations Act currently does not require an employer and union to reach an agreement, and also does not allow the government to dictate the terms of a contract between the employer and a union.  Under EFCA, however, an employer and a newly-certified union would be required to begin bargaining within 10 days of the employer’s receipt of a request for bargaining from the union.  If the employer and union are not able to reach an agreement within 90 days, then either party may request mediation.  If the parties still are not able to reach an agreement within 30 days, then EFCA will require that the dispute be referred to an arbitration board, which will render a decision settling the dispute and setting terms of employment that will bind the employer and union for two years.  In other words, if an employer does not give in to union demands within 120 days, an outside, government-mandated arbitrator will determine wages, benefits, and other contract-related matters.  

What Should Employers Do?  Supporters and opponents of EFCA are promising to fight hard over the bill.  Indeed, even before EFCA was reintroduced, Congressional Republicans preemptively introduced a bill named the Secret Ballot Protection Act, which would make it an unfair labor practice for a union to try to force an employer to recognize or bargain with a union if the union has not been selected by a majority of employees in a secret ballot election conducted by the NLRB.  Nonetheless, all indications at this point are that some form of EFCA will be passed.  As such, employers should educate managers now about how to recognize early warning signs of a union card signing drive and how to lawfully communicate with employees about the benefits of a union free workplace.  Employers also should consider publishing a lawful “union free” statement in their employee handbooks or other written policy statements.  Finally, employers also may consider educating employees about the benefits of a union free workplace so they are aware of the issues even before a union card signing drive is started.

     On Friday, February 6, 2009, President Barack Obama issued what may be the most far reaching of the various Executive Orders he has issued affecting federal contractors.   

     The Executive Order, entitled “Use of Project Labor Agreements for Federal Construction Projects,” sets forth an official government policy to recommend that executive agencies begin requiring project labor agreements in all large-scale construction projects.  The order defines “large scale construction project” as any project where the cost to the federal government is $25 million or more.  The order also defines a “project labor agreement” as “a pre-hire collective bargaining agreement with one or more labor unions that establishes the terms and conditions of employment for a specific construction project.”   

     If an executive agency determines that a Project Labor Agreement would promote “economy, efficiency and labor stability while ensuring compliance with federal laws,” the agency may require every contractor or subcontractor to agree to negotiate or become a party to a project labor agreement with “appropriate labor organizations.” 

     The impact of this latest Executive Order could fundamentally change labor relations for federal contractors if mandatory Project Labor Agreements are commonly required by federal agencies in letting construction contracts.  In effect, the required use of Project Labor Agreements would virtually require that all covered contractors for federal construction contracts (defined as work involving construction, rehabilitation, alteration, conversion, extension, repair or improvement of builds, highways or other real property) use union labor. 

     The order is effective immediately and requires the Federal Acquisition Regulatory Council (FAR Council) to amend FAR regulations to implement the order within 120 days.  Within 180 days, the Director of the Office of Management and Budget, along with the Secretary of Labor, shall provide the president with recommendations regarding broader use of project labor agreements.     

     The full text of the executive order can be found here.  

If you have any questions, please contact one of our Labor & Employment attorneys. 

The American Recovery and Reinvestment Act of 2009 (“ARRA” or “the Act”) has been largely publicized in terms of its price tag, roughly $787 billion.  However, the Act also contains several provisions affecting employers’ workplace duties. 

A Retroactive COBRA Subsidy

Initially, ARRA expands employee rights under COBRA, requiring employers to fund continuing health care for the unemployed.  This provision goes into effect on March 1, 2009.  However, as explained below, the bill applies retroactively to employees terminated on or before September 1, 2008.

Under current law, COBRA generally is available for 18 months after a qualifying event, or until an individual becomes eligible for coverage under any other group health plan or Medicare.  Although ARRA shortens that period to 9 months, the new subsidy would be available prospectively for individuals who were involuntarily terminated from employment between September 1, 2008 and December 31, 2009, who made less than $125,000 per year (single) or $250,000 year (couple) and who elect COBRA coverage.

