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Trouble Ahead

Trouble Ahead

TROUBLE AHEAD:

AFFORDABLE CARE ACT COMPELS EMPLOYER-PROVIDED HEALTH CARE

WHEN PART-TIME SCHEDULE IS PROVIDED AS AN ACCOMMODATION

By:  Bill Pilchak – 1/29/15

In 1994, I had the privilege of briefing Congressional personnel on how the Americans with Disabilities Act and FMLA handcuffed employers attempting to deal with employee violence. The sponsor of the briefings arranged for a former Regan Administration staff member to orient us to the task at hand.

I will never forget his advice: “Assume that your audience knows nothing about either the ADA or the FMLA.” Surely, he was jesting, I thought. Congress had just passed the FMLA in 1993. But, it was true.

As such, I have always taken note when one statute fails to mesh with another. As a lawyer, ironing out such conflicts puts food on my table. However, I believe that those we have elected to create the laws we live by should know how their most recent legislation implicates or conflicts with past laws they have imposed. If they make the law, they should know the law.

Recently, a disturbing little trap within the Affordable Care Act came to light. As those required to comply know, employers were required to identify full-time (30 hours or more) employees during 2014. Employers could assess the number of hours worked by employees with variable hours during a standard measurement period of at least 3 months. If they averaged more than 30 hours per week, they are designated as full time during a “stability period’” of six months or more.

The ADA specifically identifies part-time work as a possible accommodation (unless it would pose an undue hardship). Likewise, FMLA leave may be taken on a “reduced leave schedule.” Mathematically, a 40 hour per week employee could use FMLA to work a perpetual 30.7 hour schedule, and a 30 hour per week employee could work only 23.1 hours forever.

Does the ACA excuse the employer from providing health care during the stability period to someone who has affirmatively requested (or insisted on) part time status? The answer, found in the regulations at 26 CFR parts 1, 54 and 301, is a resounding “no.” They provide:

  1. Look-Back Measurement for Ongoing Employees

***

If the employer determines that an employee was employed on average at least 30 hours per week during the standard measurement period, then the employer treats the employee as a full time employee during a subsequent stability period, regardless of the employee’s number of hours of service during the stability period, so long as he or she remains an employee.

If the employee became part-time during the measurement period, there would be no obligation to offer health care. However, not if the change occurs during the stability period:

  1. Change in Employment Status

The proposed regulations address the treatment of new variable or seasonal employees who have a change in employment status during the initial measurement period… The change in employment status rule only applies to new variable hour and seasonal employees.  A change in employment status for an ongoing employee does not change the employee’s status as a full-time employee or non full-time employee during the stability period.

Sometimes, part-time work would be an undue hardship in one position, but the employer might be able to transfer the individual to a different, officially-part-time position. Does that transfer alleviate the obligation to provide health care? Seemingly not, since “a change in employment status…does not change the employee’s status as a full time employee…during the stability period.”

Since the regulation above says “so long as he or she remains an employee…” might the obligation be alleviated by officially firing the employee and rehiring the person? That avenue is blocked by a regulation which provides that any lapse in employment must generally be 26 weeks (the minimum stability period), unless the employer applies a rule of parity in which case the lapse need only be as long as the length of time the employee has been employed.

It certainly would be reasonable for the law to excuse the obligation to provide health care to an employee who insists on a change from the previously-assessed full-time status. After all, getting at least 30 hours of work out of someone is what theoretically justifies the employer’s expense. However, if one views the Affordable Care Act as just another of the Obama Administration’s means of transferring wealth from business owners – including to employees who want to work as little as possible, one sees why the employer remains “stuck.” Sometimes, the best we at Pilchak & Cohen can do is alert employers that a trap lays ahead.

