FEBRUARY 2007 NEWSLETTER

In this issue:

PLAINTIFF MUST SHOW CONNECTION BETWEEN ACCOMMODATION AND MAJOR LIFE ACTIVITY IN ADA CLAIM

     The Eighth Circuit Court of Appeals recently held that because an employee’s requested accommodation was not related to his alleged limited major life activity, the employee’s discrimination claim under the Americans with Disabilities Act (ADA) must fail. 

     In Didier v. Schwan Food Co., the plaintiff, a route sales manager, was required to drive a route truck and deliver frozen foods to customers' homes. 465 F.3d 838, 840 (8th Cir. 2006). During his employment, the plaintiff injured his wrist and had surgery. After returning to work, he received a promotion to the position of sales manager. About five years later, the plaintiff suffered another wrist injury requiring another surgery. He then returned to his position as sales manager with modified duties. Eventually, the plaintiff’s doctor released him to full duty. Instead of returning him to the sales manager position, however, the employer offered the plaintiff a position as route sales manager, the position he held before his promotion to sales manager. 

     The plaintiff turned down the offer claiming that he could not perform the essential functions of the job because of problems with his right arm. The results of a functional capacity evaluation led the plaintiff’s doctor to restrict him to carrying no more than ten pounds and from driving the route. As a result, the employer placed the plaintiff on light duty until it could no longer provide such assignments, at which time his employment was terminated. 

     The plaintiff filed a lawsuit under the ADA claiming that he was dismissed because of his right arm disability and that the employer failed to provide him with a reasonable accommodation. To support his claim, the plaintiff alleged he was substantially limited in the major life activity of caring for himself, i.e. grooming, cleaning, feeding, and dressing himself, due to his right arm injuries. The plaintiff’s requested accommodation was to have another employee accompany him on the routes to open and close the truck door. 

     The court held that the plaintiff did not make a prima facie case because he failed to establish that he had a disability under the ADA. Furthermore, the court recognized that even if he were able to establish a disability, his proposed accommodation was not appropriate because there was no connection between the claimed disability and the proposed accommodation. Here, the proposed accommodation, having another employee ride with him to open and close the truck door, was not related to the claimed disability - limitation in the activity of caring for himself. 

     For more information on ADA claims, please contact any attorney with the Firm.

VERSIONS OF FEDERAL MINIMUM WAGE ACT PASS IN HOUSE AND SENATE

     On January 10, 2007, the U.S. House of Representatives passed H.R. 2, the Fair Minimum Wage Act of 2007, a bill to amend the Fair Labor Standards Act of 1938. The bill increases the federal minimum wage to $5.85 an hour, beginning on the 60th day after enactment of the Act; $6.55 an hour, beginning 12 months after that 60th day; and $7.25 an hour, beginning 24 months after that 60th day.      

     On January 31, 2007, the U.S. Senate approved H.R. 2. However, the Senate’s version contains numerous amendments, including a business tax package that extends and expands tax breaks intended to help employers absorb the costs of the minimum wage increase and prohibiting employers from receiving federal contracts who unlawfully employ aliens. 

     In a statement following the vote, President Bush urged the House to support a bill that includes both a minimum wage increase and small business tax relief. Having passed in both the House and Senate, the bill will proceed to a conference committee of senators and representatives to work out differences in the versions of the bill each chamber approved. The bill then awaits the signature of the President before becoming law.

H-1B TERMINATIONS: NOTIFYING ONLY H-1B NONIMMIGRANT OF TERMINATION COULD RESULT IN LIABILITY FOR BACK WAGES

     The Immigration and Nationality Act (INA) permits U.S. employers to hire H-1B nonimmigrant alien workers to work in occupations requiring specialized knowledge and a degree in the specific specialty. 8 U.S.C. § 1101(a)(15)(H)(i)(b); 8 U.S.C. § 1184(i)(1). An H-1B nonimmigrant must be paid the prevailing wage for his or her position until the employer effects a “bona fide termination” of the employment relationship. 20 C.F.R. § 655.731(c)(7)(ii). In addition, upon termination, an employer has a duty to notify the United States Citizenship and Immigration Services (USCIS) that it has terminated the employment relationship so that the H-1B visa may be revoked. 8 C.F.R. § 214.2(h)(11). Additionally, the employer must provide transportation costs to the terminated H-1B employee’s last place of foreign residence abroad. 8 C.F.R. § 214.2(h)(6)(v)(E). 

