By: Dan Cohen – 3/27/14
For all of you Federal contractors and subcontractors who took notice of your new obligations to protected veterans in our March 17 post: “Federal Contractors Be Aware: VEVRAA Amendments Take Effect Later This Month,” your new obligations also extend to individuals with disabilities. Section 503 of the Rehabilitation Act prohibits discrimination on the basis of disability by Federal contractors and subcontractors. It also requires that covered contractors take affirmative action to employ and advance in employment qualified individuals with disabilities. Similar to its concerns about protected veterans, the DOL had expressed concern that the unemployment rate of the disabled remains too high. Consequently, the new revisions are designed to enhance contractor accountability for compliance and ultimately increase employment opportunities.
For those with existing Affirmative Action Plans, the immediate impact of the new regulations is minimal. But, once your AAP expires on and after March 24, 2014, you will be faced with a more time-consuming and costly update. Data collection, outreach and record-keeping obligations are nearly identical to those set forth in the VEVRAA Final Rule. Also, there is a nationwide 7% utilization goal, which is applied to each AAP job group annually, except for contractors/subcontractors with 100 or fewer employees who may apply the utilization goal to their entire workforce. Like with your existing AAP, failure to attain the goal is not a violation and will not result in penalties. For now, your new obligations are as follows:
Applicant Self-Identify Provisions – The Final Rule requires contractors/subcontractors to invite applicants to self-identify at the pre-offer and post-offer stage of the application process. Employees must be invited to self-identify in the first year the contractor/subcontractor is subject to the self-identification rule and every five years thereafter with at least one reminder in the intervening years. Unlike the self-identity form for protected veterans, which is a form that can be prepared by the contractor/subcontractor, the self-identify form for individuals with disabilities must be the DOL form which can be found at www.dol.gov/ofccp/regs/compliance/sec503.
New Definitions – The Final Rule revises definitions relating to “disability” including “major life activities,” “major bodily functions,” “regarded as” having a disability and “substantially limits” in accordance with the changes brought about by the ADAAA. Collectively, these new definitions lower the threshold for establishing a disability and more individuals will have protection. Most of us have been operating under the new definitions for some time so this should not require much in the way of changed methods or operation.
Notice to Applicants and Employees – The “EEO is the law” poster must be provided to applicants and employees. Where an internet application is used, the DOL permits contractors/subcontractors to link to the poster with a brief explanation. As of the date of this posting the “EEO is the law” poster had not been revised.
Subcontract Clause Requirement – “Incorporation by reference” clauses must be contained in government subcontracts and purchase orders. The DOL has recently clarified that Contractors may elect to combine the incorporation by reference language of VEVRAA and 503 as well as all Executive Order clauses and provides the following example:
This contractor and subcontractor shall abide by the requirements of 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, national origin, protected veteran status or disability.
Contractors may opt to keep the incorporation provisions separate because of the varying jurisdictional thresholds that apply (generally $100,000 for VEVRAA; $10,000 for Section 503/Executive Order 11246).
Job Solicitations and Advertisements – Contractors/subcontractors must state in their job solicitations and advertisements that they are an equal opportunity employer of potential veterans with disabilities. This statement can be combined with a similar statement for protected veterans under the VEVRAA Amendments so that it reads: “We are an Equal Opportunity Employer and all qualified candidates will receive consideration for employment without regard to their protected veteran, disabled or other protected status.”
The OFCCP has been working on these rules for years, and their implementation is sure to be the focus of compliance audits in the future. Take steps now to revise your notices, contract clauses, forms, and advertising taglines before OFCCP contacts you.
By: Dan Cohen – 3/27/14
Yesterday, the Regional Director of the NLRB in its Chicago Region ruled that college football players at Northwestern University were employees of the University, who could be represented by a Union. I guess I should consider myself a former employee of Eastern Michigan University, where I played football on scholarship. OK I’ll say it: This is absolutely crazy! And, I’m not alone. 91% of people polled by the Today Show believe college athletes are students, not employees. According to Regional Director Ohr, “players receiving scholarships to perform football-related services for the Employer under a contract for hire in return for compensation are subject to the Employer’s control and are therefore employees.” I suppose we can say this about all college athletes, not just football players, as well as students who are on academic scholarships.