Under the Act, an employee who elects COBRA coverage would pay 35% of any COBRA premiums to the employer or employer’s health plan.  The employer or health plan would pay 65%, the remainder of the premium. Any payments made by employers pursuant to this provision could be deducted from their payroll taxes.  If the COBRA expense is greater than the amount of any payroll taxes, then the employer would be reimbursed by the Secretary of the Treasury.

According to the Act, employees who were involuntarily terminated on or after September 1, 2008, but before the enactment of ARRA and who did not elect COBRA coverage, must receive notices regarding their ability to elect COBRA coverage.  These employees must receive 60 days from the date of this notice to accept or reject COBRA coverage.  Furthermore, if an employee elects COBRA after receiving the notice regarding the subsidy, coverage attaches on February 13, 2009, the date of the signing of the Act, and not the initial qualifying event.  However, the coverage will not extend beyond the period that COBRA would have remained in place had it been initially elected.

Pursuant to current COBRA provisions, a former employee may only continue coverage at the level currently being provided before his separation from employment.  Under ARRA, unemployed persons who are eligible for the COBRA premium subsidy can elect a lower-cost health plan option available under the employer’s plan.

Finally, ARRA provides that terminated employees who lose coverage and who are age 55 or older, or who have completed at least ten years of service with their employer at the time of their separation from employment, can elect to remain on COBRA.  Essentially, ARRA extends the COBRA continuation period for these individuals and their spouses or dependents who are qualified beneficiaries until Medicare entitlement, failure to pay a required premium, or becoming covered under another group health plan.

All plan documentation and notices regarding COBRA must be updated to notify employees of the availability of the COBRA subsidy.  Model notices are due from the DOL on March 12, 2009.

Increased Unemployment Benefits

In addition to retroactive COBRA subsidies, ARRA also gives unemployed workers increased unemployment benefits.  The Unemployment Compensation Act of 2008 temporarily expanded unemployment compensation, but was scheduled to terminate on March 31, 2009.  ARRA extends the termination date to December 31, 2009, with no compensation payable after May 31, 2010.  Instead of funding these benefits through the Federal Unemployment Tax Act (FUTA) levied on business, the proceeds will come from the Treasury.

In addition to extending the length of benefits, ARRA also increases the amount of unemployment benefits by $25 per week for states that agree to abide by the terms proposed by the U.S. Labor Secretary. 

States interested in modernizing their unemployment systems also would be eligible for a portion of the $7 billion ARRA sets aside in an unemployment insurance trust fund.  To receive one-third of its allotted funds, a state must adopt an “alternative base period” allowing workers to meet eligibility requirements by counting their most recent wages.  To receive the remainder of the money, states would need to comply with two of six requirements outlined by ARRA:

• Family Related Needs: providing unemployment compensation for workers who have resigned voluntarily due to illness or disability of an immediate family member, the relocation of a spouse or immediate family member or domestic violence. 
• Job Training: providing training benefits to unemployed workers laid off from a “declining” occupation who enroll in a state-approved training program for entry into a high-demand occupation.
• Part-Time Work: providing unemployment compensation benefits to employees seeking part-time work.
• 26 Week Payouts: raising maximum compensation caps to 26 weeks for all unemployed workers.
• Child Assistance: paying unemployed workers at least $15 more per week for each of the worker’s dependents.

Health Information Technology

Although largely aimed at doctors and hospitals, ARRA includes provisions accelerating the use of electronically transmitted health care information.  The Act establishes a timetable of 2010 to implement standards allowing the secure transfer of health information.  At the same time, ARRA expands federal privacy protection for health information.  Among the key privacy provisions: a ban on the sale of health information, measures aimed at ensuring the security of audit trails, encryption and rights of access, improved enforcement mechanisms, and support for groups who advocate for patient privacy to participate in the regulatory process.