     The regulations clearly establish that notice of termination must be given to the USCIS for the termination to be lawful. In addition, the regulations establish that an employer must pay the H-1B nonimmigrant employee until such notice is made. However, despite these regulations, there has been much debate about when a “bona fide termination” takes place, and hence, when an employer may cease paying an H-1B nonimmigrant employee. Many employers have asserted that a “bona fide termination” is effective when the H-1B nonimmigrant employee has been given a termination letter, despite the failure of the employer to provide notice of the termination to the USCIS. In a recent case, however, the Department of Labor’s Administrative Review Board (ARB) disagreed with this position, stressing the importance of notification to the USCIS of the termination of H-1B employment in order for the termination to be considered bona fide. 

     In Matter of Amtel, ARB Case NO. 04-087 (September 29, 2006), Amtel terminated the employment of an H-1B nonimmigrant employee. Although Amtel notified the H-1B nonimmigrant employee of her termination in a written memorandum, it did not make any attempt to notify the USCIS of this information so that revocation of the H-1B visa could occur. The H-1B nonimmigrant employee filed a complaint with the Department of Labor’s Wage and Hour Division alleging, among other things, that she was wrongfully terminated and should be given back wages. 

     The ARB held, pursuant to applicable regulations, that whether termination of an H-1B nonimmigrant is bona fide is not dependent on whether the employer can establish good cause for the termination. Despite this ruling, however, the ARB held that the termination in this case did not constitute a “bona fide termination” pursuant to 20 C.F.R. § 655.731(c)(7)(ii) and accompanying comments. In interpreting this regulation, the ARB rejected the assertion that a “bona fide termination” under the INA occurs at the point that an H-1B nonimmigrant employee receives notice of termination. “While notice to the employee is a necessary concomitant to termination of the employment relationship, that alone is not sufficient to end the employer’s obligation to pay the required wages to an H-1B employee.” A “bona fide termination” occurs only when an employer has notified the USCIS so that it can cancel the H-1B visa petition. Until such notice is given to the USCIS, an employer has a duty to pay wages to the H-1B nonimmigrant employee. 

     With this decision, the ARB put to rest the debate over what constitutes a “bona fide termination.” It is clear from this decision that an employer has a duty to pay wages to an H-1B nonimmigrant employee until he or she is notified of termination by the employer, AND the employer gives notification of this termination to the USCIS. Ceasing payment of wages prior to BOTH of these actions will result in liability for back wages. 

     For more information on terminations of employees who hold H-1B visas or other immigration issues, please contact Donna Galchus, Missy Duke, or Danna Young in the Little Rock office.

SEC DISCLOSURE REQUIREMENT CHANGES

     The Securities and Exchange Commission (SEC) has recently passed sweeping changes regarding disclosure requirements for executive compensation and related persons. These changes went into effect on different dates, November 7, 2006 and December 29, 2006. The regulations amended were 17 C.F.R. Parts 228, 229, 232, 239, 240, 245, 249, and 274. There are still interim final rules pending regarding specific executive compensation disclosures with comments being accepted until January 29, 2007.

I. First Set of Amendments 

     The SEC adopted amendments to the disclosure requirements for executive and director compensation, related person transactions, director independence and other corporate governance matters, and security ownership of officers and directors. These amendments apply to disclosure in proxy and information statements, periodic reports, current reports, and other filings under the Securities Exchange Act of 1934 and to registration statements under the Exchange Act and the Securities Act of 1933. Another new requirement is that disclosure under the amended items generally be provided in plain English. The amendments are intended to make proxy and information statements, reports, and registration statements easier to understand. They are also intended to provide investors with a clearer and more complete picture of the compensation earned by a company’s principal executive officer, principal financial officer and highest paid executive officers, and members of its board of directors. In addition, they are intended to provide better information about key financial relationships among companies and their executive officers, directors, significant shareholders, and their respective immediate family members. 

     The amendments require disclosure of company voting securities beneficially owned by more than five percent holders and company equity securities beneficially owned by directors, director nominees, and named executive officers. Also required is disclosure of arrangements known to the company that may result in a change in control of the company.

II. Second Set of Amendments 

     This second set of proposed amendments with pending comments may require compensation disclosure for three additional highly compensated employees, not necessarily officers or directors. The SEC did not yet adopt the proposed disclosure requirement regarding the total compensation and job description of up to an additional three most highly compensated employees who are not executive officers or directors but who earn more than any of the named executive officers. Instead they are requesting additional comments. In particular, they have specific requests for comments as to whether the proposal should be modified to apply only to large accelerated filers who would disclose the total compensation for the most recent fiscal year and a description of the job position for each of their three most highly compensated employees whose total compensation is greater than any of the named executive officers, whether or not such persons are executive officers. Under this approach, employees who have no responsibility for significant policy decisions within either the company, a significant subsidiary, or a principal business unit, division, or function, would be excluded from the determination of the three most highly compensated employees and no disclosure regarding them would be required. However, should this amendment be completely adopted, it will have far reaching consequences. 

