On October 22, 2009, New York State Commissioner of Health Richard F. Daines, M.D., suspended the mandatory influenza immunization requirement for New York State health care workers due to a shortage of available vaccines. In a letter dated October 23, 2009, the Commissioner wrote that the current emergency regulations requiring vaccination would expire on November 11, 2009, and that no new emergency regulations would be promulgated. Rather, the Department will propose a permanent regulation requiring vaccination of health care personnel in the facilities covered by the emergency regulation and post the draft for a period of public comment. The Department of Health now stresses that the limited vaccine supply should be prioritized for patients and those most at risk (pregnant women, and children and young people between the ages of 6 months and 24 years).

The emergency regulations went into effect on August 13, 2009, and required all covered health care facilities in New York State to ensure that health care personnel having direct patient contact were immunized against both seasonal influenza as well as the H1N1 virus. The mandate applied to personnel in hospitals, diagnostic and treatment centers, home care services agencies, certified home health agencies, licensed home care services agencies, long term home health programs, and hospice programs. The regulations required that personnel commencing employment on or after November 30, 2009, be immunized and that existing personnel receive annual vaccinations before November 30 of each year. The only health care personnel exempt from the vaccination requirement were those who provided documentation from a licensed physician or certified nurse practitioner certifying that vaccination would be detrimental to the health of the individual.

The Commissioner’s most recent action was permitted by the emergency regulations, which state that if “the commissioner determines the vaccine supplies are not adequate given the numbers of personnel to be vaccinated or vaccine(s) are not reasonably available, the commissioner may suspend the requirements(s) to vaccinate and/or change the annual deadline for such vaccinations.” This past summer, both the federal government and the Centers for Disease Control and Prevention (CDC) estimated that upwards of 120 to 200 million doses of H1N1 vaccine would be available nationwide by the end of November. After receiving reports from the CDC that New York would in fact only receive 23 percent of its anticipated H1N1 vaccine supply, and that the amount of seasonal flu vaccine available to the State would also fall short of the increased demand, the Commissioner of Health suspended the mandate.

The suspension comes just six days after three nurses filed suit in Albany County Supreme Court alleging that the mandatory vaccination requirement violates the civil rights of health care workers. After consolidating the nurses’ suit with two other lawsuits, the Court issued a temporary restraining order on the mandate and scheduled further hearings to take place on October 30.

Nicholas Fusco assisted in the preparation of this post.

 

As Henry J. Kaiser once said, “Problems are only opportunities in work clothes.” So it is with annual performance evaluations -- supervisors should see them as an opportunity to improve employee performance, or, if that does not work, as a valuable tool in defending against employment litigation claims. Instead, most supervisors dread them and, as a result, put them off as long as possible. Lawyers for ex-employees love them because, as a general rule, the evaluations: (i) are not brutally honest about poor performance because the supervisor is still “working” with the employee; (ii) conflict with later positions taken by the employer in litigation; and (iii) lack specific examples and often closely resemble the evaluation of employees given dissimilar raises or who are still employed. In my litigation travels, I have been both greatly helped and hurt by evaluations. I have also learned many lessons, some the hard way. Here are a few performance evaluation do’s and don’ts for supervisors:

1. Planning.  Start to think about the evaluation at the beginning of the evaluation period, not the end. Keep track of good and bad performance examples throughout the year. If you evaluate all of your employees at the last minute because you are up a against a submission deadline, you may rush them and tend to generalize. This, in turn, creates a risk that the evaluations of your employees will tend to resemble each other.

2. The Good, the Bad and the Ugly.  You should note good and bad behaviors, even if the overall evaluation is poor, unsatisfactory or fails to meet expectations. Such an evaluation appears much more balanced, fair and unbiased, even if it is overwhelmingly negative as a whole.

3. Support Your Conclusions.  Nothing makes an evaluation more powerful than specific and concrete examples (date, time, place, deadlines met or missed, attendance, employee response after counseling or discipline, etc.). Keeping a folder or a log during the year will greatly assist you in recounting specifics in the evaluation. Assumptions and conclusions not supported by specifics are as unpersuasive in this context as any other.

4. Document Carefully.  If you keep a folder or log during the year, keep in mind it is discoverable by the ex-employee’s lawyer in litigation. So make sure there is nothing inappropriate written (just the facts). We often see reviews that speculate about the causes for the performance issue through comments which attribute the poor performance to family problems, medical problems, stress, etc. Avoid this speculation and stick to the facts. In addition, make certain you can demonstrate that you keep similar logs or folders for all your employees. The employer must avoid any appearance that it “built a file” to justify an adverse employment decision. Also, supervisors should inform themselves about company policy on the required time period for retaining such a file after completion of the evaluation.

5. If You See Something, Say Something.  If you notice trends or repeat behavior, don't igore them.  Note them in the review, particularly if the behavior has continued despite intervening counseling or discipline. This is a very powerful “specific.” (Note -- supervisors get extra credit for using the log to correct behavior or improve performance by communicating with the employee at the time the behavior or performance deficiency occurs, rather than waiting to write about it in the evaluation.)

6. Watch Your Language.  Too often, our first meeting with a supervisor to review an evaluation relevant to a litigation begins with the dreaded words, “I probably should have chosen a different word, but what I meant was… .” Obviously, supervisors must guard against any stereotyping and against mentioning factors that tend to indicate a retaliatory or discriminatory motive. Have Human Resources or another manager review your comments. Consider drafting the evaluation well before it is due. Then put it aside and pick it up again after a few days. Doing so provides an opportunity to examine it with fresh eyes and to make needed changes.

