Cross, Gunter, Witherspoon & Galchus E-Newsletter

Do your employees ever pull a trailer behind their pickup truck? If so, you and your employees may be subject to U.S. Department of Transportation (“DOT”) regulations just like the big truckers. A commercial motor vehicle is defined as any self-propelled or towed motor vehicle used on a highway in interstate commerce to transport property when the vehicle has a gross vehicle weight rating (“GVWR”) or gross combination weight rating (“GCWR”) of 10,001 pounds or more. Companies that operate commercial motor vehicles must comply with DOT regulations or they are subject to stiff fines and penalties.

A 2007 Chevrolet Silverado 1500HD Crew Cab pickup has a GVWR of 8,600 pounds, and all Silverado 2500HD models have a GVWR of 9,200 pounds. Silverado 3500 single rear wheel models have a GVWR of 9,900 pounds. 2007 Ford F-250 models have a GVWR ranging from 8,800 pounds to 10,000 pounds. If these vehicles are combined with a trailer having a GVWR high enough to total more that 10,001 pounds, the combined unit meets the definition of a commercial motor vehicle. For example, if your employee drives a 2500HD pickup hauling a trailer with a GVWR of 2,500 pounds, the GCWR of the combined unit is 11,700 pounds and, therefore, meets the definition of a commercial motor vehicle.

Commercial motor vehicles with a GVWR of 26,001 pounds or less, however, are not subject to the federal CDL and drug and alcohol testing requirements in 49 CFR Parts 40, 382 and 383. The Regulations listed above are voluminous and complex, often requiring legal assistance to ensure compliance.

The Arkansas State Highway Commission enacted regulations in 1997 that adopted the DOT regulations applicable to commercial motor vehicles and prescribed them as applicable to intrastate operations of motor vehicles. Drivers operating commercial motor vehicles in Arkansas, therefore, are subject to roadside inspections by the state police at any time. A few examples of items officers look for at roadside inspections include a mounted fire extinguisher, reflective triangles, spare fuses, company markings on the door (including DOT number if crossing state lines), up-to-date federal annual inspection stickers on the truck and trailer, proper trailer braking equipment, and a current DOT medical certification of the driver.

Companies that operate commercial motor vehicles are subject to audits performed by state and/or federal agencies relating to hours of service records, driver files, and maintenance and inspection procedures. Violations of any of the regulations may result in vehicles being placed out of service, along with fines and other penalties, including the possible loss of vehicle operating authority. State agencies in particular have recently indicated plans for strict enforcement of the regulations relating to smaller commercial motor vehicles.

The Arkansas Legislature recently passed Act 157 of 2007, titled, “An Act to Prohibit State Agencies from Contracting with Businesses that Employ Illegal Immigrants,” which became effective on July 31, 2007. The act requires all bidders for state contracts to certify that they do not employ or contract with any illegal immigrants. The certification is required on contract bids for professional services, technical and general services, or any construction contract of $25,000 or more to certify that the contractor does not employ or contract with illegal immigrants. The certification process must be completed on-line at http://www.arkansas.gov/dfa/procurement/pro_immigrant.html.

“Professional services contract” means that (1) an independent contractor relationship exists between the individual performing services and the state agency; (2) the personal services are professional in nature; (3) the state agency does not have direct managerial control over the day-to-day activities of the individual providing the services; (4) the contract specifies the results expected from the rendering of the services rather than the manner in which the services will be rendered; and (5) the services are rendered to the state agency itself or a third-party beneficiary.

“Technical and general services” means (1) work accomplished by skilled individuals involving time, labor, and a degree of expertise in which performance is evaluated based upon the quality of the work and the results produced; (2) work performed to meet a demand, including work of a recurring nature that does not necessarily require special skills or extensive training; or (3) the furnishing of labor, time, or effort by a contractor or vendor, not involving the delivery of any specific end product other than reports that are incidental to the required performance.

Before executing a public contract, each prospective contractor must certify, “in a manner that does not violate federal law,” that the contractor, at the time of the certification, does not employ or contract with an illegal immigrant. A contractor found to have violated the certification requirement (e.g., employing or contracting illegal immigrants) must remedy the violation within 60 days. If the violation is not remedied within 60 days, the state agency must terminate the contract for breach of contract, and the contractor is liable for actual damages.