“Making Work Pay”

ARRA also includes a “Making Work Pay” tax credit of $800 for couples making less than $150,000 per year and $400 for individuals earning less than $75,000 per year.  Taxpayers may choose to reduce their withholdings by the amount of the credit or claim the credit on their tax returns.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit currently provides employers with a tax break for hiring employees in one or more of nine groups.  ARRA creates two additional groups, unemployed veterans and “disconnected youth” who begin employment from December 31, 2008-December 31, 2010.

Trade Adjustment Assistance

Employees who lose their jobs due to increased off-shoring of jobs or through increased imports from certain foreign countries will now be eligible for up to two years of government assistance.

Limits on Executive Compensation

Organizations accepting money from the Troubled Asset Relief Program (TARP) are now obliged to limit the pay of their top executives.  The pay ceiling is directly indexed to the amount of TARP aid the organization receives.  Additionally, bonuses are restricted to one-third of the executive’s salary, “golden parachute” provisions are nixed, and there are limits on corporate expenditures such as vacations and office redecorating.  ARRA also forces TARP recipients to hold a shareholder vote approving executive compensation.

Restrictions on H-1B Visas

ARRA also provides that organizations receiving TARP funds may not obtain H-1B visas for 2 years, unless they can submit evidence of a good faith effort to recruit U.S. workers for the job at issue.

     President Barack Obama has executed three executive orders covering contractors who receive money from the federal government.

      In Executive Order 13495, entitled “Notification of Employee Rights Under Federal Labor Laws,” President Obama expressly revoked President Bush’s Beck Order which required federal contractors to inform employees of their right to refuse to pay union dues for non-collective bargaining activities.  In addition, the order requires that all federal contractors and subcontractors post a notice to employees informing the employees of their rights under federal labor laws.  This notice must be posted in a conspicuous place on the worksite where other notices are posted, and if other notices are posted electronically, the new notice must be posted electronically as well.

     Penalties for a violation of this order include cancellation of the federal contract.  Prime contractors will be responsible for ensuring compliance by subcontractors.  Although the order indicates that this mandate is effective immediately, the contents of the notice were not released with the order.  The order directs the Secretary of Labor to issue rules and regulations regarding the notice within 120 days.  A copy of the new order can be found here.

     The second order issued by President Obama is  Executive Order 13496, entitled “Economy in Government Contracting.” Under this order, federal contractors and subcontractors are prohibited from being reimbursed for the costs of activities undertaken to persuade or dissuade employees from exercising or not exercising their rights to organize and bargain collectively.  The executive order explicitly prohibits use of any government funds to (a) prepare and distribute materials; (b) hire or consult an attorney; (c) hold meetings; and (d) plan or conduct activities by managers, supervisors, or union representatives during work hours.  The Federal Acquisition Regulatory Council (FAR Council) has 150 days to adopt rules and regulations appropriate to carry out the Order.  The Order may be found here.

     The third order issued is Executive Order 13497, entitled “Nondisplacement of Qualified Workers Under Service Contracts.” In this order, President Obama mandates that all contracts falling under the Service Contract Act contain a clause which requires contractors and subcontractors to offer the right of first refusal to employees under a predecessor contract if the contractor or subcontractor is awarded a contract that succeeds a contract for the same or similar services at the same location.  This rule will not require the successor contractor or subcontractor to offer the right of first refusal to managerial or supervisory employees, and contractors or subcontractors are free to employ fewer workers than were employed by the previous contractor. 

     The order also requires the predecessor contractor to provide the successor with a list of all service employees working under the contract or subcontract within the last month of performance not less than 10 days prior to the completion of the contract.  The Secretary of Labor has 180 days to issue regulations clarifying compliance with this Order.  The Order may be found here.         

If you have any questions, please contact one of our Labor & Employment attorneys. 