Of course, this is not the final word as Northwestern intends to appeal the decision to the full NLRB in Washington. From there, the case can proceed to federal court and perhaps all the way to the Supreme Court. This decision will have no application to public universities, where most college football programs are found, because the NLRB does not have jurisdiction in the public sector. However, state agencies that regulate such issues for public universities could be influenced by the decision. Who knows, maybe college athletes will start filing workers compensation claims against their schools when they are injured as well as overtime claims under the FLSA. I can assure you that during the football season, I spent more than 40 hours a week related to football, particularly when we drove 7 hours each way to Northern Illinois. Quite frankly given Regional Director Ohr’s opinion that “even the players’ academic lives are controlled [by the University],” a good argument can be made that even non-football related activities would count towards the number of hours “worked” by the scholar athlete.
Behind this effort is the College Athletes Players Association, which referred to the NCAA as “a dictatorship.” The CAPA’s list of demands include: financial coverage for sports-related medical expenses, placing independent concussion experts on the side-lines during games, establishing an educational trust fund to help former players graduate and “due process” before a coach could strip a player of his scholarship for a rules violation. While I whole-heartedly agree that student athletes should not have to rely on their parents’ health care plans, if any, to fund their medical care if injured in the line of duty, the question becomes, who will pay for that? And, who will ultimately pay to have concussion experts on the sidelines, which is probably another great idea? Will the vast majority of college students see their tuition go up to subsidize the overwhelming minority of student athletes? College football and men’s basketball are huge businesses with lucrative television contracts and huge revenues so one might think there is plenty of money to fund these ideas. However, football and men’s basketball must foot the bill for the rest of the athletic programs, most of which would probably be in the red but for football and basketball. Nothing against cross-country, but how many of you have ever attended a cross-country meet…and of those how many would pay to do so?
Establishing trust funds to help players graduate and due process before a coach can strip a student athlete of his scholarship are, in my humble opinion, a bunch of “hogwash.” Maybe the student athletes should stay in school and graduate before they run off to sign multi-million dollar contracts to play in the NFL and NBA. And, if they do run off to play at the next level, God forbid they set aside a little of their petty cash to put towards their degree when their professional careers are over. As for due process, let me just say that playing college sports on a full athletic scholarship is an absolute privilege. The disciplinary rules are pretty straight-forward and pretty easy to follow. So, we do not need a union to fight to keep student athletes from expulsion. The rules that apply to the rest of the students should apply equally to the scholar athletes. There is already a perception that they get preferential treatment, and there are more than enough examples of this.
I would prefer to see these issues taken up with the NCAA, which is deserving of some reform, but union representation for student athletes is probably not the answer. Oh, by the way, where are these college students going to get the money to pay their union dues? I suppose demands will eventually be made to pay student athletes since paying for their education, accommodations and food apparently isn’t enough. Of course, if the Spartans or Wolverines’ players wish to be represented by a union, they can always exercise their “right to work” rights and simply not pay any union dues.
It’s too bad that Northwestern is the target of unionization. If an organizing drive were to hit Ohio State, UofM and MSU fans might have a completely different perspective, especially if players adopted the typical “just enough to get by” union mentality. Of course, I can only imagine what Bo Schembechler would have done if a union business agent brought him a grievance filed by the senior quarterback who was replaced by the superstar freshman quarterback in violation of his “seniority” rights. And, just imagine paying top dollar to watch the intramural flag football champions who have been suited up as “replacements” for striking college football players.
By: Bill Pilchak and Dan Cohen – 3/25/14
In 2015, an army of employees will be interested in whether
their employer is a federal subcontractor
On February 12, 2014, President Obama signed an Executive Order raising the minimum wage for federal contractors and subcontractors to $10.10 (a $2.85 increase), effective January 15, 2015. Executive agencies, likely the Department of Labor or OFCCP, are required to issue regulations by October, 2014, in order to enforce the minimum wage requirement sixty days later.