In the event the subcontractor uses a subcontractor at the time of certification, the subcontractor must also certify, “in a manner that does not violate federal law,” that the contractor, at the time of the certification, does not employ or contract with an illegal immigrant. The subcontractor has 30 days after the execution of the subcontract to submit its certification. The contractor is required to maintain on file the subcontractor’s certification throughout the duration of the term of the contract. If the contractor learns that a subcontractor is in violation of the certification requirement, the contractor “may” terminate the contract with the subcontractor and such termination will not be deemed a breach of the contract by the contractor and subcontractor.

The act is ambiguous in how contractors will be found to have violated the certification process. Additionally, the act does not indicate the proper remedy for correcting the violation. Further, it is unclear whether a subcontractor who is found to have violated the certification requirement has the same opportunity to remedy the violation, as does the contractor, and whether the subcontractor is subject to actual damages for such a violation like that of a contractor. Finally, the state certification process is duplicative of what employers already are required to do under federal I-9 employment eligibility requirements, thereby adding to the employer’s current burden.

It is difficult to predict the outcome in the event that a contractor challenges a finding that he or she violated the certification process. Nevertheless, because the statute provides that contractors and subcontractors must certify that they do not employ or contract with illegal immigrants “in a manner that does not violate federal law,” contractors and subcontractors should make sure that they are in compliance with the I-9 requirements before they make such a certification.

The New York Air National Guard (NYANG) was sued by a former employee who alleged that she was “blacklisted” and was given unfavorable references to potential employers for complaining to authorities about environmental hazards on a NYANG airbase. An Administrative Law Judge for the U.S. Secretary of Labor found that the former employee suffered emotional harm, which caused her to grind her teeth (“bruxism”), as well as physical harm, such as anxiety attacks, shortness of breath and dizziness, all in response to the stress caused by NYANG. Consequently, the Administrative Law Judge found NYANG guilty of discrimination and retaliation and awarded the former employee $70,000 in compensatory damages, $45,000 for “past and future emotional distress” and $25,000 for “injury to her vocational reputation.”

The former employee included the $70,000 award as gross income on her tax returns. However, she later filed an amended return, seeking a refund of the $20,665 she paid in taxes on the award. She sought the refund pursuant to Section 104(a)(2) of the Internal Revenue Code, which exempts from gross income any damages received for “personal physical injuries or physical sickness.” When the Internal Revenue Service denied her request, she sued to obtain the refund.

The D.C. Circuit Court of Appeals noted that in 1996, Congress amended the “physical injury” tax exemption to provide specifically that “emotional distress shall not be treated as a physical injury or physical sickness.” Accordingly, despite evidence of physical injuries, the Court concluded that the award failed to qualify for the tax exemption because the award was based on emotional distress and injury to her professional reputation.

The National Labor Relations Board (“NLRB”) ruled in Toering Elec. Co., 351 N.L.R.B. No. 18 (Sept. 29, 2007) that the National Labor Relations Act (“the Act”) does not protect applicants not “genuinely interested” in obtaining employment with employers. Until Toering, employers were subject to unfair labor practice charges for failing or refusing to hire union members, called “salts,” who attempt to gain employment for the purpose of organizing other workers, even if the salt has no intention of accepting any work from the employer. The facts in the Toering case, however, forced the board to address the issue of salting and led to a more specific definition of “employee” under the Act which effectively removed salts not genuinely interested in gaining employment from the protections of the Act.

According to Section 8(a)(3) of the Act, “[i]t shall be an unfair labor practice for an employer by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization . . .” In Phelps Dodge Corp. v. NLRB, the Supreme Court determined that the protections against discrimination under Section 8(a)(3) of the Act should extend to applicants for employment. Applicants for employment, therefore, qualify as “employees” under the Act. Following Phelps Dodge, the Supreme Court established that Section 8(a)(3) only prohibits employers from discriminating against individuals who fall under that statutory definition of “employee.” Until Toering, the Board had not considered whether or not an applicant for employment lacking a genuine interest in securing a position with the employer qualified as an “employee” under the Act.

