EEOC Announces New "EEO Is The Law" Poster

The United States Equal Employment Opportunity Commmission ("EEOC") has revised its “Equal Employment Opportunity is the Law” poster. This new version reflects current federal employment discrimination law, including the Americans with Disabilities Act Amendments Act of 2008 and the Genetic Information Nondiscrimination Act of 2008. The revised poster also includes updates from the Department of Labor.

Information on this poster and EEOC requirements can be found at http://www1.eeoc.gov/employers/poster.cfm

DOL Sues Connecticut Company for Failing to Remit 401(k) Contributions

The U.S. Department of Labor ("DOL") has sued Manchester Moving and Storage Inc., a Manchester, Connecticut based company, as well as company president Frank N. Serignese for alleged misuse of more than $36,000 belonging to the employees of the company's 401(k) plan. The lawsuit, filed in the federal court in Connecticut, alleges that Serignese and the company violated ERISA by failing to remit to the plan employee contributions and participant loan repayments. The company was the plan sponsor and plan administrator, while Serignese served as the plan's trustee. Both were fiduciaries to the plan with responsibility for collecting money and property owed to the plan, which was funded primarily through contributions withheld from employee paychecks. The DOL's suit alleges that the defendants collected and used for the benefit of the company $31,709.94 in employee contributions and $4,318.21 in loan repayments belonging to the plan.

DOL Sues Virginia Company For Abandoning 401(k) Plan

The U.S. Department of Labor ("DOL") has filed a lawsuit to obtain appointment of an independent fiduciary to oversee the 401(k) plan of Global System Enterprises Inc., a defunct company formerly located in Arlington, Virginia. The company managed the plan until May 2005 when it ceased operations. Since that time, no one has taken fiduciary responsibility for the operation and administration of the plan and its assets. As a result, the plan’s participants and beneficiaries have been unable to gain access to or information about their individual balances. The suit, Solis v. Global System Enterprises Inc., Civil Action Number: 1:09-cv-01351-LMB-IDD, was filed in federal court in Virginia and seeks to appoint an independent fiduciary to terminate the plan and distribute plan assets to participants and beneficiaries.

DOL Issues Advisory Opinion Regarding "Target-Date" or "Lifecycle" Mutual Funds

On Decemmber 4, 2009, the United States Department of Labor ("DOL") issued Advisory Opinion 2009-04A, addressing the issue of whether the assets of "target-date" or "lifecycle" mutual funds constitute "plan assets" of employee benefit plans which invest in the funds. The DOL also addressed the issue of whether the funds' investment advisers would be considered fiduciaries of the investing employee benefit plans under ERISA. In answering these questions, the DOL assumed that the Funds are investment companies registered under the Investment Company Act of 1940. The DOL noted that, under Section 3(21)(B) of ERISA, the investment of an employee benefit plan in a registered investment company does not, by itself, cause the company or its investment adviser to be a fiduciary (or a party in interest) of the investing plan for purposes of Title I of ERISA. In the DOL's view, nothing in ERISA Section 3(21)(B) or Section 401(b)(1) suggests that a registered investment company's investment in the shares of affiliated mutual funds would, by itself, affect the application of those sections of ERISA. According to the DOL, the fact that a fund's assets consist of shares of affiliated mutual funds does not, by itself, make the assets of the fund "plan assets" of an employee benefit plan which invests in the fund, or make the fund's investment advisers fiduciaries of the investing employee benefit plan under ERISA.

Here is the link to the Advisory Opinion Letter http://www.dol.gov/ebsa/regs/aos/ao2009-04a.html.

NY Governor to Sign Gender Identity Executive Order

New York Governor David Paterson will sign an executive order today to extend anti-discrimination protections to transgender state employees. Governor Paterson is scheduled to sign the order this morning at the Lesbian, Gay, Bisexual, and Transgender Community Center in Manhattan. A number of cities, including Buffalo, Albany, Rochester and New York City, already prohibit workplace discrimination on the basis of gender identity or expression. More comprehensive legislation to outlaw discrimination based on gender identity has passed the Assembly but awaits action in the Senate.