Just Do Your Job

Just Do Your Job

By:  Dan Cohen – 1/23/15

Along with 55.9 Million other viewers, I watched in astonishment as Green Bay Packers Tight End, Brandon Bostick, botched the on-side kick that would have sealed the victory and sent the Green Bay Packers on to Super Bowl 49. As I have heard and read, Bostick was not supposed to jump for the football on the play, but step up and block someone so Jordy Nelson, their gifted wide receiver, could secure the ball and the victory. I have not seen or heard anyone on the inside confirm this, but the way Packers coach Mike McCarthy got into it with Bostick after the play strongly suggests he missed his assignment

Is it fair to say that Bostick lost the game? Of course, it isn’t. The Packers made other mistakes that we can point to. The coaching staff chose not to go for two touchdowns earlier in the game. Had they reached the end zone on either play, Bostick’s mistake may not have even mattered. In every football game, there are going to be missed opportunities, blown assignments, penalties, dropped footballs, missed kicks, missed tackles, etc. As viewers, we don’t see all of these mistakes. We see some of them, and of course, when Fox shows the replay of the on-side kick a dozen times and of Bostick’s teammates consoling him another half dozen times, this mistake is significantly amplified. It is amplified to the point that a large portion of the 55.9 million viewers actually do blame the outcome of the game on Bostick. They don’t see it as a mental mistake, but as a tight end on the “hands” team who let the ball slip through his hands and into the waiting hands of a Seattle Seahawk. True, he should have caught the ball, but had he done his job, Jordy Nelson would have been jumping for the ball instead. But, so should the rest of his teammates, who made mistakes themselves.

Whether you are earning $500,000 a year like Bostick or $10/hour working at McDonald’s, there are consequences to the team when you don’t do your job. Even though I don’t blame the outcome of the game on Bostick, his mistake contributed to the Packers’ loss. It was one of dozens of mistakes that occurred during the game. There can be no doubt that mistakes affect the team and business.  They prevent the team from achieving its goals and they affect the moral of the team, which affects overall performance and impacts success. Mistakes also affect the public’s perception of the team.  How many of us, to this day, refer to those same old Lions and still believe they’ll find a way to lose? Certainly, you don’t want your customer base to have that perception of your business.

We will never eliminate all mistakes, but we can minimize mistakes through effective leadership, by holding employees accountable, and cultivating an environment where employees care about their work and want to put forth effort. Effort is critical because coaches, like bosses become more upset over mistakes that have nothing to do with effort.  You are not going to see too many coaches scream at a receiver because he did not make a diving catch, or a sprinter who gets edged out at the finish line.  But coaches do get upset when a lineman jumps off sides, gets a penalty for stepping on another player after the whistle has blown or when the sprinter is disqualified from a race because of a false start.  Similarly, most bosses are much more likely to become upset when employees make mistakes without giving maximum effort. It’s one thing to make a mistake while giving 110%. It’s an entirely different thing to make a mistake while loafing or not paying attention.

Employees must understand that everyone must do their job and that every job is important to the success of the business. Successful companies get this point across to their workforce early and often and constantly reinforce it through an effective communication and reward system. Of course, if workers are working hard, it is easier to accept the mistakes when they occur.

An Ounce of Prevention is Worth a Pound of Cure

An Ounce of Prevention is Worth a Pound of Cure

By:  Dan Cohen – 1/15/15

The Holidays are over. We have rung in the New Year. And, business has been back in session for nearly two weeks. If you blink, the snow will soon be melting and the annual pilgrimage to Comerica Park for Opening Day will be upon us. Time really does have a way of flying by, doesn’t it? 2015 holds much in store for us. If you have not already noticed, we have an overly active federal government. Some federal agencies, like the NLRB, have been extremely active while others, like the DOL, have received additional funding to go on the offensive. The U.S. Supreme Court will decide whether pregnant employees must be provided with accommodations similar to those provided to non-pregnant employees. Criminal background investigations, medical marijuana, social media and LGBT rights will continue to be in the forefront.

So, my question is: What are you waiting for? And, my challenge is: What are you doing to protect your business? Now, is certainly not the time to let down your guard. Your hiring guidelines, employment applications, employee communication programs, leave of absence and accommodation policies, pay practices, disciplinary forms, restrictive covenants, record-keeping and handbooks should all be reviewed. Quite frankly, if your handbook has not been reviewed for over a year, it is already outdated thanks to the NLRB. I suspect your other forms, policies, guidelines and agreements can use some freshening-up as well.