7. Get Help If You Need It.  Supervisors and managers are required every day to do more with less in order to accomplish the mission of their organizational units. Owners and Human Resource Professionals owe it to those supervisors to provide training and assistance in completing evaluations. This means doing more than just establishing a system, a form, and a deadline for completion. If your organization has not offered you that kind of training and assistance, don’t be afraid to ask. You and your organization will be better off in the long run.
 

On September 29, 2009, Acting Assistant Secretary for Occupational Safety and Health Jordan Barab announced the agency’s proposal to align OSHA’s current Hazard Communication (“HazCom”) Standard with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (“GHS”).  The proposed rule  was published in the Federal Register on September 30, 2009 and – if implemented without change – will significantly alter the labels and material safety data sheets that currently appear and accompany hazardous chemicals in the workplace.   Significant aspects of the proposed rule are described below.

 

 

Under OSHA’s current HazCom Standard (which was originally promulgated in 1983), chemical manufacturers and importers must evaluate the chemicals they produce or import and provide hazard information to downstream employers and workers by preparing labels and safety data sheets. Employers must have a hazard communication program for exposed workers, including hazard identification, container labels, safety data sheets and employee training. The HazCom Standard remains a priority for OSHA as 2007 Bureau of Labor Statistics data revealed that more than 50,000 workers became ill in 2007 because of chemical exposure.

The GHS was developed -- after what Assistant Secretary Barab termed “decades of international negotiations” -- by a number of countries and international organizations to address inconsistencies in hazard classification and communication. The GHS is intended as a single, harmonized system for classifying chemicals and preparing labels and safety data sheets. Under the GHS, labels will identify chemical hazards through standardized format, signal words, pictograms, and hazard statements for each hazard class and category. Safety data sheets will be presented in a designated order with a specified sixteen-section format. The new standard requires workers to be trained within two (2) years of publication of the final rule to facilitate recognition and understanding of the new labels and safety data sheets.

The design/intent of OSHA’s proposal rule is to:  increase the quality and consistency of information provided to workers and employers; enhance worker comprehension; ensure the appropriate handling of chemicals; and reduce chemically-related fatalities, injuries and illnesses. OSHA speculates that the change will also make it easier for employers to train workers on how to safely handle chemicals shipped from various manufacturers and importers. Additionally, the new standard is supposed to decrease the cost of providing hazard information and facilitate international trade by eliminating the need for multiple labels and safety data sheets when shipping a product to several different countries.

OSHA expects that affected employers will incur one-time transition costs as a result of the proposed revisions, but that the ongoing annual compliance costs will be the same or lower than under the existing standard. OSHA will have a 90-day comment period on the proposed rulemaking, ending December 29, 2009. Comments should be submitted to OSHA electronically at http://www.regulations.gov/ (http://www.regulations.gov/search/Regs/home.html#home); by fax to the OSHA Docket Office at (202) 693-1648; or by mail to the OSHA Docket Office, Docket No. OSHA-H022k-2006-0062, U.S. Department of Labor, Room N-2625, 200 Constitution Ave., NW, Washington, D.C., 20210. 

This blog post was prepared with the assistance of Katherine A. Ritts, Esq.

According to a recent decision by the United States Court of Appeals for the Second Circuit, an employer is not necessarily insulated from liability for the discriminatory acts of its independent contractors. Halpert v. Manhattan Apartments, Inc., Slip Op. No. 07-4074-cv (September 10, 2009). The case arose when the plaintiff, Michael Halpert, interviewed for a position as a “Shower,” a person who shows apartments to potential buyers. The person who interviewed Halpert for the position was an independent contractor of the defendant Manhattan Apartments. He allegedly told Halpert that “they were looking for someone younger.” Halpert sued contending that he was not hired for the position because of his age in violation of the Age Discrimination in Employment Act (“ADEA”). Manhattan Apartments contended that it could not be held liable for any alleged discrimination because the person who made the decision was an independent contractor who was making the hiring decision for himself, rather than for Manhattan Apartments. Relying on the Second Circuit’s decision in Robinson v. Overseas Military Sales Corp., 21 F.3d 502 (2d Cir. 1994), the United States District Court for the Southern District of New York agreed, and granted summary judgment dismissing the complaint.

The Second Circuit reversed in an unsigned per curiam opinion. First, the Court held that the issue in the case was not controlled by its decision in Robinson, because Robinson only held that an independent contractor cannot bring a claim under the ADEA. The Court stated that the issue before it was a different one: whether an employer can be held liable for the alleged discriminatory acts of its independent contractor. In holding that an employer can be held liable, the Court stated that general principles of agency law applied to the question. Thus, an employer can be held liable for the discriminatory acts of its agents whether those agents are employees or independent contractors. An individual is an agent where he has been given actual authority to hire on behalf of the employer, or where the employer through its words and conduct has created an apparent authority to hire in the eyes of the job applicant.

What types of evidence are sufficient to render an independent contractor an agent of the employer? There is no one set of facts that is sufficient. In this case, the key facts on agency were disputed, causing the Court to hold that summary judgment on the issue was inappropriate. But this also means that Halpert had enough evidence to go before a jury on the question. According to the Court, Halpert had evidence that: Manhattan Apartments sponsored a training program from which “Showers” would be selected; that individuals chosen from the training program would receive commissions from Manhattan Apartments; and that Manhattan Apartments enlisted the independent contractors to interview candidates for the training program. In addition, Halpert apparently presented evidence that he was interviewed at Manhattan Apartments’ offices. Although Manhattan Apartments contended that the interviewer was doing the hiring for himself and would be paying the commissions, Halpert presented evidence to counter that contention. He alleged that the person who interviewed him stated that “they” were looking for someone younger, implying that the independent contractor was not hiring for himself. In addition, the independent contractor’s agreement with Manhattan Apartments did not address in any way the independent contractor’s purported responsibility for paying commissions to “Showers.”
 

