Healthcare Integration Advisors - Overcoming Obstacles Along the Continuum of Care

While the headlines reported colorful allegations of kickbacks to physicians, such as Hawaiian vacations and Madonna tickets, and the stunning magnitude of the largest healthcare fraud settlement and payment by a drug company , the most significant aspect of the $3 Billion settlement by global pharmaceutical giant GlaxoSmithKline LLC (GSK) was the Corporate Integrity Agreement  (CIA), which restructures its sales and promotion practices.  The alleged misconduct involved “off-label” drug promotions (recommendations to use medicines for different conditions and patients than the FDA approved), payment of kickbacks, making false and misleading statements concerning the safety of Avandia, and reporting false “best prices” in order to underpay rebates owed under the Medicaid Drug Rebate Program.

With the theme “patients before profits, science before sales” the government set about to restructure GSK’s marketing practices in significant ways.  In addition to changing its incentive compensation practices, such that executive bonuses are now required to be clawed back for regulatory compliance failures, and field representative compensation must be based on service quality rather than sales volume, the 123-page CIA outlines a major overhaul of GSK’s physician arrangements policies and procedures.

Physicians and hospitals/academic medical centers may obtain remuneration from drug companies under any number of arrangements, including consulting agreements, speaker programs, service on advisory boards, research, publication activities, and grants for medical education activities.  Concern that these payments may undermine medical judgment or scientific independence led Congress to adopt the “Physician Payments Sunshine Act” reporting requirements, which go into effect on  January 1, 2013.  CMS blogged that the final rule will come later this year.  In the meantime, however, the CIA goes far beyond requiring the transparency of monetary payments. It requires that each type of physician relationship involving compensation be conducted in such a manner as to promote compliance with federal standards.

Physicians should see the following changes, among others, in their relationships with GSK and possibly with other companies that read the CIA as “a word to the wise” and adopt similar compliance practices voluntarily:

• Physicians will receive a letter from GSK describing the allegations, the settlement, and requesting that physicians report inappropriate promotion of products or other questionable conduct;
• Any requests by physicians for information on “off-label” uses of drugs will be required to be put in writing, confirming what information was requested, whether or not the request was unsolicited, signed by the medical professional, referred to the Medical Affairs Department, and all such requests for information will be tracked internally at GSK;
• Drug company sales and field reps may be accompanied by monitors who will observe their meetings with health care providers and assess the promotional materials distributed;
• Speakers at programs will be required to have compliance training and written agreements describing the scope of the work, speaker fees to be paid (fair market value with annual caps), compliance obligations. In addition, their programs will be monitored and their fees reported on the GSX website;
• Samples, coupons, and vouchers for drugs will be distributed only to the medical specialty or types of clinical practices for which the drug’s use has been approved;
• Researchers will have written agreements describing the scope of clinical research or other work, fees based on a pre-set rate structure, and compliance obligations;
• Physicians who sit on drug formulary boards or who develop clinical guidelines will be required to disclose their financial relationships with GSK; and
• Sponsorship or funding of grants to healthcare-related organizations in support of educational programs will be limited. The programs must be non-promotional and accurate in nature, and financial relationships with teaching faculty will be disclosed,.

It is important that the health care provider community as well as drug and medical device manufacturers read this CIA in order to have a clear understanding of what the Office of the Inspector General and the FDA expect.  Both business practices and compliance programs may need to be modified or enhanced to address financial incentives related to promotional and scientific activities that could compromise high quality patient care.  Transparency of financial arrangements is useful to raise the question of whether benefits have influenced physician judgment, but this CIA seeks to reform the underlying industry marketing, research, and compensation practices that drive many manufacturers’ arrangements with physicians.

Social networking sites have become a popular tool for employers seeking information about job applicants.  In the wake of media coverage detailing the conduct of certain employers who were requesting the social media passwords of job applicants, several states, including New York, have seen legislation introduced banning the practice.