Unfair labor practice charges were brought against Toering Electric when the company did not hire eighteen (18) International Brotherhood of Electrical Workers (“IBEW”) members who submitted resumes. In September 2000, an NLRB Administrative Law Judge determined that Toering violated Section 8(a)(3) of the Act because it failed to hire and discriminated against the IBEW members based on their union affiliation. On appeal, the NLRB noted that IBEW Local 275 targeted Toering in a salting campaign and referred to a union newsletter article boasting about Local 275’s salting campaign putting “a big hurt” on Toering’s business.

A “key tactic” used by unions in salting campaigns, according to the NLRB, was “the filing of unfair labor practice charges at every opportunity.” The charges burden employers with litigation costs and create “disruption of the nonunion employer’s work force and production through a series of declared unfair labor practice strikes.” The result, therefore, is that “the resources of the federal government are used not to promote collective bargaining but to impose economic injury on designated salting targets.”

In Toering the NLRB determined that the protections afforded to individuals in Section 8(a)(3) of the Act only extend to those “genuinely interested” in working for the employer. The NLRB reasoned that, “one cannot be denied what one does not genuinely seek” and that individuals not genuinely seeking employment with a company should not be considered “employees.” The NLRB stated that “we shall prevent those who are not in any genuine sense real applicants for employment from being treated by the Board as if they were.”

The Board also concluded in Toering that the presumption that anyone who applies for a job is an “employee” should be eliminated. In other words, it is no longer up to the employer to prove an applicant did not have a genuine interest in securing employment. Instead, the burden is ultimately placed on the General Counsel to prove the genuineness of an applicant when filing discrimination charges under the Act. If the General Counsel demonstrates that an application was made, an employer has an opportunity to refute the genuineness of the application. If the employer is able to produce evidence indicating a lack of genuineness, the General Counsel will be required to prove by a preponderance of the evidence that the individual genuinely sought employment.

The NLRB, in Oil Capitol Sheet Metal, Inc., 349 N.L.R.B. No. 118 (May 31, 2007) held that union “salts” will no longer be afforded the usual rebuttable presumption that a worker, who was not hired because of his or her union affiliation, would have continued to work for the employer indefinitely. “[T]he Board has developed a rebuttable presumption in compliance proceedings that the back pay period should extend indefinitely from the date of the discriminatory discharge or refusal to hire until the respondent extends a valid job offer to the discriminatee.” Until Oil Capitol Sheet Metal, Inc., this rebuttable presumption was applied to union salts.

The traditional remedy for a refusal to hire violation includes a back pay and instatement order. The General Counsel is required to prove, by a preponderance of evidence, the reasonable amount of gross back pay necessary to remedy the losses suffered by an applicant who has been discriminated against through an employer’s hiring practices. In determining a reasonable amount of back pay, the NLRB has adopted a policy of presuming that an applicant for employment would have worked for the employer for an indefinite period of time. As a result of this policy allowing the General Counsel to rely on a rebuttable presumption of indefinite employment, the employer is required to present evidence that an applicant for employment would not have worked indefinitely. The NLRB recently reconsidered whether or not the General Counsel should be permitted to rely on the rebuttable presumption in cases involving union salts and ultimately decided to shift the burden from the employer to the General Counsel.

Oil Capitol Sheet Metal Inc. violated Section 8(a)(3) of the Act by refusing to hire a union organizer based on his union affiliation. Since NLRB v. Town and Country Electric, Inc., 516 U.S. 85 (1995), the Board has recognized that salts qualify as employees under the Act and are entitled to back pay when an employer violates Section 8(a)(3). In assessing the rebuttable presumption that a worker who was not hired because of his or her union activity would have continued to work indefinitely for the employer, the NLRB recognized that “the temporary nature of many salts’ employment warrants different treatment in calculating the amount of back pay due in salting cases.” Thus, the NLRB found that the presumption should apply differently to union salts.