In our August 18, 2009 blog, we provided best practice recommendations for conducting workplace investigations generally. This post follows up on the earlier post by focusing in greater detail on best practices for questioning the employee accused of misconduct.

An internal investigation of employee misconduct serves multiple functions. It fosters compliance with corporate policies by ensuring that alleged instances of misconduct are not ignored. It promotes fairness by ensuring that any disciplinary action is based on fact rather than rumor. And it enhances morale by communicating to the workforce that the employer enforces its policies but takes disciplinary action only after giving the accused employee an opportunity to be heard. Proper questioning of the accused employee is essential to achieving all these purposes. Some best practice suggestions for conducting that questioning are provided below.
 

The Setting

The questioning should take place in a private location, such a windowless conference room. Discretion is fair to the accused, and minimizes the spread of distracting rumors.

Except in the most informal and straightforward investigations, a management-friendly observer should be present in addition to the investigator. This helps avoid disputes about what the accused admitted and how fairly the investigation was conducted. The observer can also take notes, enabling the investigator to focus on the questioning.

If the accused is represented by a union, the accused has the right to request that a union representative be present.  The union representative should be permitted to observe the questioning, but not to interfere with it.

Introductory Statement

The investigator should begin by introducing herself and the observer, and explaining the general purpose of the interview. Unless the accused already knows the subject of the investigation, no details should be provided at the outset. If the allegations are disclosed prematurely, the accused will be better able to invent a false story, limit a confession, and deduce the identity of the accuser(s).

The investigator should assure the accused of the following:
 

• The investigation will be conducted fairly.
• No firm conclusions have yet been reached.
• If the accused cooperates and answers the questions truthfully, that will be considered in his favor when determining any penalties.
• The investigation will be kept confidential. Managers and employees will be told about the matter only on a need-to-know basis.

The interview should not be electronically recorded, but you may later ask the accused to sign a written statement confirming what he has said. Open electronic recording hinders candid conversation. Secret electronic recording is likely to be perceived as unfair if it later comes to light, and may violate state law . Handwritten notes are the least distracting way to keep a record of the interview.

Questioning Techniques

If the accused does not already know who has made the accusation against him, it is often helpful to begin the questioning by asking him whether he can think of anyone who has any reason to make up a lie about him. If the answer is no, this makes it more difficult for the accused to claim later that the accusation is the product of an unfair vendetta. If the answer is yes, and the accused presents a motive for the accuser to lie, then the accused’s credibility will be enhanced.

Start with general and open-ended questions. Leading questions tip the accused off as to the nature of the allegations, and help him to craft a false “story.” The following are examples of good ways to start the questioning:

• Did anything unusual happen at the sales conference last week?
• Are you aware of any violations of the Company’s policy on XYZ?
• Where were you last Friday?

If the accused denies knowledge of any unusual events, ask gradually more narrow questions. When the accused starts talking about the incident you are investigating, follow up with open-ended questions starting with the 5 W’s (who, what, when, where, why):

• Who else was there?
• What happened next?
• When did that happen?
• Where did that happen? 
• Why did you do that?

Gradually narrow the scope of your questions to fill in the details.

Don’t be adversarial or judgmental. Make it easy for the accused to give you relevant information. Ask questions like:

• Is there anything you might have said that may have led someone to falsely conclude that XYZ occurred?
• Can you think of any way that someone may have gotten the false impression that you did XYZ?

You can gain more information by being deferential than by being self-righteous. Don’t be Perry Mason; be Columbo. In lawyer’s terms, an investigation should be more like a deposition than a cross-examination.  Your purpose is to find out what the accused has to say, not to embarrass or demean him. After all, the accused may be innocent. Even if he is guilty of misconduct, the accused may still be a valuable employee, and may provide you with more useful information if he feels he is being treated with courtesy and respect.

If a claim is likely to be disputed, ask who else witnessed the disputed events, so you can interview them later. You should also ask if there are any documents, emails, or other evidence that will support the accused’s version of events.

One of the biggest mistakes that investigators make is to follow a script rather than listening to what the accused says and adjusting accordingly. It is helpful to have an outline of the points you want to cover, but it is important to be flexible. Listen to the answers to your questions. Ask follow-up questions. Make sure you fully understand the accused’s story, and make sure you have all the details you need to confirm whether that story is true.

Insist on facts, not conclusions. If the accused says, “So and so was flirting with me,” ask: “What did she say?” “What did she do that makes you say that?”

Make sure you distinguish between what the accused knows from first-hand observation and what he thinks he knows from hearsay. Ask: “How do you know that?” “Did you ever see that happen?”

Make sure you are eliciting everything relevant that the accused has to say, not just narrow answers to particular questions. After the accused answers a question, make sure the question has been answered in full before you move on. This will not only increase the amount of information you obtain; it will also make it difficult for the accused to change his story or add more details later:

•  Were there any other times when that happened?
• Is there anything else I should know about that?
• Did anything else happen that day?

Use silence to your advantage. You will be astonished how much information you can obtain by simply looking at someone after he answers a question, or by sitting quietly, catching up with your note-taking.

Be open to the accused’s version of the events. Do not jump to conclusions. The accusation may be incorrect, and the accused may be innocent. Suspend judgment until you have given the accused an opportunity to tell his side of the story.