On April 13, 2012, New York State Senator Liz Krueger sponsored and introduced a bill that would prohibit employers, as well as their agents or representatives, from requiring employees or job applicants to disclose log-in names, passwords or other means for accessing a personal social media account or device.  The legislation would also prohibit employers from discharging, disciplining or otherwise penalizing an employee, or refusing to hire a job applicant, based on his or her refusal to provide such information.  Employers found in violation of this law would be subject to a fine of $300.00 for a first offense, and $500.00 for each subsequent offense.

On May 2, 2012, Maryland became the first state to enact legislation that prohibits employers from requesting the social media passwords or accessing the social media of prospective and current employees.  Similar legislation is pending in several other states, and efforts are underway to introduce federal legislation that would prohibit employers from asking for the social media passwords of employees or applicants.

Needless to say, the world of social media and networking is changing rapidly.  As employers and legislators react to employers’ utilization of information secured from such sites, employers need to exercise caution in using social media to screen applicants.  Should an employer choose to do so, it should put in place a clear policy on the use of social media checks and monitor developments in this area of the law.

On May 30, 2012, the National Labor Relations Board (NLRB) announced its third report on social media cases, with a particular emphasis on the General Counsel’s findings that several employers’ social media policies were overbroad and therefore unlawful under the National Labor Relations Act.   Six policies are quoted in detail, and the defects in the policies elucidated. 

However, one employer’s social media policy (as revised) was determined to be acceptable, and is appended to the NLRB report at pages 22-23.   The acceptable sample contains warnings such as “before creating online content, consider some of the risks and rewards involved.  Keep in mind that any of your conduct that adversely affects your job performance…or otherwise adversely affects …Employer’s legitimate business interests may result in disciplinary action up to and including termination.”  So, even though the NLRB report concluded that it was unlawfully vague to tell employees, as one employer did, not to post “offensive, demeaning, abusive or inappropriate remarks,” on the grounds that this flawed provision could discourage protected communication among workers about working conditions, there are a number of more precise and permissible ways for employers to communicate to employees that appropriate conduct is required in social media venues.  The approved social media policy sample published by the NLRB is an invaluable resource for employers.

On January 24, 2012, the National Labor Relations Board (NLRB) released an Operations Management Memo detailing recent agency decisions on whether employees were properly disciplined for social media conduct. The take-away from the NLRB’s web release  is that “employer policies should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as the discussion of wages or working conditions among employees.”  This guidance is important to both unionized and non-unionized workplaces, because the NLRB has jurisdiction over all  private-sector and not-for-profit employers whose revenues exceed $250,000, excluding agricultural, railroad and airline employers.

In each case, the employers’ social media and confidentiality policies that had been the basis for employee discipline were reviewed by the NLRB to determine whether these work rules improperly restricted employees' rights to engage in “Section 7” activity under the National Labor Relations Act.  Section 7 activity is concerted employee activity in which an employee initiates or acts with the authority of other employees to address the terms and conditions of employment for the mutual aid and protection of employees.  Where employers were identified as having vague or overbroad policies, the NLRB called for them to include clear definitions, examples of prohibited conduct, and/or limiting language to clarify that the policy did not restrict protected Section 7 concerted activity. 

Below are some examples of the three categories of social media policies - explicitly restrictive of Section 7 rights, overbroad, and lawful/acceptable.  Many of the invalidated provisions will be a surprise to employers, since these provisions are commonly used in social media policies.

A.       Policy failures--explicit restriction of concerted activity:

• Policy prohibits employees from “making disparaging comments about the company through any media, including online blogs, other electronic media or through the media” [Problem: would reasonably be construed to restrict Section 7 activity.]
• Policy restricts use of Employer’s confidential and/or proprietary information provided that, in external social networking situations, employees should generally avoid identifying themselves as Employer’s employees, unless there was a legitimate need to do so or when discussing terms and conditions of employment “in an appropriate manner.” [Problem:  Employees have a Section 7 right to discuss their wages and other terms and conditions of employment, and this prohibits “inappropriate” discussions, and “savings clause” seeking to interpret policy so as not interfere with Section 7 rights at the end of the policy did not remove chill and could not be understood to clarify what “inappropriate” discussions were.]
• Policy prohibited employees from disclosing or communicating confidential, sensitive, or non-public information concerning the company on or through company property to anyone outside the company without prior approval of senior management or the law department.  [Problem:  policy that precludes employees from discussing terms and conditions of employment, or sharing information about themselves or fellow employees with outside parties violates law.]

