A Second Court of Appeals Invalidates NLRB’s Notice Posting Rule

By Edwin S., Hopson

On June 14, 2013, the U.S. Court of Appeals for the Fourth Circuit in South Carolina Chamber of Commerce v. NLRB,  No. 12-1757 (4^th Cir. 2013) became the second federal Court of Appeals to reject the NLRB’s notice posting rule.  On May 7, 2013, the U.S. Court of Appeals for the District of Columbia Circuit had also invalidated the NLRB’s notice posting rule in National Association of Manufacturers et al. v. National Labor Relations Board, et al., Civil No. 12-5068, 12-5138 (D.C. Cir. 2013).

The Fourth Circuit Court of Appeals stated, in part:

“We agree with the district court that the rulemaking function provided for in the NLRA, by its express terms, only empowers the Board to carry out its statutorily defined reactive roles in addressing unfair labor practice charges and conducting representation elections upon request. Indeed, there is no function or responsibility of the Board not predicated upon the filing of an unfair labor practice charge or a representation petition. We further note that Congress, despite having enacted and amended the NLRA at the same time it was enabling sister agencies to promulgate notice requirements, never granted the Board the statutory authority to do so. We therefore hold that the Board exceeded its authority in promulgating the challenged rule, and affirm.”

Supreme Court Affirms Arbitrator’s Holding That Contract Permitted Class Relief

The U.S. Supreme Court on June 10, 2013, issued its decision in Oxford Health Plans v. Sutter, 569 U.S. ___, No. 12-135 (2013), holding unanimously that once an arbitrator decides that a contract permits a class arbitration proceeding, the parties are bound by that decision under the Federal Arbitration Act’s very narrow scope of judicial review. In this commercial arbitration case involving a healthcare provider’s claim against a medical plan, Justice Kagan, speaking for the Court, stated, in part:

“Because the parties ‘bargained for the arbitrator’s construction of their agreement,’ an arbitral decision ’even arguably construing or applying the contract’ must stand, regardless of a court’s view of its (de)merits. Eastern Associated Coal Corp. v. Mine Workers, 531 U. S. 57, 62 (2000) (quoting Steelworkers v. Enterprise Wheel & Car Corp., 363 U. S. 593, 599 (1960); Paperworkers v. Misco, Inc., 484 U. S. 29, 38 (1987)…. Only if ‘the arbitrator act[s] outside the scope of his contractually delegated authority’—issuing an award that ‘simply reflect[s] [his] own notions of [economic] justice’ rather than ‘draw[ing] its essence from the contract’—may a court overturn his determination. Eastern Associated Coal, 531 U. S., at 62 (quoting Misco, 484 U. S., at 38). So the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.”

Significantly, the cases relied upon by the Court in this commercial arbitration case were prior labor and employment law decisions.

Employers Get Ready! NEW Notice Requirement under the Affordable Care Act

By Sherry P. Porter

Overview of the New Notice Requirement

Most employers will have a new notification requirement beginning October 1, 2013.  Under the Patient Protection and Affordable Care Act (ACA), new health insurance options will be available under the health care exchanges or marketplaces as of January 1, 2014.  Employers are required to provide notices to their employees about these new health insurance options by October 1, 2013 which corresponds with the date open enrollment begins on the marketplaces for health insurance coverage beginning January 1, 2014.

The ACA added a new provision under the Fair Labor Standards Act (FLSA) that requires an employer to notify all of its employees about the new health insurance options available through the marketplace.  This requirement applies to all employers who are subject to the FLSA.  This generally applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce with at least $500,000 in annual dollar volume of business or if the employer is one of a list of certain employers such as hospitals, schools, government agencies and others.  To see if you are subject to the FLSA, you can visit their internet compliance tool: 
http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp

Assuming you are subject to the FLSA, you will need to comply with the notification requirement by October 1, 2013.  All full time and part time employees must receive the notice.  Employers must provide the notice even if they do not provide health insurance for their employees.  Employers do not have to provide the notice to dependents, former employees or other individuals who may be covered under their health plan, such as retirees.  The marketplaces open on October 1, 2013 which is driving this deadline.  Under the ACA, nearly all Americans will be required to have health insurance coverage by January 1, 2014 or risk a penalty assessment.