If you have questions that may embarrass or antagonize the accused, save them for the end of the interview. Such questions may stifle cooperation, and diminish the amount of information you obtain.

After the Questioning

At the end of the interview, ask the accused if there is any reason why he was not able to fully answer all your questions. This avoids later false challenges to the fairness or reliability of the investigation. It is also helpful to ask the accused if there is anything else he would like to add, or that he thinks you should know.

The investigator should also direct the accused not to retaliate against any other employee for making an accusation against him or cooperating with the investigation.

If the allegation is serious enough, and if there is likely to be a dispute about the facts, consider writing up your notes in the form of a written statement for the accused to sign. This avoids claims that you have mischaracterized the accused’s version of events. If you plan to do this, you should inform the accused in advance, so he does not feel sandbagged. Writing the statement yourself is preferable to asking the accused to write it, so that the statement can be written in a clear manner, without hedging or evasion. However, you should make it clear that you do not want the accused to sign the statement unless and until he has read it carefully, corrected any errors, and feels fully comfortable with its contents. These instructions should be in writing, on the same document as the statement itself.

The questioning of the accused is just one part of a workplace investigation. If there are disputes about relevant facts, you will want to interview other witnesses, examine documents or other evidence, and perhaps even question the accused a second or third time. If the initial questioning of the accused is done using best practices, your investigation will be off to a good start. The company will be more certain that it is taking the proper steps, and everyone involved will be satisfied that the process has been fair.
 

In a final rule published today in the Federal Register, the Department of Homeland Security (“DHS”), has rescinded its controversial “no-match” letter regulation promulgated during the Bush administration. The action has been anticipated ever since it was initially announced in July, and completes a process which commenced with the publication of a proposed rule on August 19, 2009. The Bush era regulation never went into effect because its enforcement was preliminarily enjoined by a federal district court.  The significance of the rescission is explained below.

A no-match letter can be generated by the Social Security Administration (“SSA”) when a combination of employee name and Social Security Number (“SSN”) on a W-2 form does not match SSA records. This can occur for a variety of entirely innocent reasons, but can also occur when someone not authorized to work in the U.S. uses a false SSN or someone else’s SSN. The Bush era regulation would have required employers receiving such letters to take particular actions to resolve the discrepancy and verify the individual’s employment eligibility or face potential liability for employing an unauthorized alien.

Rescission of the regulation does not mean that SSA will stop issuing no-match letters. Moreover, in the text addressing public comments on the rescission, DHS has made it clear that receipt of a no-match letter will continue to count in a totality of the circumstances determination of whether an employer knowingly hired or continued to employ an unauthorized alien. As a result, employers that receive such letters should continue to investigate them with the employees to whom they apply. DHS states that the prudent employer will: check its own records for errors; ask the employee to review the information; and allow the employee a reasonable amount of time to resolve the no-match with SSA.

In order to avoid potential liability under the anti-discrimination provisions of 8 U.S.C.§ 1324b, employers who receive a no-match letter should also refrain from taking precipitous action against the affected employee. DHS states unequivocally that employers should not use a no-match letter alone as a basis for firing an employee. The Justice Department’s Civil Rights Division provides guidance to employers on how to respond to a no-match letter without engaging in prohibited discrimination.
 

Among other things, the Health Insurance Portability and Accountability Act (“HIPAA”) requires heath care plans, third party health plan administrators, pharmacy benefit managers, health care providers, and other so-called “covered entities” and “business associates” to maintain the confidentiality and security of an individual’s “protected health information” or “PHI.” The Health Information Technology for Economic and Clinical Health Act (the “Act”), passed earlier this year as part of the economic stimulus package, introduced substantial changes to the HIPAA privacy and security rules, including the addition of new notification requirements that may apply in the event that the privacy or security of PHI is compromised.

Under the Act, if the confidentiality or security of PHI is compromised by a “covered entity,” notification of the “breach” may have to be provided to (i) affected individuals, (ii) the United States Department of Health and Human Services (“HHS”), and (iii) in certain cases, the media. If a “business associate” compromises the confidentiality or security of PHI, the business associate may be required to notify the covered entity of the breach.

On August 24, 2009, HHS issued interim final rules (“Final Rules”) that clarify the breach notification requirements. Although the Final Rules are effective September 23, 2009, and although HHS expects covered entities to comply as of that date, sanctions will not be imposed for noncompliance that occurs prior to February 23, 2010. Until then, HHS has indicated that it will take appropriate corrective action to help covered entities achieve compliance. Covered entities and business associates should not delay implementing appropriate measures to comply with the requirements of the Final Rules, despite the delayed enforcement date. The most significant aspects of the Final Rules are discussed below.

 

Covered Entities, Business Associates and PHI Defined

For purposes of the Final Rules, a “covered entity” is defined as a health plan, health plan clearinghouse, or health care provider that transmits any health information electronically in connection with a covered transaction (such as submitting health care claims to a health plan). A “business associate” is defined as a person who performs functions on behalf of, or certain services for, a covered entity that involve the use or disclosure of individually identifiable health information (e.g., third party administrators or pharmacy benefit managers for health plans). PHI is defined as individually identifiable health information held or transmitted by HIPAA covered entities and business associates, subject to certain limited exceptions.

 

When Does a Breach Occur?

The Final Rules define a breach to mean the unauthorized acquisition, access, use, or disclosure of unsecured PHI which compromises the security or privacy of such information. The security or privacy of PHI is considered to be “compromised” under the Final Rules if its disclosure poses a significant risk of financial, reputational, or other harm to the affected individual.