B.      Policy failures--overbroad language (lacked clear definitions, examples, and limiting language):

• Policies prohibiting “unprofessional communication,”  “disrespectful conduct,”  “inappropriate conversation,” or “inappropriate postings.”
• Policy which prohibits employees from using social media to “engage in unprofessional communication that could negatively impact the Employer’s reputation or interfere with the Employer’s mission” or regarding members of the Employer’s community.
• Policy prohibiting use of company’s name or service marks in social media.  [Reason: employer’s proprietary interests were not implicated by employee’s non-commercial use in Section 7 activity.]

C.      Approved policies:

• Policy prohibited the use of social media to post or display comments about coworkers or supervisors or the Employer that are vulgar, obscene, threatening, intimidating, harassing, or a violation of the Employer’s workplace policies against discrimination, harassment, or hostility on account of age, race, religion, sex, ethnicity, nationality, disability, or other protected class, status, or characteristic.  [Reason:  prohibited conduct not reasonably understood to restrict Section 7 activity.]
• Policy that required employees not to refer to the company in social networking if necessary to insure compliance with securities regulations and other laws.
• Policy that prohibited employees from using or disclosing personal health information about patients.

Because social media law is developing, and involves the application of Federal labor and employment law and administrative agency guidance to specific situations, employers would do well to consult with legal counsel before implementing social media rules/policies,  or enforcing discipline based on those workplace rules.  Our prior blog reviewed the NLRB's first report on its social media decisions.

The New York Wage Theft Prevention Act went into effect on April 12, 2011.  The act amends New York State’s notice of wage rate requirements and expands the civil and criminal penalties when employers fail to comply with the requirements. 

One of the requirements mandates that employers provide current employees with a notice containing specific wage information on or before February 1^st of each year, commencing February 1, 2012.  The information required to be provided in the notice can be found in our blog post from April 2011.  The employee’s acknowledgement of the notification must be signed and dated by him or her and retained by the employer for six (6) years.

The New York State Department of Labor can impose damages upon employers who fail to adhere to the notice requirements in the amount of $50.00 per week, per employee.  If you have any questions about any of the statute’s notice requirements, contact the New York State Department of Labor or legal counsel knowledgeable in this area of the law.

On August 25, 2011, the National Labor Relations Board (NLRB) announced its final rule related to the Notification of Employee Rights under the National Labor Relations Act (NLRA).  Under that rule, private-sector employers (including labor unions) whose workplaces fall under NLRA jurisdiction will be required to post a notice of employee rights regarding unionization.  The NLRA covers most private-sector employers.  Excluded from coverage under the NLRA are public-sector employees, agricultural and domestic workers, independent contractors, workers employed by a parent or spouse, employees of air and rail carriers covered by the Railway Labor Act, and supervisory personnel.

The final rule requires the employers whose workplaces fall under NLRA jurisdiction to post and maintain the NLRB notice in conspicuous places and to take “reasonable steps” to ensure that the notices are not altered, defaced, covered by any other material, or otherwise rendered unreadable.  The proposed rule was to have taken effect on November 14, 2011.  However, in October 2011, the NLRB decided to postpone the implementation date for the notice until January 31, 2012.  Since that time, legal challenges to the rule remain unresolved in federal court.  Consequently, on December 23, 2011, the NLRB agreed to postpone the effective date of the notice-posting to April 30, 2012.  The Board stated that postponing the effective date of the rule would facilitate the resolution of the legal challenges that have been filed with respect to the rule.

