Washington Workplace Law

We've written before about the benefits and potential pitfalls of hiring interns. While most employers are aware of state and federal regulations governing wages and hours worked, the rash of intern lawsuits over the past few years have demonstrated that employers are still confused about how to comply. Last year, unpaid interns launched several high profile lawsuits against Fox Searchlight, the Hearst Corporation and PBS's "Charlie Rose" show, claiming that they should have been paid based on the type of work they performed. Private sector internships must meet certain Department of Labor criteria in order to be "unpaid," otherwise the intern will be considered an employee, and wage and hour requirements apply.

However, even paid internships can lead to wage and hour woes. A wage and hour class action was recently filed against Hamilton College by a former paid intern. The intern claimed the college intentionally misclassified him and other interns as exempt from minimum wage and overtime pay. See Kozik v. Hamilton College. The complaint asserted that the college lacked funds to hire full-time assistant coaches and used interns instead, requiring them to work up to 100 hours per week below minimum wage.

Employers should be very cautious when paying interns to ensure compliance with minimum wage and overtime requirements under the Fair Labor Standards Act and applicable state law.

If you have questions about offering internship programs at your company, please contact the Foster Pepper Employment and Labor Relations Group.

On February 12, attorneys from the Foster Pepper Employment and Labor Relations Group presented “Wage and Hour Compliance: Beyond the Basics” to guests in our Seattle offices and via webinar to others across the state and beyond. Even if you missed the presentation, you can follow this link to review the audio, slides, and handout materials.

To find materials from other presentations on employment and labor relations topics, click here and choose the “News/Pubs” tab.

In a flurry of new decisions issued shortly before the holiday, the National Labor Relations Board continues to significantly alter the labor law landscape on topics such as employee discipline, dues checkoff, and social media.

In the first groundbreaking decision, Alan Ritchey Inc., the company and its recently-certified union were negotiating their first collective bargaining agreement. Before an agreement was reached, the company disciplined a union employee. The union filed an unfair labor practice charge, arguing that the company should have bargained before disciplining the employee. The Board agreed, ruling that before the first union contract is in place, the employer must offer to bargain over the decision to discipline a union employee. Although the Board hoped to encourage “even-handed and uniform application of rules of conduct,” in practice employers face one additional hurdle before issuing corrective action while trying to bargain a first contract.

In a second significant decision, WKYC-TV, Gannet Co. Inc., the Board ruled that employers must continue to honor arrangements to deduct union dues from employee paychecks even after the collective bargaining agreement has expired. This decision represents a substantial change for many employers and overrules half a century of labor law precedent on the issue. The Board thus stripped employers of a valuable bargaining tactic. Employers used to be able to use the threat of loss of dues to pressure the union to reach a new agreement. Now, employers must continue dues deductions until an agreement is reached, or valid impasse allows unilateral employer action.

Finally, in Hispanics United of Buffalo, the Board found that the employer unlawfully fired five employees because of their off-duty Facebook activities. The five targeted a co-worker named Lydia who criticized their work performance. One of the criticized employees, Marianna, sparked a conversation among four other co-workers about the criticism in a Facebook post. Lydia observed and commented on the Facebook postings, and subsequently complained to management about the abusive conduct. All five employees were fired. In reversing the terminations, the Board found the communications were protected, concerted activity under the National Labor Relations Act, and that the protected communications were the only basis for the terminations. The decision illustrates the Board’s application of its existing rules to new technology, in this case limiting discipline for employee use of Facebook as a “virtual water cooler.” It also emphasizes the Board’s continued application of the NLRA to non-union employers.

If you have questions about the effect of the National Labor Relations Board decisions on your workplace, please contact the Foster Pepper Employment and Labor Relations group.

The battle over health care reform appears to be over, as President Obama's re-election eliminated the last major threat to the his signature healthcare reform law, the Affordable Care Act ("ACA"). The US Supreme Court's June 2012 decision upheld the ACA in its entirety, which means that employers must now prepare to implement its provisions.

In addition to those requirements which have already gone into effect, the ACA imposes several duties on employers and plan sponsors which are effective between now and 2014, including:

• Mandatory Employee Coverage – Employers with an average of 50 full-time employees must offer health coverage that meets minimum essential coverage requirements or pay a fine ($2,000 per employee over 30 FTEs). Effective: January 1, 2014.
• Summary of Benefits and Coverage – Employers are required to provide a standardized summary of benefits and coverage ("SBC") to all applicants and enrollees at initial enrollment and annual enrollment. Effective: Plan years beginning on or after September 23, 2012.
• W-2 Reporting Requirement – Employers are required to report the aggregate cost of applicable employer-sponsored health coverage on W-2s provided to employees. Effective: Calendar year 2012.
• Comparative Clinical Effectiveness Research Fee – The ACA imposes a fee on all health plans to fund comparative clinical effectiveness research. Effective: Plan years beginning November 1, 2011.
• Limit on Flexible Spending Account Contributions – Employee pre-tax contributions to a Section 125 health flexible spending account ("FSA") will be limited to $2,500 annually. Effective date: Plan years beginning on or after January 1, 2013.
• Medical Loss Ratio Rebates – Employers must begin handling medical loss ratios rebates received from insurers in accordance with guidance issued by the Department of Labor (for ERISA plans) and the Department of Health and Human Services (for non-federal governmental and church plans). Effective: First applied to 2011 plan year and the first rebate is due by August 1, 2012.
• Health Insurance Exchange Notices – Employers must prepare notices to employees as to the availability of health insurance coverage through the state’s health insurance exchange, and eligibility for premium tax credits through the exchange, if the employer’s health care coverage does not satisfy the ACA’s minimum value test. Effective: March 2013.

While most employers are generally aware of the ACA's requirements, implementation of the legislation remains unclear without further regulatory guidance addressing vague and undefined provisions. Following President Obama’s victory, employers can expect increased activity by federal regulatory agencies to address critical aspects of the ACA, such as:

• Essential Health Benefits – Guidance on the definition of essential health benefits, which will determine which benefits the health insurance exchange plans must offer and, for insured or self-insured plans, which benefits are subject to the prohibition on lifetime and annual limits (for plan years beginning before January 1, 2014).
• Minimum Value Test – Rules for determining whether a plan satisfies the ACA's "minimum value" test (i.e., covers at least 60% of the costs of benefits that the employer has determined will be provided under its plan).
• Shared Responsibility – For employers with 50 or more full-time employees, the ACA's “shared responsibility” provision imposes penalties on the employer if any full-time employee obtains subsidized coverage through a health insurance exchange, either because the employer does not offer coverage at all or because the coverage offered is "unaffordable" or does not satisfy the ACA’s "minimum value test."
• "Full-Time" Employees – Standards for calculating the number of full-time employees.
• Automatic Enrollment – Standards addressing the ACA's automatic enrollment provision, which requires employers with 200+ full-time employees to automatically enroll employees into a default plan if the employee does not affirmatively elect health plan coverage or opt-out.
• Wellness Plans – Rules governing the design of employee-sponsored wellness programs and the ACA’s employee incentives to participate in such wellness plans.

Employers should take immediate action to begin the process of implementing ACA requirements, communicate plan changes to employees, and continue monitoring regulatory activity regarding implementation guidance. The Department of Labor website provides regulatory guidance and FAQs.

If you require assistance complying with the ACA's employer requirements, you may contact Amy Kauppila at kaupa@foster.com or (206)390-1071.

By now, all Seattle employers covered by the paid sick and safe leave ordinance should be in compliance. You can find details about the ordinance here.

Now that the ordinance has been in effect for several months, a representative of the Seattle Office for Civil Rights – which is the agency that interprets and enforces the ordinance – has stated that it is expanding its Frequently Asked Questions (“FAQ”) document to provide additional guidance for employers. Although there is no date set for issuance of the revised FAQs, the Office is providing telephonic technical assistance clarifying its position on various issues that have arisen since the ordinance went into effect.

Of interest to many employers, the Office has clarified the scope of the “occasional employee” definition, especially as it applies to employees who spend most of their time outside of Seattle but enter the city to perform work. The Seattle Office for Civil Rights Rules specify that employees who “work in Seattle on an occasional basis are covered by the Ordinance if they perform more than 240 hours of work in Seattle within a calendar year.” 70-040 (5). The Rules also specify that “[e]mployees who work in Seattle on an occasional basis shall begin to accrue paid sick/safe time upon coverage by the Ordinance (i.e. when they have worked more than 240 hours of work in Seattle within a calendar year).” 70-120(2).

The Office has clarified its interpretation of “occasional” basis. It will distinguish between workers who enter Seattle on a scheduled basis, such as a Friday afternoon shift, and employees who come to Seattle on an unscheduled basis. Only those employees performing Seattle-based work on an unforeseeable, random schedule will be subject to the 240 hour threshold requirement. Non-Seattle employees working in Seattle on a regularly-scheduled basis will accrue sick and safe time from the first hour they work.

At the same time, employers should also ensure that all Seattle-based employees, regardless of how much or little they work, and regardless of whether they work a regular or sporadic schedule, accrue sick and safe time from the first hour they work.

Employers should review their policies to ensure they are consistent with these interpretations. Employers have the opportunity to correct compliance issues now, and would also have the opportunity to bring policies into compliance in the event of an employee complaint to the Office for Civil Rights.

We’ll post updated guidance when the expanded FAQs are released, and you can also sign up for updates directly from the Office.  If you have questions about the impact of the ordinance on your organization, please contact the Foster Pepper Employment and Labor Relations group.