HHS previously issued guidance regarding when PHI is considered “secure,” and therefore not subject to the breach notification requirements. Generally, the guidance stated PHI is not considered secure unless it is either destroyed or encrypted in accordance with National Institute of Standards and Technology guidelines.

Under the Final Rules, a breach does not include certain unintended and inadvertent disclosures of unsecured PHI, nor disclosures where the recipient would not have been able to retain the disclosed information (e.g., instances where unsecured PHI is mailed to the wrong individual and the envelope is returned unopened).

 

What are the Notification Requirements With Respect to Individuals?

• General Requirement: After the discovery of a breach of unsecured PHI, the Final Rules require covered entities to notify each individual whose unsecured PHI has been, or is reasonably believed by the covered entity to have been, accessed, acquired, used or disclosed as a result of such breach. Breaches are treated as discovered as of the first day that the covered entity knows, or reasonably should have known, of the breach.
   
• Timing of Notice: The notification must be provided without “unreasonable delay” (i.e., as soon as reasonably possible) and in no event later than 60 calendar days after the breach is first discovered by the covered entity.
   
• Content of Notice: The notification must include, to the extent possible:

1. A brief description of the breach, including the date of the breach and the date of the discovery of the breach;

2. A description of the types of unsecured PHI involved in the breach;

3. Steps individuals should take to protect themselves from potential harm resulting from the breach;

4. A brief description of the actions taken by the covered entity to investigate the breach, to mitigate potential harm, and to protect against further breaches; and

5. Steps that can be taken to obtain additional information.
 

• Method of Notice: The notice must be provided by first-class mail to the individual at his or her last known address, or by electronic mail, if such method was previously agreed to by the individual. If the covered entity knows that the individual is deceased, written notice may be provided to the address of the next of kin or the individual’s personal representative.
   
• Substitute Notice: If the covered entity has insufficient or out-of date contact information with respect to the covered individual, the covered entity must provide notice through alternative means. If insufficient or out-of-date information is available for fewer than 10 individuals, substitute notice may be provided by an alternative form of written notice, telephone, or other means. If insufficient or out-of-date information is available for 10 or more individuals, the covered entity must either post a conspicuous notice of the breach on the web site of the covered entity involved, or provide conspicuous notice in local major print or broadcast media. Such notice must include a toll-free telephone number where an individual can learn whether the individual’s unsecured PHI was included in the breach (the number must remain active for at least 90 days).

 

When is Media Notification Required?

In the case of breaches involving more than 500 residents of a State or jurisdiction, the covered entity must notify “prominent media outlets” of the State or jurisdiction. Such notice must be provided without unreasonable delay, and no later than 60 calendar days of the discovery of the breach, and must include the same content as described above with respect to the notification of individuals.

 

When is Notice Required to be Provided to HHS?

Breaches Involving 500 or more Individuals: For breaches involving 500 or more individuals, a covered entity must notify HHS of the breach at the same time notice is provided to the affected individuals as described above, and in the manner specified on the HHS web site (www.hhs.gov).

Breaches Involving Less than 500 Individuals. For breaches involving less than 500 individuals, a covered entity is required to maintain a log of such breaches and submit it to HHS on an annual basis. The log must be filed with HHS within 60 days after the end of the calendar year, and in the manner specified on the HHS web site (www.hhs.gov).

 

What Notification Requirements Apply to Business Associates?

Upon discovery of a breach, business associates are required to notify the covered entity of the breach without unreasonable delay, and no later than 60 calendar days after discovery of the breach. Such notice must include, to the extent possible, the identification of each affected individual as well as any other information that the covered entity is required to provide to the individual pursuant to the covered entity’s notice obligations.

As an exception to the notification requirements described above, the Final Rules allow covered entities to delay the notification of a breach if requested by a law enforcement official.

 

Recommended Action

The Final Rules require covered entities and business associates to take immediate steps to ensure compliance. Such steps include, among other things:

1. Establishing internal procedures to determine when breaches of unsecured PHI have occurred and ensure compliance with the notification requirements;
2. Creating and maintaining a breach log to track any breaches so that they are properly reported to HHS;
3. Training appropriate personnel on the notification requirements;
4. Revising business associate agreements to account for the new requirements; and
5. Modifying existing HIPAA policies and procedures and the notices of privacy practices to comply with the new notification requirements.

Since the Supreme Court’s decision in IBP, Inc. v. Alvarez , 546 U.S. 21 (2005), “donning and doffing” claims have been filed with increased frequency against employers in many industries. In some instances, these claims take the form of a collective and or class action. Recently, the United States District Court for the Western District of New York granted summary judgment dismissing wage and hour claims brought under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law in a case defended by Bond, Schoeneck & King, PLLC (“BS&K”). Albrecht v. The Wackenhut Corp., slip op. no. 07-CV-6162 (W.D.N.Y. Sept. 24, 2009). The court’s holdings are discussed below.

 

The action was commenced on behalf of current and former security guards at the Ginna Nuclear Power Plant in Ontario, New York. The plaintiffs sought additional compensation for donning and doffing activities that allegedly occurred before and after their scheduled workdays; specifically, the time spent “arming up and clearing through security and arming down.” In ruling for the employer, the court acknowledged that under the Portal-to-Portal Act (an amendment to the FLSA), employers need not compensate employees for activities that are “preliminary to or postliminary to" their “principal” work activities. In Alvarez, the Supreme Court held that such activities are only compensable if they are “an integral and indispensable part of the principal activities.” In finding that the activities involved in the case before it were not “integral” to the performance of the guards’ principal activities, the Albrecht court analogized the tasks at issue to those found to be non-compensable by the Second Circuit in Gorman v. Consolidated Edison Corp., 488 F.3d 586 (2d Cir. 2007) and Reich v. New York City Transit Auth., 45 F.3d 646 (2d Cir. 1995). The court in Albrecht further ruled that the time spent arming up and arming down involved non-compensable preliminary or postliminary activities because the tasks could be accomplished with minimal effort and were not difficult or time consuming.