A sample of the proposed notice language is attached.  Employers should also know that along with the obligation to post the rule will come the right to post a notice to employees of their right to choose not to unionize – however, wording of such notice should be discussed and cleared with legal counsel prior to posting it.

In order protect your business, it may be prudent to incorporate a non-solicitation provision into your employment agreements.  This type of restrictive covenant prohibits employees from leaving your company and soliciting your clients or customers.  Careful attention must be given when drafting a non-solicitation covenant because a restriction that is overbroad in its reach will not be enforceable.  The key to drafting an enforceable non-solicitation clause is ensuring that the restraint is not greater than is needed.  In New York, this means that a non-solicitation clause cannot extend to clients with whom the employee never acquired a relationship through the resources provided by the employer, or to clients that the employee developed independently and without the benefit of any expenditure of effort or resources by the employer.  When analyzing the validity of a non-solicitation clause, New York courts also consider: (i) the reasonableness in time and area, (ii) the harm to the general public, and (iii) the burden to the employee. 

Below is an example of a narrowly tailored non-solicitation provision. 

Non-Solicitation Covenant.  Employee agrees that in the event of separation from employment with Employer, whether such separation is voluntary or involuntary, Employee will not, for a period of twenty four (24) months following such separation, directly or indirectly: (i) solicit clients of Employer for the purpose of selling or providing products or services of the type sold or provided by Employee while employed by Employer, or (ii) induce clients or prospective clients of Employer to terminate, cancel, not renew, or not place business with Employer.  This restriction shall apply only to those clients of Employer with which Employee had contact or to those clients or prospective clients of Employer about which Employee obtained confidential information or trade secrets during the last twenty four (24) months of his or her employment with Employer.  For purpose of this paragraph, the term “contact” means interaction between Employee and a client which takes place to further the business relationship, or making (or assisting or supervising the making of) sales to or performing or providing (or assisting or supervising the performance or provision of) services or products for the client on behalf of Employer. 

If you decide to include a non-solicitation clause in your employment agreements, it is important to consult with an attorney to ensure that the provision is drafted in a manner that will withstand judicial scrutiny down the road. 

The Internal Revenue Service (IRS), the United States Department of Labor, and various states have joined together in an effort to crack down on the misclassification of employees as independent contractors.  Despite the fact that the definition of an employee for federal tax purposes has not been substantively amended, the IRS is getting more aggressive about pushing employment status for workers, including some that have long been viewed as independent contractors.

In concert with the increased investigation and enforcement of laws pertaining to worker classification, the IRS has launched a new program that will enable many employers to resolve past worker classification issues by paying a fraction of its employment tax liability in exchange for a prospective reclassification of independent contractors as employees.  “Designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government,” the new IRS Voluntary Classification Settlement Program (VCSP), also called the “Fresh Start Initiative”, was announced only two days after state and federal officials jointly proclaimed an agreement to work together to curb the practice of misclassifying employees.  To be eligible to participate in the VCSP, an employer must:

• consistently have treated workers in the past as non-employees;
• have filed all required 1099s for those workers for the previous three years; and
• not currently be under audit by the IRS, the Department of Labor, or a state agency concerning the classification of workers.

Employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least sixty days before they wish to begin treating the workers as employees, and the IRS will then determine whether or not the business qualifies.  The IRS maintains absolute discretion to deny an application into VCSP, even if the employer satisfies all eligibility requirements.  If an employer is accepted into the program:

• it will pay only 10% of the amount of employment taxes that would have otherwise been due on the compensation paid to the workers during the most recent tax year;
• no interest or penalties will be due;
• the business will not be audited on payroll taxes related to those workers for prior years; and
• participating employers will, for the first three years under VCSP, be subject to a special six-year statute of limitations rather than the usual three years that generally applies to payroll taxes for each of the first, second, and third years after it reclassifies its employees.