Next, on March 12, President Obama reported that he will be directing the Department of Labor to issue regulations increasing the minimum required salary amount for an individual to qualify for exempt status to $984.00 per week ($51,168 per year). “Minimum required salary” means that unless a person is paid salary at that level, they must receive overtime pay at 1 ½ the hourly rate for hours over 40 in a week. The minimum required salary had been $455. The new threshold will more than double the former minimum when the regulations take effect.
Authority For These Measures
In case you have been tuned into the current political/Constitutional controversy of the President acting unilaterally to impose law, neither move likely requires Congressional approval. Federal contractors have had numerous obligations, including Affirmative Action Plan obligations, under Executive Orders for decades. And, the minimum required salary has always been set by regulations, not Congress.
That said, every time the President acts unilaterally, Court-watchers wonder if the Supreme Court won’t reign in the “imperial Presidency.” The President’s power is supposed to stem from an Act of Congress or the Constitution itself. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952), struck down an executive order of the President for that reason, a case most recently cited to limit President Bush’s power in international affairs in Medellin v. Texas, 552 U.S. 491 (2008). Congress has spoken on pay for government contractors and subcontractors at least four times in the Davis-Bacon Act, the Walsh-Healey Act, the Service Contract Act and the Fair Labor Standards Act.
Federal Contractor Minimum Wage
Many may yawn at the news about the minimum wage for federal contractors and subcontractors, thinking the developments have no effect for them. However, there are greater implications than most understand. Many businesses operate without appreciating that they are federal subcontractors. (Others recognize that they are, but ignore their obligations until the OFCCP comes knocking.) Federal contractors are supposed to include “flow-down” clauses in their federal contracts alerting their suppliers of their obligations. However, many do not and the OFCCP does not consider the lack of a flow-down clause to be an excuse for not complying.
“A ‘Federal subcontract’ is an agreement or arrangement with a Federal contractor either (1) for the furnishing of supplies or services or for the use of real or personal property, which is necessary to the performance of any one or more Federal contracts; or (2) under which any portion of the Federal contractor’s obligation under any contracts is performed, undertaken, or assumed. Thus, some but not all contracts with a Federal contractor will trigger coverage under the laws administered by OFCCP.”
Many (possibly most) large corporations are suppliers to the federal government. Employers may think that their goods/services are not necessary to the performance of a federal contract, but the OFCCP takes an expansive view of that. For example, a company supplying workers’ compensation coverage to a federal contractor is “necessary” to the performance of a federal contract. Moreover, once any aspect of a business has federal subcontractor status, federal subcontractor obligations spread to all facilities and departments of the business.
As noted, many businesses “lay low” until the OFCCP sends a notice, and then rush to comply. However, effective January, 2015, there will be an army of employees making less than $10.10 interested in ferreting out whether their employer is a federal subcontractor.
Employers have the remainder of 2014 to adopt a strategy, but many will assure that their lower-tier employees are paid $10.10 per hour in 2015, to avoid an OFCCP complaint and scrutiny.
Minimum Required Salary
Admittedly, $455 per week ($23,660) probably was too low, because someone with salaried responsibility (supervising employees, making decisions of consequence to the company) probably should be paid more. But, $984 ($51,168) is too high for some industries, including fast food and retail. Glassdoor.com reports that a McDonald’s store manager averages $42,128 per year, with assistant managers averaging just under $30,000. To avoid giving assistant managers a $20,000 raise, McDonalds and similar companies may reconfigure the compensation for their managers to an hourly rate that –with overtime- equates to their present income.
The Obama Administration’s Continuing Transference of Wealth
A future BLawg article may someday count up all the ways that the Obama administration has drained revenue from businesses-owners. Today, let’s limit our focus to the effect of Obama’s announcements on one McDonald’s restaurant. If McDonald’s did not reconfigure the earnings of their managers, and the three Assistant Managers got raises from $30,000 to $51,168, and the Store Manager got a raise to – say $57,000 (because she can’t be paid the same as her subordinates), the March 12 announcement takes more than $78,000 out of the profits of one store. Since most McDonalds are operated by franchisees, that amount comes out of the pocket of a local business owner. If the McDonalds was on a military base and required to pay $10.10 per hour for each of the 50 employees (equaling 25 full time employees) instead of the $7.79 average today, that takes $120,000 per year out of the profits of one store. (10.10 – 7.79 x 40 x 25 x 52).