In addition, the court supported its ruling on an alternative ground. It held that to the extent the donning and doffing activities might otherwise be compensable, they were nevertheless de minimis in nature. Relying on the Second Circuit’s decision in Singh v. City of New York, 524 F.3d 361 (2d Cir. 2008), the court noted that the “continuous workday rule,” which generally requires inclusion of all time after the start of an employee’s workday, is not triggered when an employee engages in principal activities that are de minimis. The court observed that while there is no “bright line” test for determining how much time is de minimis, several courts have found time periods of fifteen minutes or less to be de minimis. The court then found that even if all of the pre- and post- shift activities alleged were considered, the time period at issue was de minimis under that standard.

The defendant in Albrecht was represented by Robert A. LaBerge and Christa R. Cook of BS&K. This is the second donning and doffing case in the past year in which BS&K has successfully represented the employer. In Delitta v. City of Mount Vernon, current and former police officers brought a similar suit which was withdrawn after limited discovery. Equally significant, the resolution did not require the City to pay any monies to the plaintiffs. BS&K attorneys Terrence M. O’Neil and John S. Ho represented the City in that case.
 

Although many employers have put a freeze on hiring during these tough economic times, as we ease out of the current recession, many employers are moving from a hiring freeze mode to a hiring expansion mode. If you are one of those employers, it is a opportune time to remember that federal and state equal employment opportunity laws prohibit prospective employers from asking certain questions during the hiring process, whether on a job application or in an interview. Asking such questions can lead to potential liability for discriminatory hiring and to costly lawsuits. Below are twelve key subjects to avoid during the hiring process.

 

     1.      Have you ever been arrested?

The New York Human Rights Law (NYHRL), makes it unlawful for an employer to inquire about, or act adversely upon, a job applicant’s arrests or criminal accusations, if the applicant has been exonerated of the charges leading to the arrest, or if the charges were not pursued through the legal system.

An employer may lawfully ask if an applicant has previously been convicted.  If this question is answered affirmatively, the employer may seek additional information about the conviction. However, under New York law, it is unlawful to deny employment because of a criminal conviction unless the employer can demonstrate, using a multi-factor analysis, either a direct relationship between the criminal offense and the employment sought or that granting the employment sought would create an unreasonable risk to the property or safety of others.

     2.      List all clubs, societies and organizations to which you belong.

Although this inquiry is commonly made by employers to obtain information that may reveal an applicant’s character, it should be avoided because the response may indirectly reveal an applicant’s membership in a protected class. Inquiries regarding professional associations or memberships, however, are acceptable if they are job-related.

     3.      When did you graduate?

Although information regarding an applicant’s academic, vocational or professional education may be relevant to an individual’s qualifications for a particular job, employers should not ask for dates of attendance or graduation, because the response may indirectly reveal an applicant’s age. The Age Discrimination in Employment Act (ADEA) and the NYHRL prohibit employers from discriminating on the basis of an individual’s age, including refusal to hire an applicant because of his/her age.

     4.      How would you feel about working for someone younger than you?

This question may be tempting when filling a position in a department run by a relatively young employee, and might seem acceptable because it is not asking directly about the candidate’s age, but it should still be avoided. Since the question goes indirectly to the applicant’s own age, it is impermissible under the ADEA and the NYHRL.

     5.      Do you rent or own your home?

This is rarely, if ever, relevant to the job in question, and questions such as this tend to have a disparate impact on minorities. Therefore, the best bet is to avoid the topic of home ownership altogether.

     6.      I see you worked at ABC Corporation…they are unionized, aren’t they?

This is too close to asking, “have you ever been a member of a union?” The Labor-Management Relations Act makes it illegal to discriminate on the basis of union membership

      7.      I see from your resume that you speak a number of languages.  How did you learn to speak so many languages?

This inquiry may indirectly reveal the candidate’s national origin because it invites the employee to respond, for example, “I was born in Japan, and had to learn English when I moved to the U.S.”, or some other response revealing national origin. Because it is illegal under Title VII of the Civil Rights Act and the NYHRL to discriminate based on national origin, this type of question should not be asked.

      8.      Will you need a reasonable accommodation in this job?
Can you perform the essential functions of this job with or without reasonable accommodation?
Have you ever been on Workers' Compensation?

An employer should not make any of these inquiries on an application or during an interview because they are likely to elicit information about the applicant’s disabilities. Under the ADA and NYHRL, an employer may not ask any disability-related questions of a job applicant prior to making a conditional offer of employment. This prohibition is intended to ensure that an applicant's disability is not considered before the employer evaluates an applicant's general qualifications for the job. While an employer may ask an applicant if she can perform specific job functions, it may only ask an applicant about the need for accommodations during the pre-offer stage if she has an obvious disability or she voluntarily discloses a disability during the interview. The Equal Employment Opportunity Commission’s ADA Enforcement Guidance: Pre-Employment Disability-Related Questions and Medical Examinations provides a good resource for employers on this subject.

     9.      Do you use Miss? Mrs.? or Ms.?  Are you married? Single? Divorced? Separated?

The New York Human Rights law prohibits all pre-employment inquiries into an applicant’s marital status. Such questions may also violate Title VII if the information gained is used to deny or limit employment for women. If this information is needed for business purposes (insurance, tax withholdings, etc.) it can be lawfully obtained after hiring.