Notice Contents

The notices must contain certain information about the marketplace.  The notice must (1) inform the employee of the existence of the marketplace and include a description of the services provided and contact information, (2) inform the employee that if the employer plan does not provide a minimum value, then the employee may be eligible for premium tax credits under the ACA if s/he purchases insurance through the marketplace, and (3) inform the employee that if s/he purchases insurance through the marketplace, s/he may lose any employer contribution toward such coverage and that all or a part of the employer’s contribution may be excluded from their income.

The Department of Labor recently issued two model notices that an employer may use to meet this notification requirement – one for employers that offer a  health plan for its employees and one for employers that do not offer a health plan for its employees.  However, these model notices are not the type that an employer can just print out and send to its employees.  The forms will require the employer to have a real handle on its health insurance plan and how it meshes with the requirements under the ACA in order to fulfill the notification requirement.  Employers may use the model notices or create their own notices so long as they contain the required information.

Giving Notice

If an employer does not sponsor a health plan for its employees, there is a sample form that may be used.  Generally, if the employer is not a “large” employer (it has less than 50 full time equivalent employees), then it is not subject to potential ACA penalties for not offering health insurance coverage to its full time employees.  Many small employers do not offer health insurance for a myriad of reasons.  The employer that does not provide health insurance to its employees will need to provide the required information along with its contact information and distribute it to all employees by October 1.  This information will be needed by employees who seek to obtain insurance through the marketplace.

For employers that sponsor health plans for employees, the form is a little more complicated.  The basic information is the same but the employer must add information about the health plan it sponsors.  Employers will have to provide information about its health plan and whether or not the coverage meets the affordability and minimum value standards mandated by the ACA.  Employers must be analyzing this now to be able to complete the required notification.  If an employer has not determined the status of its plan under the ACA and how it will comply or not comply, then it cannot properly complete the form. 

The model notices direct employees to a website (www.healthcare.gov) for more information about the marketplace. While this should relieve the employer from explaining the notice to employees, employers are still going to be inundated with questions as the individual insurance mandate and marketplaces go into effect.  You will need to be ready to handle these questions.  Many employers will take advantage of this opportunity to educate their employees about the upcoming mandates under the ACA, the impact on employer provided health insurance and understanding the how the ACA impacts the employer as well as the employee. 

For existing employees, the notice must be provided by October 1, 2013. Beginning October 1, 2013, the notice must be given to each new hire.  For 2014, new hires must receive the notice within 14 days of their start date.  The notice must be provided free of charge, can be sent by first class mail and must be provided in writing that can be understood by the average employee.  An employer may also send the notice electronically so long as all of the Department of Labor’s electronic disclosure rules are met.

 Revised COBRA Notice

For many years, employers have been providing COBRA notices to employees and dependents who experience a qualifying event under COBRA to allow them to continue health care coverage at their own expense.  Now, all COBRA notices will need to be revised to include information about the marketplace.  The DOL has updated its existing COBRA notice on its website.  From October 1, 2013, all COBRA notices must contain the new information about the marketplace.  The new language may be confusing to employees so employers are going to have to be ready for questions.

 What Should Employers Do Now?

All employers should be developing their own communication plan about the new health insurance requirements to avoid confusion by employees and to keep employees informed.  The notices provided by the DOL contain terms that are going to be confusing to employees and will likely prompt even more questions.  Many employers are taking this opportunity to educate their employees about the ACA and the impact it has on employer provided health insurance.  Employers will need to look at their own work force to determine what is best for all involved.  Employers may wish to modify the DOL’s forms to best suit their work force and may very well end up with different forms for different groups of employees.  An employer can only comply with the notice requirements if it has a good understanding of its health plan’s compliance under the ACA – so don’t delay!

NLRB and Socal Media

By Erin Frankrone*

It may be illegal to fire employees who complain about supervisors or working conditions on Facebook and other social media sites, as such complaints probably constitute protected concerted activity.  

On April 19, 2013, the NLRB decided Design Tech. Group, 359 NLRB No. 96 (2013), and found that employees’ complaints and discussions on Facebook were a continuation of direct complaints to the employer, and a discussion of the terms and conditions of employment.  Therefore, the Board ruled they were protected concerted activity for their mutual aid and protection under Section 7 of the Act.