Supreme Court to Hear Employee Text Messaging Case

The United States Supreme Court agreed to hear today a case appealed by the city of Ontario, Calif., and its police department — a case involving the blackberrt hand-held communication device. The petition tests whether there is a constitutionally-based right of privacy in text messages for employees of a government agency and, if there is such a right, whether it is less extensive for city employees using government-owned electronic pagers. The case involves the city of Ontario, California's review of text messages that a member of a police SWAT team had sent to another officer with whom he was having a romantic affair, and also messages he had sent to his wife. The Court'a decision in thia case likely will involve the examination a 1987 decision of the Court, Connor v. Ortega, which recognized some workplace privacy for public employees, but at the same time counseled that courts should take into account the "operational realities" of the workplace.

EEOC Launches Guides In Effort To Increase Federal Hiring of Individuals with Disabilities

Advancing its campaign to increase federal hiring of employees with disabilities, the U.S. Equal Employment Opportunity Commission (EEOC) has issued a set of guides on leveraging Schedule A, an authority available to federal agencies to hire and/or to promote individuals with disabilities without competing the job. The five “ABCs of Schedule A” guides are tailored for each participant in the federal hiring process: Service Providers, Applicants with Disabilities, Human Resources Professionals, Hiring Managers, and Disability Program Manager and/or Selective Placement Coordinator. The EEOC determined that the guidance was necessary because, according to the Agency, the participation rate of individuals with severe disabilities in the federal workforce continues to decline. All five guides are available on the EEOC’s web site, eeoc.gov, and can be immediately downloaded and printed.

EEOC Sues Brooklyn Fishery for Racial Harassment

The EEOC filed suit Monday against a family-run fishmonger in Brooklyn charging bosses with racially and sexually harassing male employees. The suit, filed in federal court in Brooklyn, NY, says black workers were subjected to racial jokes and slurs. The lawsuit also alleges that managers at the fish business regularly grabbed and pinched male employees' buttocks and frequently jabbed fish hooks into male employees' buttocks.

Read more: http://www.nydailynews.com/ny_local/2009/12/08/2009-12-08_fish_biz_in_reel_ugly_bias_case.html#ixzz0Z7FXTKLe

Monster Settles ERISA Class Action Lawsuit

A federal judge has granted preliminary approval toward a $4.25 million settlement between Monster Worldwide Inc., which owns the popular Monster.com job-search Web site, and a class of plaintiffs alleging the company and its executives breached their fiduciary duty by artificially inflating stock prices to the detriment of employees' retirement plans, a practice sometimes referred to as backdating.

Backdating takes place when executives change the award date of previously granted stock options in shares of their own company so that their securities are worth more. The backdating issues at Monster Worldwide resulted in the criminal convictions of two former senior officials. Monster recently agreed to pay $4.25 million to a group of employees who held Monster stock in their 401(k) plans. These employees sued alleging violations of ERISA and contending they had bought shares in their 401k plans while their bosses -- Monster Worldwide executives -- made false disclosures about Monster's financial condition and illegally lined their pockets with back-dated stock option grants.

Judge Alvin Hellerstein of the U.S. District Court for the Southern District of New York on Thursday granted preliminary class certification and preliminary approval of the settlement.

Applicant for Employment Accuses McDonald's of "Transgender" Discrimination

A transgender teen in Orlando has filed a complaint against McDonald’s after a manager refused to interview her and subsequently left a message on her answering machine containing a common epithet. Zikerria Bellamy applied for a job at McDonald’s in July and left the box on her application for gender blank. The online application specifically says that field is optional, but when she arrived for an interview, the manager insisted she fill in the field. After checking the box that said “Male”, he terminated the interview. Zikerria returned a second time to try speaking to a different manager who also refused to speak to her and then followed up with a message on her voice mail (see below).

The Transgender Legal Defense & Education Fund has filed a complaint with Florida’s Commission on Human Relations on Bellamy’s behalf, claiming that McDonald’s violated the Florida Civil Rights Act. Florida law does not explicitly prohibit employment discrimination on the basis of sexual identity or sexual orientation, but administrative agencies have in the past ruled that the sex and disability provisions of the Florida Civil Rights Act protects transgendered individuals.