The program permits a business to reclassify some, or all, of its workers.  However, once it chooses to reclassify certain workers as employees, all workers in that same class must be treated as employees for employment tax purposes.

Please keep in mind that the “amnesty” contained in the VCSP applies to federal employment taxes only.  Depending upon whether state taxing agencies adopt a similar “amnesty” program, an employer participating in the VCSP could invite exposure under state tax laws.

When you joined the staff of your employer’s company, you made sure to protect your rights pursuant to an employment agreement.  Now the expiration date of your employment agreement is fast approaching and you’re wondering if there is really a need to push for a written extension.  You may think that as long as you continue your employment, you’ll be protected by the provisions of your contract, even if it technically expires.  If you work in New York, making such an assumption could cost you down the road. 

In 2008, the New York Court of Appeals issued a decision in Goldman v. White Plains Center for Nursing Care, LLC , 11 NY3d 173, that every employer and employee needs to keep in mind, especially when it comes time to renew an employment agreement.   At issue in the case was whether the expiration of a two-year employment contract gave rise to successive one-year implied contracts when employees continued working for the employer without a new agreement.  The plaintiff relied on a common law rule that recognizes an inference that parties intend to renew an employment agreement for an additional year where the employee continues to work after the expiration of an employment contract.  In other words, the plaintiff tried to argue that the employment agreement automatically renewed even though the parties had not executed a written extension.  The Court noted that the parties agreed the contract memorialized their understandings, could only be modified in writing, and expired on a specified date absent additional negotiations for a new agreement.  It stated that the application of the common law rule would contradict the express terms of the contract.  The Court held the common law rule could not be used to imply that there was mutual and silent assent to automatic contract renewal when an agreement imposed an express obligation on the parties to enter into a new contract to extend the term of employment.  Hence, plaintiff's employment became an at-will arrangement upon the expiration of the agreement. 

So what’s the lesson here?  If you have an employment agreement in place that provides valuable protection, be sure to obtain a written extension prior to the expiration of the agreement.  If you are an employer that wants to avoid uncertainty regarding the application of the common law rule, you can specify in your employment contracts that continuation of the employment relationship after the expiration of the contractual period will result in at-will employment status.

There is a long-standing practice in the health care industry to treat certain physicians, in particular medical directors, as independent contractors.  However, over the years the IRS has issued a number of rulings in which it has determined that these “typical” relationships are that of employer-employee.  Although the IRS modified its test in 2006  for determining whether an employer-employee relationship exists, which could affect these rulings, many industry analysts believe that the IRS will abide by its prior rulings. To date there have been no private letter rulings issued that would signal a change in the IRS’s position.

In 1995, the IRS issued two private letter rulings that are instructive with regard to medical directors and physicians.  In both, the physicians appeared to have entered into fairly standard medical directorship agreements with a nursing home or hospital, whereby the physicians maintained a separate private practice, provided administrative services to the nursing home or hospital, and received a monthly stipend for their services.  Both the nursing home and the hospital cited the long-standing industry practice of treating medical directors as independent contractors.

In the first ruling, the IRS cited the following factors to support its determination that the medical director was an employee:

• The physician provided the nursing home with services that differed from those provided in the physician’s private medical practice;
• The nursing home had the right to control the activities of the physician (i.e., the physician was required to be available for emergencies, to teach in-service classes, and to be at the facility 12 to 14 hours per month);
• The physician was paid a set monthly compensation and, therefore, was not in a position to realize a profit or incur a loss as a result of performing the services;
• The physician’s services were required by regulation and were necessary for the nursing home to provide high-quality medical care;
• The physician and nursing home had a continuing relationship that required the physician to personally render the designated services and work a set number of hours per month;
• The physician was required to submit monthly written reports to the nursing home;
• The nursing home paid for the physician’s business expenses, including professional seminars and conferences; and
• Both the physician and the nursing home retained the right to terminate the relationship with 60 days written notice.