      President Obama signed the Lilly Ledbetter Fair Pay Act (“Fair Pay Act”) into law last Thursday, making it the first bill he signed as President.  The Fair Pay Act overturns the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), and expands the length of time an employee has to file a claim of pay discrimination.  It also potentially expands the class of individuals with standing to bring a claim of pay discrimination.  As a result, employers may be subject to litigation for pay decisions made many years in the past and also may need to adjust their record keeping policies.

     The impetus for the Fair Pay Act arose from Lilly Ledbetter’s lawsuit against her employer for pay discrimination, claiming that it did not give her the same pay raise it gave to other male employees.  Although Ms. Ledbetter did not file her charge until long after this pay decision was made, she argued that her charge still was timely and not barred by the statute of limitations because each pay check she received from that point forward was lower than it would have been if she had been given the raise, effectively making each pay check an act of discrimination that restarted the filing period for her claim.  The Supreme Court disagreed, however, and held that an employee must file a charge within 180 or 300 days (depending on the state) of the day the initial discriminatory pay decision was made.

     The Supreme Court’s decision was met by strong opposition from those who claimed that, unlike other types of discrimination, pay discrimination is particularly hard to detect because information about co-worker pay usually is confidential.  As a result, opponents argued that employees like Ms. Ledbetter would be unfairly prevented from filing claims of pay discrimination because they often do not know they are subject to discrimination until well beyond the normal time for filing a charge.  Congress responded to the criticism by enacting the Fair Pay Act to overturn the Supreme Court’s decision. 

     The Ledbetter Fair Pay Act amends Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act to state that an independent act of discrimination occurs each time wages are paid to an employee following a discriminatory pay decision.  As a result, an employee who normally would have been time-barred from asserting a claim of pay discrimination based on a decision made years, or perhaps decades, in the past can now make such a claim as long as it is filed within 180 or 300 days (depending on the state) of when the employee last received a pay check.  It also potentially expands the class of individuals with standing to bring a claim of pay discrimination to include those who are “affected by” the alleged discrimination.  Read literally, that could include the families and relatives of the worker who was allegedly discriminated against, and perhaps even more broadly the employee’s survivors (as well as other employees).

     All of this means that employers may need to review their record retention policies and consider preserving records of pay decisions for much longer than they have in the past so they are able to defend themselves in later-filed pay discrimination claims.  These records would include not only decisions about direct pay increases, but also decisions related to promotions, job assignments, layoffs, and other decisions that affect compensation.  Also, it would be prudent for employers to document which managers and supervisors made pay decisions, or decisions that might have affected compensation.  Otherwise, if a pay discrimination charge is filed, there may be no way for the Company to identify who made the pay decisions at issue.

     The Fair Pay Act went into effect immediately upon President Obama’s signature and even applies retroactively to May 28, 2007, the date of the Supreme Court’s decision.  Thus, the new law will apply to all claims of discrimination in compensation under Title VII, the ADEA, ADA, and the Rehabilitation Act pending on or after that date.      

If you have any questions, please contact one of our Labor & Employment attorneys. 

     This week, the United States Supreme Court issued a decision clarifying what conduct constitutes “opposition” for purposes of a retaliation claim under Title VII of the Civil Rights Act of 1964, as amended.  This case expands the protection afforded to employees who provide their employers information regarding conduct they believe to be unlawful and effectively increases the liability exposure for employers who subsequently take adverse action against such employees.

     In Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, No. 06-1595 (U.S. Jan. 26, 2009), the employer, Metro, investigated rumors of alleged sexual harassment by its employee relations director, Gene Hughes. Although Vicky Crawford, the plaintiff, did not initiate the complaint, she was questioned during the internal investigation and indicated in response that Hughes had made lewd gestures to her on numerous occasions.  Crawford subsequently was terminated for embezzlement.  She then sued, claiming that the termination was in retaliation for her providing information about Hughes during the internal investigation.