     10.     Do you have a boyfriend? Or, do you have a girlfriend?

The question could elicit information about the applicant’s sexual orientation and should be avoided. The New York Human Rights Law prohibits an employer from discriminating against an applicant based on sexual orientation including homosexuality, bisexuality and asexuality.

     11.     You don’t do any crazy stuff like hang gliding, dirt biking, snowboarding or bungee jumping do you?

New York’s Off Duty Conduct Law (N.Y. Labor Law, Sec. 201-d, et seq.) prohibits an employer from refusing to hire an applicant because of that individual’s outside recreational activities, if those activities: are pursued off the employer’s premises; fall outside work hours; are pursued without the employer’s equipment; and are lawful. Whether the interviewer makes this inquiry to ascertain the likelihood of injury and resulting lost time, or simply to gauge the presence or absence of good judgment of the applicant, this line of questioning should be avoided.  This is not to say that employers are prohibited from asking candidates what they do for fun or what their interests are.  These are certainly appropriate interview topics.  But employers should be wary about reacting negatively to the candidate's lawful recreational activities, should avoid questions that imply a negative view of certain types of activities, and cannot base a refusal to hire on such activity.

     12.      Do you smoke?

New York’s Off Duty Conduct Law also prohibits discrimination against applicants who use certain “consumable products.” For consumption to be covered by the law, it must be a lawful product, enjoyed outside work hours, off the employer’s premises and not involve the employer’s equipment or property. Smoking cigarettes, cigars or pipes is clearly covered by the statute and as a result employers should avoid asking applicants about such habits.

 

Employers wishing to obtain further guidance on pre-employment inquiries in New York should also review the guidelines issued by the New York State Division of Human Rights.

 

Effective July 24, 2009, the minimum salary that an employee must receive to qualify for the executive or administrative exemption from overtime pay requirements in New York increased to $543.75. It was $536.10. Because this amount differs from the exempt salary amount under the federal Fair Labor Standards Act (“FLSA”) of $455, employers in New York should evaluate their pay practices to ensure compliance with both state and federal law. The differences between federal and New York law are described below.

 

Common Minimum Wage and Overtime Requirements

Both New York law and the FLSA require employers to pay non-exempt employees a minimum wage of $7.25 per hour, and to pay one and one-half times the employee’s “regular rate” for all hours worked in excess of 40 in a work week. In addition, both New York and federal law provide for categories of “exempt” employees to whom the minimum wage and overtime requirements do not apply. The most common categories are executive, administrative, and professional employees. In order to satisfy the federal and state exemption criteria, such employees must be paid on a salaried basis, and they must also satisfy certain duties tests. The duties tests under the FLSA and New York law are very similar.

Differences in the Salary Amount and Its Consequences

But the salary amounts necessary to satisfy the salary basis of the exemptions are different. While New York now requires payment of a weekly salary of $543.75 for the executive and administrative exemptions, with no minimum salary for the professional exemption, the FLSA requires payment of only $455 per week for all three exemptions. The differing state and federal exemption amounts create three potential categories of employees: (1) employees who are non-exempt under both federal and state law; (2) employees who are exempt under both federal and state law; and (3) employees who are exempt under federal law, but not under state law because they only meet the salary test under federal law. (It is also possible to have a professional employee who is exempt under state law because it does not have a salary test for professionals, but who is not exempt under federal law because the professional is paid less than $455 per week.)

An employer’s overtime obligations toward employees in the first category – non-exempt – are the same under federal and state law: pay time and a half the regular rate for hours worked in excess of 40 in a week. An employer’s obligations to employees in the second category are also the same under both federal and state law: no overtime obligation because the employee is exempt under both laws.

But the third category of employees – exempt under federal law, but not state law – creates a complication. When an employee meets the duties test for the executive or administrative exemption, but meets only the federal salary test, New York’s General Wage Order, as interpreted by the New York State Department of Labor (“NYSDOL”) requires that the employee receive one and one-half times the state minimum wage (not the “regular rate”) for each overtime hour worked in a given work week, up to a cap of $543.75 in total wages for the work week. So, for example, an employee who meets the duties requirement of the administrative exemption but was paid a salary of $500 for a week in which she worked 50 hours would be entitled to $508.75. How do we get there? The regular rate is $10.00 per hour, yielding straight time pay of $400 for the first 40 hours of work. The overtime calculation is, however, based on the minimum wage, not the regular rate, so the employee is entitled to one and one-half times the minimum wage of $7.25 for the 10 hours of overtime, or 10 hours at $10.875 for a total of $108.75 in overtime. Adding the straight time pay of $400 yields a total of $508.75. So the employee is entitled to an additional $8.75 in overtime pay. While New York law requires payment of overtime at one and one half times the state minimum wage, it does not prohibit payment at one and one half times the regular rate, if the regular rate is higher than the state minimum wage.

Unfortunately, these calculations are rather complicated. In addition, this interpretation of the New York General Wage order is based on opinions issued by the NYSDOL years ago. New York employers are advised to carefully analyze their payment schemes for employees who are exempt under federal law, but who do not satisfy the New York salary test. Failure to pay overtime to an employee who is exempt under federal but not state law could result in potential liability for unpaid wages, liquidated damages, civil fines and reimbursement of attorney’s fees to claimants who commence litigation.
 