     For more information on the SEC Disclosure Requirements, please contact  a CGWG attorney.

CGWG NEW ASSOCIATE REED EDWARDS

     Mr. Reed Edwards is a graduate of the University of Arkansas at Fayetteville and the University of Arkansas at Little Rock School of Law, where he served as an Associate Editor of the U.A.L.R. Law Review. From 1996 to 1999, Mr. Edwards served as a Law Clerk to Senior United States District Judge G. Thomas Eisele and United States District Judge James M. Moody. Since 1999, Mr. Edwards has been engaged in the representation of businesses and individuals in a wide variety of commercial matters, with specific emphasis on business disputes, real estate litigation, and products liability defense. Additionally, from 2005-2006, Mr. Edwards served as general counsel to an Arkansas-based software technology company which provides internet-based background screening services to employers and landlords nationwide. In that capacity, he advised the company on all legal matters affecting the company, including privacy litigation, software licensing issues, and Fair Credit Reporting Act compliance. Mr. Edwards joined the firm in January of 2007, and is a resident of the firm's Northwest Arkansas office.

NEWS AROUND THE FIRM

Carolyn Witherspoon was reappointed for a second four-year term as a member for the Court of Arbitration for Sport.

Ben Shipley was awarded the Spirit of the Frontier Award by the City of Fort Smith on December 14, 2006 in recognition for helping make Fort Smith one of the outstanding cities in the United States. Mr. Shipley has also recently retired from the Fort Smith City Board of Directors after having served on the Board for 17 years.

Bruce Cross will be the guest speaker at the Northwestern ABC Member Dinner in Fayetteville, Arkansas on February 27, 2007. Mr. Cross’ topic will be “Employee Free Choice Act.”

Carolyn Witherspoon, Mark T. McCarty, and Jess Sweere presented a seminar for the Arkansas Trucking Association on February 14, 2007 on employment law updates titled “Employment Law: Where the Rubber Meets the Road.”

Ms. Witherspoon will also speak at the American Bar Association’s Sixth Annual Midwinter Meeting in Manzanillo, Mexico on February 17- 19. Her topic will be “Developing Confidentiality Issues Affecting Attorney’s Ethical Obligations in Our Increasingly Hi-Tech Landscape.”

Cross, Gunter, Witherspoon & Galchus, P.C. has scheduled a three part series of Advanced Training Programs. The Advanced Training expands the scope and depth of some of the areas that were covered in the Basic Supervisor Training, in addition to topics such as the Fair Credit Reporting Act, covenants not to compete, and wellness programs. These are topics that affect, or may interest, many organizations. The first program, Track 1, will be presented on March 6, 2007.

Ms. Witherspoon will speak at the Bean Hamilton Forum on April 19, 2007. Her topic will be “Interviewing and Hiring: Success Starts Here.” She will speak at the SHRM State Conference on April 27, 2007. Her topic at that event will be “Legal Issues: You Can’t Afford a Wipe Out.” She will also speak at the CAHR Supervisor’s Seminar on May 9, 2007. Her topic will be “Life in the MySpace World – High Tech Privacy and Legal Issues.”

Donna Galchus presented a Breakfast Bulletin on February 6, 2007. The seminar topic was “The New EEO-1 Form.” She will also be presenting the same topic on February 20, 2007.

Ms. Galchus and Missy McJunkins Duke will speak at the Arkansas Bar Association Immigration Law Seminar on March 9, 2007.

Susan Kendall will presented a Breakfast Bulletin in Northwest Arkansas on February 13, 2007 discussing the new EEO-1 form revisions.

Brian Vandiver was recently elected the 2007 President of the Little Rock Chapter of The Federalist Society.

February 28, 2007 – Breakfast Bulletin on “Employer Responsibilities Under USERRA”

March 6, 2007 – Advanced Training Track 1

March 9, 2007 - Arkansas Bar Association Immigration Law Seminar

March 14, 2007 – 75 Medical Minutes discussing “Medical Records”

March 20, 2007 – Advanced Training Track 2

April 3, 2007 – Advanced Training Track 3

April 13, 2007 –Immigration Compliance Program in Northwest Arkansas

April 18, 2007 – 75 Medical Minutes discussing “Subpoena and Record Requests after HIPAA”

April 19, 2007 – Annual Bean Hamilton Forum on “Interviewing and Hiring: Success Starts Here” presented by Carolyn Witherspoon