     The federal district court granted Metro’s motion for summary judgment, and the Sixth Circuit Court of Appeals upheld this decision.  The appellate court found that “opposition” to unlawful activity for purposes of a Title VII retaliation claim required “active, consistent” opposing activity, and in this case, Crawford had not initiated the complaint.  The Supreme Court reversed, holding that the protection of Title VII’s anti-retaliation provision extends to an employee who opposes or speaks out about discrimination not on her own initiative, but in response to questioning pursuant to an employer’s internal investigation.

To view the Supreme Court’s decision in its entirety, please go to http://www.supremecourtus.gov/opinions/08pdf/06-1595.pdf.

If you have any questions, please contact one of our Labor & Employment attorneys.

U.S. Citizenship and Immigration Services ("USCIS") has issued an interim rule that makes changes to the Form I-9 employment verification process. The interim rule amends regulations governing the types of documents employers may accept for the I-9 Form and also creates a revised version of the I-9 Form. USCIS currently is accepting comments on the interim rule, which will go into effect on February 2, 2009. USCIS will later issue a final rule to become effective.

Beginning February 2, 2009, however, the interim rule will become effective, meaning that the current version of the I-9 Form (dated 06/05/2007) will no longer be valid, and employers must begin using the revised Form I-9. A final version of the revised I-9 Form is not yet available, but USCIS is expected to make it available by the time the interim rule becomes effective. In the meantime, to download a copy of the interim rule and sample of the revised I-9 Form, please click here.

The following is a summary of the significant changes made by the interim rule:

• Expired documents are no longer acceptable.

  • Under the current regulations, a U.S. Passport and all List B documents are acceptable for the I-9 Form, even if they are expired.

  • Under the interim rule, expired documents are no longer acceptable; all documents must be unexpired for use on the I-9 Form.

• Form I-688, "Temporary Resident Card," and Forms I-688A and I-688B, "Employment Authorization Cards," are removed from the list of acceptable documents.

  • These documents are no longer issued, and USCIS has determined that all of these documents that were previously issued are currently expired. Therefore, the amended regulations remove these documents from the list of acceptable documents on the I-9 Form.

• Form I-94A, "Arrival-Departure Record," is added to the list of acceptable documents.

  • Form I-94A is now listed along with Form I-94 as an acceptable document. Form I-94A and I-94 are arrival/departure records and are nearly identical except that Form I-94A fields are computer-generated rather than being written by hand.

• "Documentation for Citizens of the Federated States of Micronesia and the Republic of the Marshall Islands" are added to the list of acceptable documents.

  • Most citizens of these countries are eligible for admission to the U.S. as non-immigrants, including the privilege of residing and working in the U.S., following a 2003 Compact with their countries.

  • Residents of these countries may present a valid passport and evidence of admission under the Compact to satisfy the I-9 Form requirements.

• U.S. Nationals and U.S. citizens are now separate categories under Section 1.

  • On the current Form I-9, U.S. citizens and U.S. nationals checked the same status box.

  • The revised I-9 Form will provide a separate box for U.S. Nationals, and defines U.S. Nationals to include persons born in American Somoa, children of noncitizens born abroad, and former citizens of the former Trust Territory of the Pacific Islands.
    

If you have any questions, please contact one of our Labor & Employment attorneys.

On November 17, 2008, the Department of Labor (“DOL”) issued new regulations implementing the Family and Medical Leave Act.  These regulations become effective on January 16, 2009.  As these new regulations modify the obligations imposed upon employers and alter the rights of employees, they certainly will affect the manner in which employers manage potential FMLA issues. 

For those employers that currently do not have an FMLA policy, now is the time to develop one.  Even for those employers that currently have an FMLA policy, it will be important to amend it to conform to the new regulations.  It is clear that an employer’s failure to comply with the requirements of the new regulations may expose the employer to significant liability.  Below are some of the more significant changes to the regulations:

• Covered employers now must post a general FMLA notice, even if they do not have any employees eligible for FMLA leave.