Unlike ordinary employees, most salts do not intend to acquire a permanent position with an employer. As a result, the NLRB determined that “the facts and policies supporting a presumption of continued employment do not apply with the same force where the applicant is a union salt.” The NLRB ruled that the General Counsel should bear the burden of presenting affirmative evidence that the salt would have continued to work for the discriminating employer. This includes producing evidence that the salt would have been transferred to a new jobsite after the initial job the salt applied for had ended. The employer, however, will still bear the initial burden of proving that the applicant is a salt in order to shift to the burden on the General Counsel to prove how long the salt would have worked for the employer and a reasonable amount of back pay. This decision represents another victory for employers that could potentially alleviate litigation costs and could lead to employers paying less in back pay damages.

On September 18, 2007 the United States Senate passed S. 558, the “Mental Health Parity Act of 2007” (“the Bill”), by unanimous consent, meaning there was no official record of the vote. The Bill would amend the Employment Retirement Income Security Act (ERISA) and the Public Health Service Act to require group health plans that choose to provide mental health benefits in conjunction with both medical and surgical benefits to provide mental health benefits that are substantially similar to the medical and surgical benefits. The Bill would only apply to companies with more than fifty employees. Under the Bill, the financial requirements for mental health benefits cannot be more restrictive than substantially all medical and surgical benefits covered by the group plan, including deductibles and copayments. The mental health treatment benefits must also be no more restrictive than substantially all the medical and surgical treatment benefits covered by the group plan, including frequency of treatments or similar limits on the scope or duration of treatment. Mental health benefits must also enjoy substantially similar cost sharing requirements, and similar treatment in both in- and out-of-network situations. The Bill would excuse compliance by companies smaller than fifty one employees, and under scenarios where compliance would increase the overall cost of coverage by a certain percentage.

The Bill which was introduced in the Senate on February 12, 2007 had fifty-seven co-sponsors, including both Arkansas Senators and 15 Republican Senators. Following its passage by unanimous consent, the Bill was referred to the House Subcommittee on Health, Employment, Labor, and Pensions on October 17, 2007.

The First Circuit recently held that holidays which occur during multiple weeks of intermittent leave count towards an employee’s twelve weeks of FMLA leave. The lower court case was brought by Boston University employee, Linda Mellen, who, in order to care for her ailing mother utilized two multi-week blocks of FMLA leave. Boston University approved her leave in advance, counting Labor Day, Veterans Day, and an international Boston University holiday into Mellen’s 11 weeks and 6 days of total leave. Mellen took her leave in two increments, with Labor Day occurring during her first 8 weeks and 4 days of leave, and the other two holidays occurring during her final 3 weeks and 2 days of leave. Mellen claimed she was entitled to an extra day of leave. Despite the University’s denial of her request, Mellen failed to come to work or communicate further with the University on the day in question.

The First Circuit upheld the inclusion of the three holidays into Mellen’s leave. Without on-point case law, the Court relied upon a synthesis of the relevant regulations. While the regulations do state that “if an employee takes leave on an intermittent or reduced leave schedule, only the amount of leave actually taken may be counted,” 29 C.F.R. Section 825.205(a). The regulations also state that “the fact that a holiday may occur within the week taken as FMLA leave has no effect; the week is counted as a week of FMLA leave,” 29 C.F.R. Section 825.200(f). The Court read these two regulations together, rationalizing that the FMLA’s regulations are intended to modify each other. Thus, the “amount of leave actually taken” includes “holiday[s which] occur within the week taken as FMLA leave.” Moreover, the Court believes 802.205(a) is intended to protect individuals who take intermittent leave for half a day or part of week from being counted as taking a full day or full week of leave. As 802.205(a) is not designed to give intermittent leave-takers the privilege of being excluded from 825.200(f)’s mandate regarding holidays, the Court held the three holidays to be properly counted into Mellen’s multiple weeks of intermittent FMLA leave.

Carolyn Witherspoon will participate in an American Law Institute - American Bar Association teleconference on December 11, 2007. Her topic for that conference will be “Confidentiality and Ethics in a Wired World.” For the National Business Institute she will present a training session entitled "Harassment Claims: Handling Internal Investigations and Litigation" on November 14, 2007. She also spoke at the 51st Union Internationale des Avocates (UIA) Congress discussing "Women's Rights: Law as an Expression of Culture and Power."

