Archive for July, 2010

HAPPY ANNIVERSARY?

Did you know that today is the 20th Anniversary of the signing of the Americans with Disabilities Act? It is. On July 26, 1990 President George H. W. Bush (that is the first President Bush for those of you like me who are a bit date-challenged) signed the largely bi-partisan supported bill into law. When the President signed the bill he “borrowed” from President Reagan’s Berlin Wall speech from a few years earlier, Bush said, ”Let the shameful wall of exclusion finally come tumbling down.” http://www.cnn.com/2010/LIVING/07/26/ada.history/ So, to celebrate the anniversary of the ADA, you can find a ton of news articles and most of them seem to have a couple of things in common: first, they focus mostly on the public accommodation part of the ADA, you know, things like curb cuts and Braille in elevators, not the employment part of the ADA that we deal with every day; and second, they seem to say we have come a long way, and we have a long way to go.  Of course, we are going to talk about the employment part of the law, the part enforced by the EEOC.

In its statement “The Americans With Disabilities Act 20th Anniversary” the EEOC says there is a “growing need” for the ADA and points to charge statistics to prove it:  :

  • 1993: 15,274 charges of discrimination filed with EEOC, which obtained $15,496,811 in relief for 1,851 people though its administrative process;
  • 2009: 21,451 charges of discrimination filed, roughly a 30% increase. EEOC got $67,826,112 in relief for 3,238 people;
  • From 1993 to 2009, ADA charges rose from 17.4% of all charges filed with the EEOC to 23% of all charges filed as ADA charges became a greater part of the EEOC’s workload;
  • During the same period, the EEOC filed 874 lawsuits claiming violations of the ADA, collecting a total of $86,633,804 for victims of disability discrimination.

See http://www.eeoc.gov/eeoc/history/45th/ada20/index.cfm

You know what struck me the most about this? Take a look at the first 2 bullet points: 1993, 15,274 charges only 1,851 people got money. 2009, 21,451 charges and relief for 3,283 people. Now if my math is right (and it may not be, I went to Law School to avoid math), that means in 2009 (we’ll just stick with 2009), 18,168 charges were filed and the people filling them got no relief! That means that 84% of the charges were . . . what?  Frivolous?  So let me ask you this. Does that mean the employer’s didn’t have to spend time and effort responding to those charges? Did they get any monetary relief from the people who frivolously filed them? Nope and Nope. And things won’t get any better with the ADAAA.  Is that really a “growing need” for the ADA and the expanding definition of who is and who is not really disabled?

Now before you get the wrong idea, I am a full fledged 100% supporter of the ADA.  Those of you that have read any of my stuff know why. What I am not a supporter of is people who are not disabled trying to take advantage of a law designed to help people who are. Nor am I a supporter of a government agency making it easier for them to do that. All that does is cost business money and makes it harder for the people who really are disabled to get the protections the law affords.  Now I will be the first to admit that I may be interpreting these EEOC statistics wrong, . . . but I don’t think so.

So, Happy Anniversary.

EMPLOYEE OR NOT AN EMPLOYEE?

So things seem to be picking up a little in the economy?  At least that is what we keep reading and hearing.  What is pretty clear is that employers are very reluctant to start hiring again.  Productivity, sales, and profits might be rising, but employment isn’t.  Instead, it looks like employers are filling staffing needs with temps and independent contractors.  But before you go off and retain a bunch of independent contractors, be sure you know what you are getting into.

Last year, the IRS announced that it would audit 6,000 companies to determine if they were misclassifying employees as independent contractors.  see http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anpR2t09GIeU  This came on the heals of a 74-page GAO report on employee misclassification.

So why does the IRS care?  Because there is money (or overhead) in hiring independent contractors.  Lots of money.  Companies that hire real independent contractors don’t withhold taxes for them, withhold social security, pay benefits, or pay other expenses like unemployment and workers’ compensation premiums or pay the company’s normal share of these same taxes.  The GAO report estimated that for 1984, the last year any statistics were compiled on misclassification, the federal government lost about “$1.6 Billion (in 1984 dollars)” in tax revenue. 

States don’t like employee misclassification either.  According to the Bureau of National Affairs, Daily Labor Report, FedEx Ground Package System Inc. has just agreed to pay the Commonwealth of Massachusetts over “$3 million” to settle a misclassification suit involving drivers.  According to BNA, the settlement pays $1.3 million for state taxes, $689,000 for workers’ comp., $442,000 for unemployment, and the balance for an educational fund and into the commonwealth’s general fund.