DOL Releases Updated Employment Law Guide

The U.S. Department of Labor today announced the availability of an updated version of its popular Employment Law Guide, an online publication that describes the major employment laws administered by the department. The Guide helps the public — workers and employers — understand many of the laws affecting the workplace. For instance, it helps small businesses develop wage, benefit, safety and health, and nondiscrimination policies. It also benefits employees and employee representatives who need information about worker rights and responsibilities under federal employment laws.

Following a topical format and written in plain language, the Employment Law Guide is especially helpful for employers without a dedicated legal or human resources staff. The updated version addresses recent and important changes in employment laws, including the increase in the federal minimum wage and an expansion of the Family and Medical Leave Act that grants qualified relatives of veterans leave to care for ill or injured uniformed service members or to fulfill obligations that arise when a relative is called to active duty in the military. The Guide also now includes a chapter on child labor regulations in the agriculture industry and one on the Defense Base Act, which provides workers' compensation benefits to civilian employees working outside the United States on U.S. military bases or under certain contracts with the U.S.

The updated Employment Law Guide is available at http://www.dol.gov/elaws/ or http://www.dol.gov/compliance/.

DOL to Crack Down on Untimely 401(k) Contributions

The Employee Benefit Security Administration (EBSA), the division of the Department of Labor (the DOL) that oversees employee benefit issues, has set out its priorities for 2010. Topping that list is the timely remittance of employee contributions to retirement plans. While the DOL has penalized employers in the past for being slow to remit elective deferral contributions to its 401(k) plan trusts, Assistant Secretary of Labor Phyllis Borzi, the new head of EBSA, intends to get even tougher. Criminal investigations and prosecutions are not new. However, Borzi's September 14 speech at the 2009 ASPPA/DOL Speaks conference signals that the EBSA is prepared to take an even stronger stance on untimely remittances than in the past, at least in some circumstances. Employee contributions (such as elective deferrals to 401(k) plans) must be remitted by the employer to the plan as soon as such contributions can reasonably be segregated from the employer's general assets. The DOL has typically expected the remittance to the plans to be made within a couple of days after the tax deposits are due for the same payroll. A late deposit has always been considered a breach of fiduciary duty and a prohibited loan to the employer, giving rise to possible sanctions such as excise taxes, penalties and liability for lost earnings to the participants. Now, at least in “egregious” cases, the DOL will also consider criminal sanctions.

Bailey & Ehrenberg PLLC Announces New Web Site

Bailey & Ehrenberg PLLC announces the creation of a new “mini-site” focused on employee benefits issues – www.benefitslitigationcounsel.com. The firm intends to use benefitslitigationcounsel.com to provide information about the firm’s abilities and resources in the employee benefits field. In addition, as the site develops, the firm will provide additional news and analysis focusing in the ERISA litigation arena.

Pennsylvania Jury Awards Scientists $6.2 Million

Marcus v. PQ Corp.

Two scientists were awarded a total of $6.2 million (not including attorneys' fees), by a federal jury in Pennsylvania. The plaintiffs alleged that they were laid off due to their ages, instead of other, non-discriminatory criteria. The total is suprising for a few reasons. First, the plaintiffs were awarded approximately $900,000 in back pay. The layoffs occurred in 2005, so the plaintiffs were able to recover for back pay lost as a result of finding other work for less pay or for not finding work at all. These amounts were doubled because the jury found that the discrimination was willful. The plaintiffs also received front pay damages in the amounts of $1,100,000, presumptively as compensation for the time they would have worked past the date of the verdict had they not been wrongfully discharged. Add to that amount emotional-distress damages of $1.5 and $2 million each to get to a total award of $6.2 million. (via Law.com)

Insurer Uses Employee's Facebook Postings to Deny Benefits

A Canadian insurance company has ceased payment of sick-leave benefits to a woman who had been out of work for more than a year and a half due to depression. A former IBM employee claims that she called her insurance company when her monthly sick-leave checks stopped coming and was told that she was deemed as able to return to work based on what it had found on her Facebook page. The evidence the insurance company allegedly based its cessation of benefits upon was the employee's Facebook page, upon which the employee had posted photos of herself on at the beach and at a Chippendale’s show. The insurance company would not comment on the employee's specific case, but in a written statement sent to CBC News, the insurer said: "We would not deny or terminate a valid claim solely based on information published on websites such as Facebook." It did confirm, however, that it uses the popular social networking site to investigate clients.