Thus, the impact of both announcements in this hypothetical is nearly $200,000. It’s not hard to see how the Administration’s Marxist mindset squelches the start-up of new businesses. Not only does it take money out of the pockets of people who might start another enterprise, but it reduces the reward for risking one’s life savings in order to do so.
Sure, the crew and managers will get a bigger paycheck. If you think your out-of-work brother-in-law will be getting a job from someone making $51,168 a year, that might be a good thing. Personally, we have never seen that happen. Just as we have gotten used to self-check-out kiosks at Home Depot and most grocery stores, it looks like we will soon be punching in and paying for our orders at fast food kiosks where one employee does the work of three or four. McDonalds has already installed 7000 of these kiosks in its European market.
By: Bill Pilchak – 3/20/14
Perhaps because I was a ten-year-old Catholic kid being educated in a Catholic elementary school when the first and only Catholic President was gunned down in Dallas, I have always been fascinated by the facts and theories surrounding John F. Kennedy’s assassination. One point made clear in numerous books and documentaries is that the Secret Service and Kennedy’s staff were concerned about his safety while travelling in conservative Texas. Governor Walter Connelly’s wife’s widely reported remark, (incidentally cited by Wikipedia as one of the prime examples of irony), “Mr. President, you can’t say Dallas doesn’t love you,” was meant to assuage those concerns.
Thus, historically, we see that there was a liberal-conservative dichotomy 50 years ago, which may have eclipsed the current divide. Indeed, though the current view is that there was less open vitriol in those days, responsible people actually believed that a sitting President might not be safe travelling through a conservative state like Texas.
I was prompted to think about Kennedy a few days ago, at the fundraiser for Oakdale Academy, a Hillsdale Academy School. While the featured speaker, Michelle Malkin, captivated the audience – after all she is extremely bright, a polished speaker, and decidedly easy on the eyes- the speaker that caught my attention was a student of the Academy. Three students recited from memory, lengthy passages from scripture, speeches or literature at the event, just as students do every day during the morning announcements at Oakdale. This year, one student recited Kennedy’s remarks to American Heritage magazine on the importance of teaching history. (http://184.108.40.206/content/jfk-our-nation%E2%80%99s-memory) Since many contemporary conservatives are lamenting the fact that history and politics are being dropped from high school curriculums, resulting in a less astute citizenry, Kennedy’s words could easily have been written by Bill O’Reilly.
The evening prompted me to review Kennedy’s writings and speeches to gain further historical perspective. Doing so has illustrated how far to the left of Kennedy the current administration and climate is. I daresay that, today, any conservative would kiss a “liberal” opponent on both cheeks if the opponent espoused Kennedy’s views. I visited the website of the Kennedy Library for some examples, and offer some thoughts of my own on his quotes:
THE WELFARE STATE
“Ask not what your country can do for you. Ask what you can do for your country. “Inaugural Address (1),” January 20, 1961, Public Papers of the Presidents: John F. Kennedy, 1961 At a time when many are concerned that never-ending unemployment benefits, food stamps, welfare, Obama-care, etc., are expanding the percentage of Americans who will never work, pay taxes, and elevate the next generation, Kennedy tells us that we are on the wrong path.
THE ECONOMY AND DAMPENING EFFECT OF TAXATION ON JOBS
“A rising tide lifts all boats.” –“Remarks in Pueblo, Colorado,” August 17, 1962, Public Papers of the Presidents: John F. Kennedy, 1962. Kennedy’s perspective is literally the motto of conservatives today.
“It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough jobs or enough profits.”
“If the economy of today were operating close to capacity levels with little unemployment, or if a sudden change in our military requirements should cause a scramble for men and resources, then I would oppose tax reductions as irresponsible and inflationary; and I would not hesitate to recommend a tax increase if that were necessary.” –“Address and Question and Answer Period at the Economic Club of New York (549),” December 14, 1962, Public Papers of the Presidents: John F. Kennedy, 1962. Consider the following from the Kennedy Library website:
“Kennedy had campaigned on the slogan of “getting America moving again” (which the Nixon campaign staff had privately derided as the peristalsis plan). But, recovery from the 1958 recession had been very sluggish and unemployment remained perilously high—6.8% just after he took office. The Council of Economic Advisers urged him to attack unemployment with New Deal style spending but the president was worried that a large deficit ($7 billion) would be politically untenable in 1964. Unemployment did fall modestly, but it remained stagnant at nearly 6% well into 1963.