So, how do you know who should be an employee and who should be an independent contractor?  You have to look at least three places.  Lets start with  the IRS.  At http://www.irs.gov/businesses/small/article/0,,id=99921,00.html you can find what the IRS considers important when determining if a worker is an employee or an independent contractor.  The IRS looks at three primary areas:  First, what they call “behavioral control”–things like who decides when and where the work is done, who supplies the tools, and how the work is sequenced.  The more detailed the instructions on how to accomplish the task, the more likely you have an employee.  Second, what they call “financial control,”–things like can the worker lose money on the job, can the worker sell his or her services to others in the market, and does the worker need to make a significant investment.  Again, the more risk the company takes on, like paying by the hour rather than the job, the more likely it is you have an employee.   Finally, the IRS looks at the “type of relationship.”  Is there a written contract, does the worker get benefits from the company, and how permanent is the relationship.  The more permanent, the more likely you have an employee.

Next, you need to see what the Department of Labor has to say about employee misclassification.  The DOL enforces the Fair Labor Standards Act, and they care about misclassification because they want workers to get at least the minimum wage and overtime.  In Fact Sheet #13 (available at http://www.dol.gov/whd/fact-sheets-index.htm), the DOL, relying on decisions by the Supreme Court, looks at whether the work is an “integral part of the principal’s business,” the “permanency of the relationship,” the worker’s “investment,” and the company’s “control” over how the work is performed, among other things. 

Finally, you need to look and see if your state has any rules.  Some have very strict and complex rules and some don’t have any at all (so you will just follow the federal rules).

Misclassifying employees can be an expensive proposition.  Not only can you be liable for the taxes that you should have paid, you can also be liable for the employee portion of any taxes, penalties (like the IRS’ 100% penalty), interest, fees, and unpaid benefits.  So be careful how you classify your workers.

IS YOUR DRUG TESTING POLICY GOING UP IN SMOKE?

Sorry, bad joke, but as you all know by now, in 2008 the people of the state of Michigan, in voter referendum, passed the Michigan Medical Marihuana Act. See MCL 333.26421 et. seq. (Ok before you say anything about the spelling, I did not spell marijuana that way, the state did.)  The Act, among other things, provides for the use of medical marihuana under state law and “provide[s] protections for the medical use of marihuana” when recommended by a physician for “debilitating medical conditions.”  Section 4 of the Act specifically states:  “Sec. 4. (a) A qualifying patient who has been issued and possesses a registry identification card shall not be subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including but not limited to civil penalty or disciplinary action by a business . . . for the medical use of marihuana . . . .” 

Seems pretty clear. You can’t fire someone for using medical marihuana, end of story, right? Not so fast my friends. You see, section 7 of the Act states:  ” (c) Nothing in this act shall be construed to require: . . . (2) An employer to accommodate the ingestion of marihuana in any workplace or any employee working while under the influence of marihuana.”

Are we all completely confused now?  A business can’t take disciplinary action against an employee validly using medical marihuana, but an employer does not have to allow an employee to work under the influence?  How can that be?

Well, we may just find out. A couple of weeks ago, a young man named Joseph Casias, with the help of the American Civil Liberties Union, filed suit against Wal-Mart alleging that he was discharged in violation of the Act and in violation of Michigan public policy. Mr. Casias alleges in his complaint that he has cancer that causes him extreme pain, that in consultation with his doctor he sought and was given a medical marihuana registry identification card and that he was in full compliance with the Act. Mr. Casias alleges that he only used marihuana once per day at home and never performed any work for Wal-Mart under the influence of marihuana. Unfortunately, Mr. Casias hurt his knee at work.  When Wal-Mart took him to the emergency room he was given a drug test. And of course, the drug test showed that Mr. Casias used marihuana. 

Now Mr. Casias alleges that he told the testing facility that he was a medical marihuana user and even showed them his card. He also alleges that he told his shift supervisor that he was a medical marihuana user and showed him the card and was told not to worry about it, he was not in trouble.  Then, Mr. Casias alleges, two weeks after the injury,  he was fired by the store manager. Mr. Casias claims he was told that Wal-Mart “does not honor” his registry identification card. In his complaint, Mr. Casias alleges that the knee injury that was the cause of the drug test was not a result of his use of marihuana and that he never worked under the influence of the drug.

I don’t know how this case will come out, and we are not likely to know for some time. There will be a trial, and then probably an appeal. But hopefully, now, finally, we will get some clarity about exactly how this law is supposed to work.