• Employers now must provide employees two types of notice when employees request FMLA leave: eligibility notice (either indicating that the employee is eligible for leave or explaining the reason the employee is not eligible) and designation notice (notifying the employee whether the leave will be designated and counted as FMLA leave as well as if paid leave will be required to be substituted for unpaid FMLA leave and if the employer will require a fitness-for-duty certification upon return from leave).

• Each time the eligibility notice is provided, employers now must provide employees a notice of rights and responsibilities detailing the expectations and obligations of the employee and explaining the consequences of a failure to meet these obligations.

• Eligible employees now are provided 12 weeks of unpaid leave for a qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on active duty (or has been notified of an impending call or order to active duty) in support of a contingency operation. 

• Eligible employees now may take unpaid leave, or substitute appropriate paid leave if the employee has earned or accrued it, for up to 26 workweeks in a single 12-month period to care for a covered servicemember with a serious injury or illness.

• Employers have additional time for requesting certification from a health care provider that the employee is suffering from a serious health condition.

• Employers may demand more detailed information from the employee’s health care provider before returning the employee to work.

• Employers may consider FMLA absences in determining bonuses and other incentive awards.

• New forms have been implemented to assist employers in providing FMLA leave, including forms for employee eligibility and rights and responsibilities, designation of leave, certification of qualifying exigency for military family leave, and certification of serious injury or illness of covered servicemember for military family leave. 

• There now are separate medical certification forms for an employee’s serious health condition and for a family member’s serious health condition.

• Employees now explicitly are permitted to settle past FMLA claims.
  

These topics represent only a fraction of the changes arising out of the new FMLA regulations.  For more information on the new FMLA regulations and how they may affect your operations, please contact one of the lawyers in the Labor Law and Employment Litigation Section of Freeman Mathis & Gary, LLP.

Additionally, to view the revised FMLA regulations and forms, please go to http://www.dol.gov/federalregister/pdfDisplay.aspx?docId=21763.

In a previous LawLine article, we reported on the Georgia Court of Appeals' decision in Austin v. Moreland, 288 Ga. App. 270, 653 S.E.2d 347 (2007).  Yesterday, the Supreme Court of Georgia unanimously reversed that decision.

Austin involved a medical malpractice claim where defense counsel had ex parte discussions with prior treating physicians of the plaintiff's deceased husband.  The Court of Appeals held that those discussions did not violate HIPAA because the plaintiff had produced her deceased husband's medical records containing protected health information (PHI), and defense counsel's discussions did not go beyond the content of those records.  Id. at 275, 653 S.E.2d at 351.  The Court of Appeals reasoned that O.C.G.A. § 9-11-34(c)(2), governing requests for production to non-party healthcare providers, afforded greater protection than HIPAA by requiring notice and opportunity for a plaintiff to object to a defendants' written discovery requests.  Id. at 274-75, 653 S.E.2d at 351.

The Supreme Court of Georgia, however, held that this "analysis misses the mark," as it focuses on the discoverability of PHI instead of on the method used to discover it:  "[S]ervice of a request for production of documents is insufficient because, although it gave plaintiff notice and an opportunity to object to the production of written documents, it did not give plaintiff an opportunity to object to the ex parte oral contact and the discovery of the physicians' recollections and mental impressions."  Moreland v. Austin, 2008 WL 4762052, at *2 -3 (Ga. Sup. Ct., Nov. 3, 2008).

Notwithstanding that a plaintiff waives his right to privacy for medical records relating to a medical condition he places in issue, the Supreme Court concluded that "HIPAA preempts Georgia law with regard to ex parte communications between defense counsel and plaintiff's prior treating physicians because HIPAA affords patients more control over their medical records when it comes to informal contacts between litigants and physicians."  Id. at *2-3.  The Supreme Court clarified that defense counsel may continue to have ex parte conversations with a plaintiff's healthcare providers about "benign" matters that do not relate to PHI, such as scheduling testimony.  Id. at *3.  If, however, defense counsel wants to discuss PHI with a plaintiff's healthcare provider, he "must first obtain a valid authorization, or a protective order, or ensure that the patient has been given notice and an opportunity to object to the ex parte contact, all in compliance with the requirements of HIPAA as set forth in 45 CFR § 164.512(e)."  Id.