See http://www.cbc.ca/canada/montreal/story/2009/11/19/quebec-facebook-sick-leave-benefits.html for the complete story.

Washington Times Editor Files Religious Discrimination Claim with EEOC

The former editorial page editor of the Washington Times has filed a discrimination complaint against the paper, saying he was forced to attend a Unification Church religious ceremony that culminated in a mass wedding conducted by the church's leader, the Rev. Sun Myung Moon. Richard Miniter, who was also vice president of opinion for the conservative newspaper, made the claim in a filing Tuesday with the Equal Employment Opportunity Commission that also disclosed he was fired last month. Mr. Miniter claimed in an interview that he "was made to feel there was no choice" but to attend the ceremony if he wanted to keep his job, and that newspapers' executives "gave me examples of people whose careers at the Times had grown after they converted" to the Unification Church. A Times spokesman said the paper would not comment.

For a more detailed discussion of this story, see http://www.washingtonpost.com/wp-dyn/content/article/2009/11/17/AR2009111703325.html?hpid=newswell.

Proposed DOL Exemption - New Chrysler Corp.

The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today announced a proposed exemption that, if granted, would allow the New Chrysler Corp. to transfer approximately $4.59 billion promissory note and company securities to a Voluntary Employees Benefit Association (VEBA) Plan established to provide health benefits for the company's retirees. The retiree health plan would cover about 120,000 retirees and dependents when it becomes effective on Jan. 1, 2010.

New Chrysler requested an exemption under the Employee Retirement Income Security Act (ERISA) to allow the VEBA plan to hold stock and debt of New Chrysler in order to facilitate the sale of the company to Fiat North America LLC. ERISA prohibits certain plans from holding large percentages of plan assets in the form of employer securities. The law gives the department authority, however, to grant exemptions that protect the interests of plan participants and beneficiaries.

On May 31, 2009, a United States bankruptcy court issued a decision allowing old Chrysler to sell substantially all of its assets to New Chrysler. New Chrysler is headquartered in Auburn Hills, Mich., and employs 55,000 employees. New Chrysler is owned by the Canadian Government, the U.S. Treasury, Fiat and the VEBA plan.

The exemption would allow the securities transfer, permit New Chrysler and its health plans to reimburse each other for benefit payments mistakenly paid by the wrong entity during the transition to the new plan, and permit the automaker to recover mistaken deposits to the plan.

The assets of the VEBA plan will be held by the same trust that holds the assets of the plans established by Ford and General Motors for their respective retirees. There will be separate accounting for each plan maintained by the three companies that are now funded through a single trust.

The primary condition of the proposal is the appointment of an independent fiduciary to represent the plan with regard to New Chrysler securities transactions. The independent fiduciary will determine in advance of taking any action regarding the securities that the action is in the interests of the plan and its participants and beneficiaries. The proposed exemption also requires the review of benefit payments by an independent third party administrator and auditor for each of the plans and an objective dispute resolution process. In addition, the proposal sets time limits for the return of mistaken deposits and an objective dispute resolution process.

The 2010 National Defense Authorization Act and FMLA

The 2010 National Defense Authorization Act was signed into law by President Obama on October 28, 2009. Among other things, the bill amends the Family and Medical Leave Act (“FMLA”) by expanding its leave provisions relating to "qualifying
exigency leave" and "military caregiver leave." The FMLA-related amendments extend qualifying exigency leave" protections to families of active duty servicemembers deployed abroad so that the families can have time to manage certain personal affairs of the servicemember while he or she is on active duty. Such leave was not available to employees whose family member (spouse, child, or parent) was in the regular Armed Forces in the past but, rather, was available only to employees whose family member was in the Reserves or National Guard and who was ordered to active duty as part of a "contingency operation." As amended, FMLA now provides that leave is available to covered employees whose spouse, child or parent is in the Armed Forces on active duty and who is deployed overseas.