The president finally decided that only a bold domestic program, including tax cuts, would restore his political momentum. Declaring that the absence of recession is not tantamount to economic growth, the president proposed in 1963 to cut income taxes from a range of 20-91% to 14-65% He also proposed a cut in the corporate tax rate from 52% to 47%. Ironically, economic growth expanded in 1963…
The battle over the tax cut and the deficit continued unabated through 1963. The House Ways and Means Committee voted a tax bill out of committee in August and the grateful president reiterated that lowering taxes was the surest path to full employment and lower deficits. Polls showed that over 60% of Americans favored the tax cuts.”
ATTACK ON THE 1%-ERS
“Theodore Roosevelt once said, ‘The credit belongs to the man who is actually in the arena – whose face is marred by dust and sweat and blood…who knows the great enthusiasms, the great devotions – and spends himself in a worthy cause – who at best if he wins knows the thrills of high achievement – and if he fails at least fails while daring greatly – so that his place shall never be with those cold and timid souls who know neither victory or defeat.'”
“We have become more and more not a nation of athletes but a nation of spectators.”
–“Remarks at National Football Foundation and Hall of Fame Banquet (496),” December 5, 1961, Public Papers of the Presidents: John F. Kennedy, 1961. (References Theodore Roosevelt’s speech, “Citizenship in a Republic” given at The Sorbonne, Paris, April 23, 1910.) Kennedy came from a family of achievers whose achievements resulted in great wealth. He would be shocked by the notion today that society should pull down those who are achieving and excelling or President Obama’s statement: “you didn’t build that.”
STRONG NATIONAL DEFENSE
“Now let me make it clear that I believe there can only be one defense policy for the United States and that is summed up in the word ‘first.‘ I do not mean first, but. I do not mean first, when. I do not mean first, if. I mean first –period.” — Speech to the Veterans of Foreign Wars Convention, Detroit, Michigan, 26 August 1960, “VFW Convention, Detroit, Michigan, 26 August 1960”
“I think we’re going to have to do better. Mr. Nixon talks about our being the strongest country in the world. I think we are today, but we were far stronger relative to the Communists 5 years ago. And what is of great concern is that the balance of power is in danger of moving with them. They made a breakthrough in missiles and by 1961, ‘2, and ‘3, they will be outnumbering us in missiles.” –Transcript of fourth debate, ABC studios, New York, New York, 21 October 1960, “Television Transcript: Fourth Debate, October 21, 1960” Wow! Kennedy out-hawked Nixon? Consider Kennedy’s strong national defense posture and how it contrasts with the current administration, whose foreign policy appears to depend on whether Vladmir Putin knows the words to Kumbaya.
“Let us never negotiate out of fear. But let us never fear to negotiate.” “Inaugural Address (1),” January 20, 1961, Public Papers of the Presidents: John F. Kennedy, 1961.
THE IMPORTANCE OF GOD TO OUR COUNTRY
“This country cannot afford to be materially rich and spiritually poor.” –“Annual Message to the Congress on the State of the Union (12),” January 14, 1963, Public Papers of the Presidents: John F. Kennedy, 1963. I have only included this one quote, but despite the dalliances we know about today, Kennedy’s remarks are replete with frequent references to the Almighty. Undoubtedly, he had faith in a forgiving God.
THE SECOND AMENDMENT
“Today we need a nation of minute men; citizens who are not only prepared to take up arms, but citizens who regard the preservation of freedom as a basic purpose of their daily life and who are willing to consciously work and sacrifice for that freedom.” –“Message to Those Participating in Roosevelt Day Commemoration, 29 January 1961. Sorry to be the bearer of bad news, but your freedoms are evaporating day by day. What is Kennedy recommending we do?