Most of these projects are not labor intensive and can be completed in short order at minimum expense. There is no better way to prepare for a DOL audit, union organizing drive, Bullard Plawecki Request, EEOC Charge, sexual harassment complaint or lawsuit than to have things in place beforehand. From my humble perspective, if you are not prepared before the fox is at the henhouse, then you are sure to lose some hens. Don’t find out that you are misapplying the white collar overtime exemptions during the DOL audit or that your sexual harassment policy does not pass muster during the EEOC investigation. Now is the time to shore these things up and take chance out of the equation. Otherwise, you are likely to spend more money defending yourself and you might not have a good defense when it is all said and done.

A Naughty Peek At Attorney Income

A Naughty Peek At Attorney Income

By:  Bill Pilchak – 1/13/15

One of the most common misconceptions in the business world is that an individual’s salary or wage is confidential. Even in-house counsel at staffing companies have resisted contractual provisions that permit customers to audit salaries/wages paid to contract staff (e.g., to determine why a high percentage have departed – perhaps because they do not get a fair share of what the customer pays), claiming that it would violate the employees’ right to privacy. After 30 years involved in employment law, I am unaware of any such right of privacy, and not a single person who has asserted the notion has ever been able to back up the point.

In fact, the law is exactly the opposite. For example, cases hold that bank and tax records which reveal income are not “private” because the information is shared with third parties: the bank and the IRS. (Duh!) Each of us tends not to reveal our income because it generates envy among those who earn less ( as Karl Marx knew well) and makes those who earn more feel superior. But, there is no “right” that one’s income cannot be disclosed. Companies do not reveal income data for many reasons, including loss of talent to competitors.

So, learning another’s income is always a bit titillating, even voyeuristic. A salty lady-lawyer and former colleague used to refer to seeing another’s economics as peeking under the other’s skirt. Well, as it turns out, the State Bar of Michigan periodically publishes a survey known at the Economics of Law Practice Survey, and did so in late 2014. Although every attorney in the state receives a copy of the results, most non-attorneys have never seen the data (possibly because many attorneys studied Marxist theory in Poli Sci classes). However, Pilchak & Cohen is pleased to provide a glimpse, because it illustrates one of the fundamentals of our business philosophy: Delivering world class legal representation to employers under a business model that lowers our internal costs so that we can provide representation at the lowest practical rates.

Before I cite statistics, it’s worth reviewing some terms: “Mean” means the “average.” “Median” is the numerical value at the midpoint of all the figures submitted; ½ of the survey answers were higher, ½ lower.

With that in mind, let’s first review relevant billing rates, keeping in mind that P&C attorneys have been consistently nominated by their opponents and peers for “Best Lawyer in America,” “SuperLawyer” and “dbusiness Top-Lawyer” status for years. The below data reflects only the categories that relate to our attorneys, with some comparison data in italics. Each client knows its billing rate for P&C’s partner/shareholders and associates, and will see that our efforts to run our business efficiently have translated directly to their bottom lines:

Hourly Rate By Employment Status, Field of Practice & Firm Size

Status 25th % Mean

Avg.

Median

Mdpt

75th%
Managing Partner 205 282 250 325
Equity Partner 250 333 310 417
Associate 175 218 208 250
Employment Law- Management 225 285 275 340
Firms w/ 3 attorneys 200 259 250 300
Firms w/ 4-6 attorneys 192 259 235 300

Hourly Rate By Years in Practice (Includes Solo Practitioners, Non-Business-Side Lawyers)

Status 25th % Mean

Avg.

Median

Mdpt

75th %
31-35 years 200 276 250 300
26-30 years 200 279 250 347
1-2 years 150 189 189 225

Hourly Rate By Location

Status 25th % Mean

Avg.

Median

Mdpt

75th%
Downtown Detroit 195 304 275 400
Oakland County South of M-59 200 280 250 325
Oakland County North of M-59 200 266 250 300
Southfield 210 280 250 325
Oakland County Combined 200 278 250 325

Comparing your billing rate to the data, you will see that P&C clients are billed at or below the mid-point means and medians in all categories.