Because HIPAA does not authorize a remedy or penalty for violating its edicts in the context of a civil lawsuit, the Supreme Court noted that it will be left up to trial courts, in the exercise of their broad discretion under O.C.G.A. § 9-11-37, to fashion an appropriate remedy for HIPAA violations.  Id. at *4.  Those remedies, of course, range in severity from a slap on the wrist to striking a defendant's answer.

The Americans with Disabilities Act (“ADA”) is about to undergo a major change. Last week, Congress passed the ADA Amendments Act of 2008 (“ADAAA”), which will overturn two prior Supreme Court cases and dramatically increase the scope of employees covered by the ADA. President Bush is expected to sign the bill into law this week, and the new legislation will take effect on January 1, 2009. For access to the text of the ADAA, click here.

Generally, to be entitled to protection under the ADA, an individual must show that he has a “physical or mental impairment that substantially limits a major life activity.” In two prior cases, the Supreme Court narrowed the scope of this definition. The ADAA rejects these cases, however, and states that the term “disability” is to be “construed broadly” to cover more physical and mental impairments.

In Sutton v. United Airlines, Inc., 527 U.S. 471 (1999), the Court held that, if a person takes measures to correct or mitigate a physical or mental impairment, the effects of those measures must be considered when determining whether that person is “substantially limited” in a major life activity. Over the past decade, this has limited the number of viable claims under the ADA because, for instance, whether an individual with seizures was disabled depended on his condition while taking medication to control his seizures. The ADAAA overturns this ruling, however, by stating that future decisions of whether an individual has a disability must be made without regard to the effects of corrective devices or medications. The only exception is that the impact of ordinary eye glasses and contacts still may be considered with respect to one’s vision.

In Toyota Motor Manufacturing, Kentucky, Inc. v. Williams, 534 U.S. 184 (2002), the Supreme Court also narrowed the scope of the ADA by holding that, to be substantially limited in performing manual tasks, an individual must have an impairment that “prevents or severely restricts” him from doing activities of “central importance to most people’s daily lives.” The Court also held that the restrictions must be permanent or long-term. Under the ADAAA, this is no longer the case. The statute now says the term “substantially limits” must be construed broadly, and that an individual may disabled even if the effects of his impairment are “episodic, in remission, or latent.”

Other ramifications of the ADAAA include additional examples of major life activities (related to communication, working, and concentration) and the inclusion of bodily functions, such as digestive and reproductive functions, to the list of “major life activities.” The ADAAA also authorizes the EEOC to issue new regulations further explaining the scope of these changes. Although the regulations are not expected until late 2009, it is clear that more physical and mental impairments will be covered by the ADA, meaning that employers can expect increased litigation and greater scrutiny of their obligations to accommodate employees in the workplace.

Under the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), which amended the Fair Credit Reporting Act and went into full effect in December 2006, retailers are permitted to show only the last five digits of the credit or debit card number on a printed receipt and may not show any portion of the card’s expiration date. 15 U.S.C. § 1681c(g). Recently, plaintiff’s attorneys have brought a wave of devastating litigation against retailers who provide electronic credit card and debit card receipts to consumers without properly truncating the card number or expiration date on the printed receipt in violation of FACTA.

Retailers who fail to comply with FACTA risk a class action lawsuit and potential damages that could cripple almost any business. In this regard, negligent failure to comply with the statute may result in liability for a customer’s actual damages and attorney fees. 15 U.S.C § 1681o. Retailers risk much harsher penalties, however, for willful failure to comply with the statute. Such conduct may result in liability for actual damages, punitive damages, attorney’s fees, and statutory fines of up to $1,000 per violation. 15 U.S.C. § 1681n.

