On May 16, 2016, President Obama signed into law the Defend Trade Secrets Act of 2016 (DTSA). The new law takes immediate effect and will provide important new federal protections against unauthorized disclosure of proprietary and confidential business information. However, one provision of DTSA immediately affects employers and other parties using confidential information and non-disclosure agreements with employees and independent contractors.Read More
The Equal Employment Opportunity Commission issued final regulations on Wednesday that place limits on financial incentives used in certain employer-sponsored wellness programs. The two rules issued under the ADA and GINA, essentially limit such incentives or penalties to 30 percent of the cost of employee-only group medical coverage. Wellness programs that require employee or spouse medical examinations, or disclosure of family medical history, cannot include financial terms that reward or punish employees beyond this level based on their participation decision.Read More
An increasing number of health care providers are outsourcing the hosting and maintenance of software applications, the storage of data, and related support services. Outsourcing can provide cost savings, rapid deployment, system scalability, other efficiencies, and appropriate data security. It also introduces additional issues into the provider’s risk management analysis, largely based on the fact that a third party rather than the provider has possession and control of vital and sensitive assets and information. Before you enter into a contract that includes a cloud computing component, you should consider some of the following:
- No business decision or activity is risk free. Risk management is a balancing process based on the particular facts and circumstances. For example, a provider may be less concerned about its inability to access its web-based job application submission portal than its electronic health record application. Not all risks are the same, and a provider should devote more attention and resources to managing its greatest risks.
- Risk management is a team sport. Effective risk management requires the participation and interaction of representatives of the intended user group, financial analysts, compliance officers, information technology and data security experts, and legal counsel experienced in advising on and negotiating the particular type of contract.
The home care industry received a welcome holiday gift from the United States District Court in Washington, D.C. shortly before Christmas when Judge Richard J. Leon vacated a portion of a new regulation that would have required employers to pay minimum wage and overtime to workers providing companionship services. (The regulation also impacts live-in providers of domestic services, but my focus here is on companionship services.) The new regulation, first proposed in 2011, was set to go into effect on January 1, 2015, and had home care providers scrambling to figure out how they would pay significantly increased labor costs.
The Court’s December 22, 2014 ruling provided some welcome relief, but the final outcome remains uncertain. A new more restrictive definition of companionship services was set to go into effect on January 1, 2015. Under the current rule, a worker providing companionship services can devote up to twenty percent of his/her time to general household work and engage in unlimited care tasks such as meal preparation, bed making, and clothes washing. The new definition would limit all household and incidental care services to twenty percent of the worker’s time with the remaining hours dedicated to engaging the recipient in social, physical, and mental activities, such as conversation, reading, and games.
On December 31, 2014, however, Judge Leon issued a Temporary Restraining Order (TRO), blocking DOL from enforcing the proposed definition of “companionship Services.” In its motion for a temporary stay, the plaintiffs contended that home care recipients, providers, employees, and payers of services (like Medicaid) would suffer irreparable harm if the DOL rule went into effect. The plaintiffs’ motion was supported by detailed affidavits of two disability rights advocacy groups, The Centers for Independent Living and ADAPT. A hearing on plaintiffs’ preliminary injunction motion is scheduled for January 9, 2015. Judge Leon has indicated that he will rule on the motion as early as at the hearing and no later than January 13, 2015. If the requested injunction is granted, the exemption from overtime will continue until the trial court’s final ruling or an appellate court reverses the injunction.
To back up a bit, this case is about the Fair Labor Standards Act (“FLSA”), which requires employers to pay their employees at least minimum wage (and time and a half for any time worked over 40 hours in a single week), unless their employees are exempted from those requirements. Employees who provide companionship services to individuals unable to care for themselves due to age or infirmity always have been exempted from the minimum wage and overtime rules. The DOL wanted more workers to receive minimum wage and overtime, so it sought to narrow the exemption in two ways.
First, the DOL narrowed the definition of “companionship services.” More on that aspect of the regulations, which was not vacated by Judge Leon, below. Second, the DOL declared that third-party employers (like home care providers) would not be eligible to take advantage of the exemption at all. As a practical matter, this meant that 90% of workers providing companionship services – the approximate percentage employed by home care entities – would have been entitled to receive minimum wage and overtime, regardless of how those services were defined. The 10% of companionship services workers employed solely by individuals or families would have continued to be exempt from those requirements assuming that their schedules complied with the new, stricter definition of allowable services.
The National Association of Home Care, the Home Care Association of America, and the Independent Franchisers Association filed a lawsuit on behalf of their members to block the new regulations, arguing in part that the DOL did not have the authority to dictate which employers could take advantage of the exemption and which could not. Judge Leon agreed, stating in his opinion that Congress intended the exemption to apply to all employees who provide companionship services and that the DOL is not entitled to draw policy lines “based on who cuts a check rather than what work is performed.” Judge Leon went on to note that the purpose of the companionship exemption was to make it more financially feasible for families to care for infirm relatives at home and that whether home care entities were providing the workers is not of particular concern. If the decision stands, it will mean that all workers providing companionship services will be subject to the same rules regardless of who employs them.
While the TRO is in effect, home care providers can continue to pay home care aides and personal care attendants without added overtime compensation—except if state law requires otherwise. Providers should consult legal counsel to determine if they qualify for the exemption. For additional information on how these new developments impact your business and assistance with next steps, contact one of the following members of our Parker Poe Team: Sarah Ford (email@example.com, 919.835.4507) or Patti Bartis (firstname.lastname@example.org, 919.890.4161).
The Equal Employment Opportunity Commission has made emerging issues in employment discrimination law one of its national enforcement priorities. Last week, the EEOC settled a lawsuit brought against a California seed and fertilizer provider, alleging that the employer required applicants to submit to pre-employment medical examinations that included solicitation of family medical histories.
Under the Genetic Information Non-Discrimination Act, employers cannot require applicants or employees to disclose family medical histories as a condition of employment. The EEOC claimed that the defendant refused to hire at least one applicant after he revealed that family members had suffered from a medical condition. In addition to violating GINA, the EEOC alleged that the pre-employment examination was in violation of the Americans with Disabilities Act, because the employer screened applicants based on medical conditions that were unrelated to the requirements of the job. The employer agreed to pay $187,500 and to adopt measures intended to prevent use of such medical examinations as a screening tool in its hiring.
Most employers and medical providers that conduct pre-employment examinations are aware of these requirements, and have deleted requests for family medical histories from their exams. In addition to complying with GINA, employers should periodically review their post-offer, pre-hire examination procedures to make sure that medical grounds used to exclude an applicant from employment are clearly and directly related to their essential job functions. If the exclusion is based on a possible ADA disability, the employer needs to fully explore available reasonable accommodations before making a final decision to reject the applicant.
Jonathan Crotty has been a successful counselor and problem solver for large and small employers in the Carolinas and beyond for over 20 years. He heads Parker Poe’s Employment and Benefits practice group and represents employers in all aspects of the employment relationship, from hiring to discharge.