The company had contended in defense that it had been entrapped by the employees.  However, companies are unlikely to prevail on an entrapment defense in these situations, even if the employees appear to desire their own termination.  The NLRB noted that employees’ selfish motives do not deprive them of their rights to engage in protected activities.  The key tension in this area is whether employees’ complaints/discussions through social media can fairly constitute the classic concerted activity given the global dissemination of their remarks.

*Erin Frankrone is a Summer Associate at Wyatt, Tarrant & Combs, LLP.

Kentucky Legislature Amends the Unemployment Compensation Law

 By Sean G. Williamson*

Recently, the Kentucky General Assembly amended the Unemployment Compensation law in several respects.

KRS 341.415(1) outlines the procedures for recovery and subsequent disposition of improperly paid unemployment compensation benefits.  Act of Mar. 21, 2013, 2013 Ky. Laws Ch. 45, § 1(1) (HB 102).  Unemployment compensation benefits may be improperly paid because the recipient failed to fulfill a condition, became disqualified, or obtained an award of back pay.  Id.  KRS 341.415(1) further provides that upon collection of these improper benefit payments, any amount collected shall be credited to the “pooled account” or the account of the “appropriate reimbursing employer.”  Id.

During the 2013 Regular Session, the General Assembly added a caveat to the foregoing procedures for disposition of recovered benefit payments.  Id.  Now, when improper benefit payments are recovered, the account of the appropriate reimbursing employer will not be credited if it is determined that the improper payment occurred as a resulted of that employer’s fault under the amended KRS 341.530(4).  Id.; see Id. § 2(4) (stating the circumstances in which an employer is at fault for the improper payment of benefits).  Instead, the recovery will be contributed to the pooled account maintained by the Education and Workforce Development Cabinet.  Id. § 1(1).

Also, the General Assembly created a new subsection (6) in KRS 341.415.  Id. § 1(6).  Subsection (6) now penalizes recipients who obtain unemployment compensation benefits “as a result of false statement, misrepresentation, or concealment of material information.”  Id.  The penalty is calculated as 15% of the amount of the improperly paid benefits, id., and is collected in the same manner as all other improperly paid benefits under KRS 341.415, id. § 1(3), (6).  The preexisting subsections of KRS 341.415 were renumbered to accommodate this change.

The General Assembly created two new subsections in KRS 341.530 concerning improperly paid unemployment benefits by reason of the employer’s fault.  Act of Mar. 21, 2013, 2013 Ky. Laws Ch. 45, § 2(4)–(5) (HB 102).  First, the amended KRS 341.530(4) states that the reserve account of a contributing employer shall not be relieved of any charges relating to an improper benefit payment to a worker if:  (1) the improper benefit payment was made because the employer “fail[ed] to respond timely or adequately to a request of the secretary for information relating to the claim for benefits” and (2) the employer “has a pattern of failing to respond timely or adequately to requests.”  Id. § 2(4)(a)–(b).  A “pattern of failing” means that the employer failed to respond “timely or adequately” at least six times in one year or failed to respond to 2% of such requests in one year, whichever is greater.  Id. § 2(4)(b).  The new KRS 341.530(4) applies to improper benefit payments that occur after October 21, 2013.  Id. § 2(4).

Second, the amended KRS 341.530(5) establishes the notification procedure for determinations made under subsection (4).  Id. § 2(5).  Notice of the determination will be sent to the last known physical or electronic address of the employer.  Id.  The determination may be appealed in accordance with the provisions of KRS 341.420(2).  Id.  In response to the addition of these two new provisions, the legislature renumbered the statute’s preexisting subsections.  Id. § 2.

Only minor alterations to KRS 341.550 were made, making the provision compatible with the more extensive amendments to KRS 341.415 and 341.530.  Act of Mar. 21, 2013, 2013 Ky. Laws Ch. 45, § 3(2) (HB 102).  The legislature inserted cross-references in KRS 341.550(2) to ensure that the pooled account incurred no charges based on improper benefit payments as a result of employers’ fault and to prevent employers’ accounts from being credited with the recovery of such payments.  Id.

*Mr. Williamson is a Summer Associate at Wyatt, Tarrant & Combs, LLP.