Okay, so much for the “business” stats. I promised you a naughty peek at attorney income, and will deliver. First, let’s take a look at statistics relevant to many of the solo practitioners that sue our clients. Keeping my earlier blogs about a certain law school churning out too many lawyers in mind, you will see that some private practitioners generate so little income that they have a motive to take bad cases.

Income for Sole Practitioners (“Solos”)

Status Number

Of Responses

25th % Mean

Avg.

Median

Mdpt

75th %
Solo with office outside of home 444 40,000 120,929 75,000 145,000
Solo with home office 222(!) 9,563 47,881 25,083 64,000
Solo sharing office space 138 40,000 92,728 70,000 103,000

Not all lawyers respond to the survey. However, one can easily see how many private practitioners do not even make $100,000 per year, how many hover around $50,000 and how 25% make $40,000 or below! Once, attorneys would not invest their valuable time in bad cases. Now, attorney-time is not so

Income for Attorneys Like Us

Status 25th % Mean

Avg.

Median

Mdpt

75th %
Managing Partner 104,000 329,036 200,000 350,000
Equity Partner 132,287 300,921 215,000 350,000
Senior Associate 85,000 123,595 105,000 143,000
Associate 50,000 79,412 70,000 97,000
Total All Private Practitioners 52,196 178,340 100,000 200,000

We are not going to reveal our actual incomes, but will say this: Despite bill rates mostly below the mid-point means and medians in all categories, we are happy to generally be at, near or above the midpoints in earnings over recent years. Most of our clients know that personal financial gain, while important, is not our primary motivator. Our personal insistence upon excellence, our reputations among judges and the legal community, respect for our knowledge and strategies among our clients and assuring our place dealing with and serving the brilliant people in Metro-Detroit’s business community are at least as important.

What It Means When Employees Refuse to Sign Write-ups

What It Means When Employees Refuse to Sign Write-ups

By: Dan Cohen – 1/6/15

          Over the years, I have reviewed my share of employee personnel files. I see them when responding to agency charges, when defending wrongful discharge suits and when terminated employees request them under Michigan’s Bullard Plawecki Act. More times than not, I run across unsigned write-ups in those personnel files. Is it because the supervisor never presented it to the employee (a problem when litigation occurs), because employees forget to sign (not likely) or is it because some employees naively believe that by not signing the write-up, they can later argue the write-up never occurred? A fourth possibility is that the individual is generally uncooperative and views the employment relationship as “us against them.”

            If it were me, I would discipline/fire an employee who refused to sign a write-up. It’s a small but defiant act, an adversarial move by the employee which would absolutely affect the way I view that employee. In fact, such defiance would strain my relationship with the employee and all but destroy my faith and trust in that employee. So, yes; I would oppose their claim for unemployment benefits, and as long as I got a proper release, I would want to make sure references, who contact me about the employee, find out the employee refused to sign a write-up. But, that’s just me. You laugh, but I’m dead serious. Most employers want team players working for them. They want people who are part of the solution and not the problem. When someone refuses to sign a write-up, rather than sign it with an explanation, they are either not smart enough to be on the team or they are putting a stamp on their forehead that “I’m going to be a problem.”

              Call me a curmudgeon, but if you continue to employ an employee who refuses to sign a write-up out of principle, recognize that you have an employee who believes ”Team” is spelled with an “I”, is not very smart or simply does not trust management. And, you likely have someone who is far more likely to challenge you in the future. Obviously, none of these things are good for your business.

              The courts have not supported employees who refuse to acknowledge discipline. Cases have upheld the denial of unemployment benefits to employees who were discharged for refusing to sign their disciplinary write-up. In such cases, the employee’s refusal to abide by the request is considered misconduct, which disqualifies the employee from receiving unemployment benefits.

           Thus, to protect yourself from claims arising from your decision to fire an employee who refuses to sign a write-up, it would be worth using a disciplinary form that states:

 “Your signature acknowledges your receipt of the write-up and does not indicate your agreement with it. Refusal to sign a disciplinary form is grounds for discipline up to and including discharge.”

           I would also consider asking applicants whether they have ever refused to sign for a disciplinary write-up and I would make this part of my orientation and work rules.