Although some federal courts recently have ruled that FACTA’s truncation requirements are unconstitutional, until the law is settled in this area, retailers should become familiar with these requirements and ensure that they do not provide full credit or debit card numbers or expiration dates on receipts to customers.

By Robert Baker

Commission Approves 3.2% Increase in Georgia Power Base Rates

At its March 20, 2012, Administrative Session the Georgia Public Service Commission approved Georgia Power Company’s base rate increase for all customers.  The average tariff increase is 3.2% and will be included in the April billing.  The base rate increase was due to the Company bringing Plant McDonough Units 4 and 5 on line.  An average residential customer will see an increase of $2.46 per month on their bill.  Base rates will increase again in early 2013 when Plant McDonough Unit 6 goes on line.

Georgia Power Amended Integrated Resource Plan Approved

The Public Service Commission approved Georgia Power’s amended integrated resource plan (“IRP”), which will mean significant rate increases for residential and commercial customers due mainly to the multi-billion dollar construction program to build emission control bag houses at several coal generation plants.  The Commission Advocacy Staff estimated ratepayers would see a “ten to twenty percent rate increase for environmental upgrades,...“ (Advocacy Brief, p. 15)

The Commission’s multi-billion dollar decision authorized the Company to: (1) begin construction of bag houses at Plant Bowen Units 1-4, Plant Wansley Units 1 and 2, and Plant Hammond Units 1-4; (2) retire Plant Branch Units 1 and 2 and Plant Mitchell Unit 4C; (3) certify three purchase power agreements (“PPAs”)  and authorize the Company to collect an additional sum of $2.30 per kilowatt; and (4) convert “unusable material and supplies” to regulatory assets to be included in rate base and earn a return on equity.  

The Company is planning to file its next IRP case in January 2013.  It is expected Georgia Power will be retiring several more coal plants and seeking rate recovery for the nondepreciated net book value of the plants along with conversion of any unusable material and supplies to regulatory assets.

Georgia Power to File Fuel Cost Case

A procedural and scheduling order has been issued by the PSC directing Georgia Power Company to file a fuel cost case by the end of the month.  Fuel costs are recovered separately from base rates and special cost recovery riders.  It is anticipated the current rate will be rolled back.   

Georgia House Passes HB 386

The Senate overwhelmingly passed HB 386 on March 22.  This followed the vote of 155 to 9 in the House of Representatives on March 20.  A key provision of the legislation removes the sales tax on energy used for manufacturing, farming and mining over four years.  HB 386 contained other significant tax changes which clarified Georgia’s current on-line sales tax laws, created a one percent sales tax exemption for commercial aviation and phased out the ad valorem tax on cars.

Update on Other Utility Related Bills

Senate Bill 313 – The Broadband Investment Equity Act died in committee.  Private telephone and cable companies supported this legislation, which would have limited government owned communications service providers from being subsidized with public funds against private companies.

Senate Bill 459 – The “Smart Meter” bill allows customers the option to replace their digital meters with a mechanical meter, and is still alive in the House.  A surcharge could be collected to cover the cost of reading the meter.

House Bill 401 – Never made it out of committee in the House due to very strong utility opposition.  There may be an attempt to attach it to another utility bill, such as the “Smart Meter” bill.

House Bill 520 – Is alive in the Senate and encourages the development of renewable energy by individuals and businesses.  The bill directs electric service providers to purchase up to 2.5% of renewable energy at a price above avoided energy cost.

House Bill 855 – Didn’t make it out of the House, but was intended to reign in the out of control growth of the Universal Access Fund (UAF).  Since 2009 the USF had grown from $9 to $16 million with no end in sight.  HB 855 would have phased out the USF over 3 years.

For more information, contact Robert Baker at 770.818.4240 or bbaker@fmglaw.com.