No country can possibly move ahead, no free society can possibly be sustained, unless it has an educated citizenry whose qualities of mind and heart permit it to take part in the complicated and increasingly sophisticated decisions that pour not only upon the President and upon the Congress, but upon all the citizens who exercise the ultimate power… Commencement Address at San Diego State College (226),” June 6, 1963, Public Papers of the Presidents: John F. Kennedy, 1963.
What we seek to advance, what we seek to develop in all of our colleges and universities, are educated men and women who can bear the burdens of responsible citizenship, who can make judgments about life as it is, and as it must be, and encourage the people to make those decisions which can bring not only prosperity and security, but happiness to the people of the United Sates and those who depend upon it.” –“Address at the University of North Dakota (379),” September 25, 1963, Public Papers of the Presidents: John F. Kennedy, 1963 This is why Conservatives are so passionate about America’s lagging educational system, which is the product of union-driven mediocrity. Look what happens when the electorate is distracted by their devices and popular culture: We twice elect the least competent President in the history of the U.S.
By Dan Cohen – 3/18/14
I recently had the pleasure of learning that one of my cases had been affirmed by the United States Court of Appeals for the Sixth Circuit. The case, Horn v. Knight Facilities Management, No. 12-2688 (February 25, 2014), was originally filed in the federal district court for the Eastern District of Michigan. The plaintiff had alleged a violation of the Americans with Disabilities Act when my client refused to provide her with an accommodation that would have excused her from performing the worst part of her job. Although Congress had recently stripped my client (and all employers for that matter) of several key defenses to ADA claims when it passed the ADA Restoration Act, the law remains that an accommodation must still be a reasonable and effective one.
The facts of the case are straight forward. Plaintiff was responsible for using certain cleaning chemicals to perform her cleaning duties at a customer’s site. Shortly after she was assigned a new cleaning route, which required her to clean 8 restrooms, she claimed a sensitivity to the chemicals and brought a note to work that she could only clean restrooms for up to two hours a day. My client accommodated her request and reduced the number of restrooms for which she was responsible from 8 to 4. Thereafter, plaintiff continued to claim difficulties working with the chemicals and brought in a “no exposure to cleaning solutions” restriction. Because the cleaning solutions were used throughout the facility, and not just in the restrooms, my client placed her on a leave of absence and ultimately terminated plaintiff’s employment when months later, her restrictions were unchanged.
As you can imagine, the plaintiff was not real happy when she wasn’t given a cleaning route without toilets to clean. But, cleaning toilets was an essential function of the job. There were no available positions without toilets to clean and all jobs required use of the chemicals. Given these facts, I went for the admission at plaintiff’s deposition that (1) she could work anywhere in the world as long as the chemicals were not being used, and (2) she was aware of no other locations that used the precise chemicals she was using. When I obtained both admissions, I thought I was on my way to summary judgment just like 15 years earlier when I obtained those admissions in a case where an employee had become sensitive to the primary chemical used in its formula for manufacturing high school chemistry lab tables. My theory was that plaintiff was not disabled under the ADA because a substantial limitation of the major life activity of working required a limitation of one’s ability to perform a broad range of jobs rather than a single job at a single location.
Had this case been filed a year earlier, I probably would have gotten the case thrown out on this basis, but the ADA Restoration Act has effectively limited the defense’s ability to beat an ADA case on the basis that the individual is not disabled. Indeed, the intent of the Act was to lower the bar on establishing disabilities. I made the argument nevertheless, but neither the Eastern District of Michigan nor the Sixth Circuit decided the question. Both courts adopted my secondary argument: that my client had an absolute right to rely upon the restrictions placed upon the plaintiff by her own doctor at the time (nothwithstanding the doctor’s wavering testimony two years after-the-fact). Those restrictions precluded any reasonable and effective accommodation because even if plaintiff was excused from cleaning restrooms, “no exposure to cleaning solutions” means just that: she could not work with the chemicals whether cleaning toilets, counter tops, hallway floors or otherwise. So, the next time you receive a request for accommodation that purports to excuse an employee from doing something she does not like, think twice about just giving in. Look carefully at the request, and what it really means. Otherwise, you are likely to receive a multitude of such requests.