Scotty Shively spoke recently at the Arkansas Healthcare Association on October 1, 2007. Her topic was “USERRA” and “Discipline and Discharge.” She spoke again at the Arkansas Psychology Association meeting on October 25, 2007. Her topic for that meeting was “Subpoena and Medical Records after HIPAA.”

Donna Galchus will speak on ethics at a National Business Institute seminar on November 14, 2007. She will speak at the Northeast Arkansas SHRM Chapter meeting in Jonesboro on November 13, 2007 on internet recruiting. Also, Ms. Galchus will participate in a panel discussion on immigration issues sponsored by the Little Rock Regional Chamber of Commerce on November 14, 2007.

Rick Roderick spoke at the Arkansas SHRM Employment Law & Legislative Affairs Conference on September 21, 2007 in Little Rock. His topic was “We Don’t Have A Union So Why Do We Have To Worry About The NLRB?” He also spoke on the Family and Medical Leave Act to the Arkansas Healthcare Foundation on October 1, 2007 in Little Rock. Mr. Roderick also conducted a lunch program on “Sex, Drugs, and Rock ‘n Roll” in Rogers on October 2, 2007 and in Little Rock on November 6, 2007. For the Firm's Basic Supervisor Training, he conducted a session on “Discipline, Termination and Documentation” in Little Rock on October 10, October 23, and November 7. Mr. Roderick also conducted a seminar in Mountain Home for the Twin Lakes Human Resource Association on “Discipline and Termination” on October 23, 2007.

Danna Young spoke on the topic of performance appraisals at the firm’s September 27 Basic Supervisor Training and will speak on the same topic at the firm’s Basic Supervisor Training scheduled for November 7and November 28. She also discussed problem employees at the Arkansas Transit Authority Annual Meeting on October 17.

Jess Sweere spoke at the Annual Conference of Arkansas Public Employers Human Resources Association meeting in Hot Springs on September 13. His topic was “Tattoos, Piercings, and Gender Identity Issues in the Workplace.” He will speak at the Transportation Law Institute meeting in Arlington, VA on November 2and at the Primerus Defense Institute in Chicago, IL on November 16.

David Dixon wrote an article for the American Bar Association Labor and Employment Law Section's Fall 2007 Ethics and Professional Responsibility Committee Newsletter entitled 'Communication With So-Called "EEOC Class" Members.'

The CGWG "Happy Holidays! You're Fired" lunch program will take place on Thursday, December 4 at the Hammons Center in Rogers, Arkansas. The training will address how to deal with problem employees, investigate and ask the right questions, document for your protection, discipline an employee, and fire an employee. The presentation, which includes lunch, will begin at 11:30 a.m. and end at 1:00 p.m. The cost is $30. Contact Suzanne Bilello at sbilello@cgwg.com or 501-371-9999 to register. This session is also scheduled to take place at our Little Rock location on December 18, 2007. Details coming soon.

CGWG is presenting a lunch seminar entitled "How to Handle an EEOC Complaint." The training session will take place on Wednesday, November 14 from 11:30 a.m. until 1:00 p.m. at the John Q. Hammons Center in Rogers, Arkansas. The cost to attend is $30 and lunch will be provided. Please contact Suzanne Bilello at sbilello@cgwg.com or 501-371-9999 to register. This session is also scheduled to take place in our Little Rock location on December 11, 2007. Details coming soon.

CGWG has scheduled a Basic Supervisor Training for Thursday, December 13, 2007 at at the J. Q. Hammons Center in Rogers, Arkansas, from 8:00 a.m. until 4:30 p.m. Topics discussed include: Fair Labor Standards Act – FLSA; Discipline, Termination, and Documentation; Performance Appraisals; Harassment Prevention; Interviewing and Hiring; and Overview of the ADA, FMLA, and Interaction with Workers Comp. If you would like to attend, contact Suzanne Bilello at sbilello@cgwg.com or 501-371-9999. The cost to attend is $125.