White House Supports Paid Sick Leave Bill

The H1N1 pandemic is raising concerns about employees reporting to work sick and spreading the new flu strain. The pandemic has given momentum to efforts to enact federal legislation that would guarantee paid sick days to tens of millions of workers. Those legislative efforts received added momentum on Tuesday when the Obama administration backed the Healthy Families Act, which would guarantee seven sick days a year to workers in companies with 15 or more employees.

Cheesecake Factory Settles EEOC Lawsuit for $345,000

The Cheesecake Factory Inc. will pay $345,000 to settle a sexual harassment lawsuit stemming from actions at the restaurant chain’s location in Chandler, Ariz. The suit was filed by the U.S. Equal Employment Opportunity Commission ("EEOC"), which alleged that six male employees were subjected to repeated sexual harassment at the company’s Chandler Mall location. The suit also charged that Cheesecake Factory knew about and tolerated repeated sexual assaults against the employees by a group of male kitchen staffers. According to the EEOC, the evidence showed the alleged abusers directly touched victims’ genitals, made sexually charged remarks and forced victims into repeated episodes of simulated rape. The EEOC also alleged that complaints to virtually every manager at the restaurant were made, but they never put a stop to it. In addition to the monetary relief for the six victims, the parties agreed upon a two year consent decree that calls for the company to specifically train its employees and managers about sexual harassment and institute an ombudsman to field and address sexual harassment complaints by employees.

This case highlights the importance of putting into place, and regularly training employees with regard to, anti-harassment policies and procedures. Many employers fail to conduct diversity and harassment training seminars for their employees and management. Many others merely note during new employee orientations that they have policies in place to address harassment. The best (i.e., safest) approach is to conduct regular trainings for employees and management that make clear the employer's anti-harassment policies and procedures.

Congress Proposes Pension Funding Relief for Employers

A new bill, the Preserve Benefits and Job Act, that would extend the time allotted plan sponsors to fund defined-benefit retirement plans was recently introduced in the United States House of Representatives. The proposed legislation would provide employers with pension funding relief by allowing them to spread out required contributions to defined benefit pension plans plans over nine years, instead of the current seven. Further, Congress would allow employers up to 15 years to fully fund their defined benefit plans if they promised not to freeze the benefits. The proposed legislation also grants the Pension Benefit Guaranty Corporation more leeway in assisting defined benefit plans that are in endangered and critical status regarding their funding levels.

Deere & Co Wins ERISA Class Action Lawsuit

A federal district court in Iowa recently ruled that Deere & Co. did not violate ERISA when it redesigned its health benefits for certain retirees. The retirees alleged in the lawsuit that the company reneged on its promise of full health coverage. However, the district court found, in Brubaker et al. v. Deere & Co., that the company and its summary plan documents made it clear to the plaintiffs that their retiree health benefits could be amended, modified or terminated.

For a more detailed discussion of this case, see Employee Benefit News:
(http://ebn.benefitnews.com/news/judge-sides-with-employer-in-lawsuit-over-health-benefits-2682190-1.html).

Cornell University Discrimination Lawsuit Discussed in Inside Higher Ed

Today's edition of Inside Higher Ed has an interesting discussion of a recent decision from the United States Court of Appeal for the Second Circuit, Leibowitz v. Cornell University.

See (http://www.insidehighered.com/news/2009/10/27/cornell)

The Court of Appeals held that the failure to renew a non-tenured professor's employment can constitute an "adverse employment action" within the meaning of Title VII of the Civil Rights Act of 1974 and the Age Discrimination in Employment Act.

Welcome

Welcome to The Benefits and ERISA Observer, a blog devoted to legal issues and recent developments in the ERISA and employee benefits arena. This blog was created and is maintained by the law firm of Bailey & Ehrenberg PLLC, a boutique employee benefits and employment law firm with offices in Washington, D.C. and Philadelphia, Pennsylvania.