E-Verify is a free, Internet-based system operated by the Department of Homeland Security (“DHS”) and the U.S. Citizenship and Immigration Services (“USCIS”) in partnership with the Social Security Administration (“SSA”). E-Verify enables participating employers to electronically verify the employment eligibility of their employees based upon electronic information and records maintained by the DHS and SSA databases. As of September 8, 2009, many federal contractors and subcontractors are required to use the E-Verify system to confirm whether their employees are eligible to work in the United States. This change is the result of the final version of the applicable Federal Acquisition Regulation (“FAR”). The scope of coverage of the new rule is described below. DHS, SSA and USCIS have a variety of informational resources on E-Verify on the USCIS website, www.uscis.gov.

 

E-Verify and Federal Contracts and Subcontracts

Prior to September 8, 2009, the use of E-Verify was voluntary and applied only to new hires. As of September 8, 2009, however, the final rule requires the insertion of the E-Verify clause into applicable federal contracts. If the contract contains the E-Verify clause, federal contractors are obligated to use the E-Verify system not only for all new hires, but for all existing employees “assigned to the federal contract.” That includes any employee hired after November 6, 1986, who is directly performing work in the United States under a contract that includes the clause committing the contractor to use E-Verify. An employee is not considered to be directly performing work under the contract if the employee normally performs support work, such as indirect or overhead functions, and does not perform any substantial duties under the contract.

Not all federal contractors and/or subcontractors are subject to this new E-Verify requirement.  The final rule calls for inclusion of the E-Verify clause in prime federal contracts with a performance period of more than 120 days and a value of more than $100,000. With respect to subcontractors, the E-Verify clause will normally be included in subcontracts if: (i) the prime contract includes the clause; and (ii) the subcontract is for services or for construction with a value of more than $3,000. In addition, the final rule does not apply to contracts that include only commercially available off-the-shelf (“COTS”) items (or minor modifications to a COTS item) and related services. Nor does it apply to contracts where all work is performed outside the United States.

The final rule also recognizes some exceptions to the requirement to use E-Verify for all new hires. For instance, institutions of higher education, state and local governments, federally recognized Indian tribes, and sureties operating under a takeover agreement with a Federal agency pursuant to a performance bond may choose to only use E-Verify for those new hires who are assigned to perform work on the covered federal contract.

Participation in E-Verify has some benefit to the contractor. While it does not a provide safe harbor from work site enforcement, it does create a rebuttable presumption that the federal contractor or subcontractor has not knowingly hired an unauthorized alien. In this regard, contractors are responsible for monitoring the E-Verify system and following-up with employees if a non-verification response is received from the E-Verify system.

Overview of the E-Verify Employment Verification Process

Companies awarded a contract with the E-Verify clause after September 8, 2009, will be required to enroll in E-Verify within 30 days of the contract award date. After enrolling, federal contractors have up to 90 days to initiate verification queries for all new hires, whether employed on a federal contract or not, as well as existing employees who are working directly on the federal contract.

After the 90-day phase-in period, the federal contractors will be required to initiate verification of each newly-hired employee within 3 business days after the employee’s start date. Federal contractors may choose to initiate the verification of a newly-hired employee prior to the start of employment. However, the federal contractor may only verify an individual’s employment eligibility if the following conditions have been met: (i) the individual has been offered the position; (ii) the individual has accepted the job offer; and (iii) the individual has completed the Employment Eligibility Verification Form I-9.

Posting Requirement

Contractors participating in E-Verify are required to post the notice provided by DHS indicating the employer’s participation in the E-Verify program, as well as the anti-discrimination notice issued by the Office of Special Counsel for Immigration-Related Unfair Employment Practices at the Department of Justice. These postings must be placed in prominent locations that are clearly visible to prospective employees and all employees who are to be verified through the E-Verify system.

Pending Litigation

Mandatory use of E-Verify by federal contractors and subcontractors has been challenged in the courts. In August 2009, the District Court of Maryland upheld the legality of the final rule in Chamber of Commerce, et al. v. Napolitano (Aug. 26, 2009). The district court’s decision has been appealed. 
 

On August 26, 2009, Governor Paterson signed yet another  bill amending sections of the New York Labor Law.  This time, the amendments are designed to provide a greater deterrent effect to employers who violate the law.  The two amendments are described below.

 

First, Sections 198(1-a) and 663 of the Labor Law have been amended to expressly authorize the Commissioner of Labor to bring legal actions, including administrative proceedings, to collect wage underpayments and to assess liquidated damages. Liquidated damages equal to 25% of the amount of underpayments may be assessed against an employer, unless the employer can demonstrate that it had a “good faith” belief that it was complying with the law. Prior to the amendment, the employee had the burden to prove that the underpayment was willful in order to collect liquidated damages. By shifting this burden of proof from the employee to the employer, the amendment is designed to make it easier for employees to recover liquidated damages.

 

Second, Section 215 of the Labor Law, which prohibits retaliation against employees who complain about wage underpayments and other labor law violations, was also amended. The new law increases the minimum civil penalty for illegal retaliation from $200 to $1,000, increases the maximum penalty from $2,000 to $10,000, authorizes the Commissioner to order reimbursement for lost compensation, and extends liability for retaliation to partnerships and limited liability companies. 

 

The amendment also expands the categories of conduct protected against retaliation to include: (1) providing information to the Commissioner or his or her representative; (2) exercising rights afforded under the labor laws; and (3) an employer’s receipt of an adverse determination from the Commissioner involving the employee. Although these new categories were added to further protect employees from retaliation, it should be noted that state employees or employees of any municipal subdivisions or departments of the state are specifically excluded from protection under this section.

 

Both amendments take effect on November 24, 2009 and apply to violations occurring on or after that date.