In the second private letter ruling, the medical director was not required to work a set number of hours or submit regular reports to the hospital, did not receive office space in which to provide services, and was not reimbursed for expenses.  Nevertheless, the IRS concluded that the medical director was an employee of the hospital.  

Bottom line, if your hospital compensates physicians for medical director services, a careful analysis should be conducted to ensure your institution does not run afoul of the tax law.

In Part One of my series on employee misclassification, I discussed the penalties associated with improperly classifying an employee as an independent contractor.  In Part Two of this series, I provide information you can use to determine if a person should be classified as an employee or an independent contractor. 

The IRS uses an 11-factor test to determine if someone is an employee.  Below is a checklist you can use, which is based on this test.  A "yes" response to a question strengethens the position that an individual is an employee, while a "no" response strengethens the position that an individual is an independent contractor.  When using the term "business" in the checklist, I am referring to the entity paying the individual for his/her services. 

• Are there instructions provided by the business to the individual pertaining to when, where, and how the work is to be done?
• Is there training provided to the individual?
• Are work hours set by the business?
• Is the individual required to perform the services personally?
• Is the business in charge of hiring, firing, supervising, or paying others who will substantially assist the individual in performing the work?
• Does the business require oral or written reports on a regular basis?
• Does the business provide tools and materials necessary to perform the services?
• Does the business tell the individual where to purchase supplies and materials if not already provided?
• Is the work to be performed at the business' location?
• Is the compensation paid on a regularly recurring basis (hourly, weekly, or monthly)?
• Is the individual paid a fixed compensation amount?
• Does the business reimburse the individual's business and/or travel expenses?
• Does the individual work for only the business?
• Does the business provide benefits such as insurance, pension, or paid leave?
• Does the business anticipate a continuing relationship, rather than based on a project or period?
• Does the individual have a right to end his/her relationship with the business at any time without incurring liability?

While this checklist is meant to provide some helpful guidance, you should always contact a knowledgeable attorney if you have questions about proper employee classification. 

The  Age Discrimination in Employment Act of 1967 (ADEA) forbids employment discrimination against anyone over the age of 40 in the United States (29 U.S.C. Section 631(a)).  The ADEA contains a broad ban against age discrimination and covers employers that have 20 or more employees.  The statute specifically prohibits discrimination in hiring, promotions, wages, termination of employment, or layoffs.  Additionally, the ADEA has prohibited mandatory retirement in most sectors since 1978. 

Exceptions to older workers being covered under the ADEA are:

• When age is essential to a specific position, the ADEA does not apply.  This is also known as a “bona fide occupational qualification”;
• Police and firefighter jobs;
• Executives in high policy-making positions reaching age 65 may be obligated to retire if their annual pension benefits are $44,000 or more;
• Tenured university faculty; and
• Federal employees in air traffic control and law enforcement jobs.

Each state may also have laws prohibiting age discrimination.  The ADEA does not preempt state law when state law is broader than the ADEA.  In cases where state law is less restrictive than the ADEA, employers must comply with the more strict federal law.  The primary New York State statute prohibiting age discrimination is the Human Rights Law.  Currently under the Human Rights Law there is no maximum age limit for discrimination purposes. 

The Equal Employment Opportunity Commission (EEOC) issues a Compliance Manual and, as amended in May 2000, it states that “In most circumstances, an individual is only protected if he or she was an employee at the time of the alleged discrimination, rather than an independent contractor, partner, or other non-employee.”  The EEOC Compliance Manual also states that “In most circumstances, individuals who are partners, officers, members of boards of directors, or major shareholders will not qualify as employees.”  In determining whether a partner, officer, member of board of directors, or a major corporate shareholder is an employee or an employer, the EEOC looks collectively at the following six factors:

1. Whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work;
2. Whether the organization supervises the individual’s work and, if so, to what extent;
3. Whether the individual reports to someone higher in the organization;
4. Whether the individual is able to influence the organization and, if so, to what extent;
5. Whether the parties intended the individual to be an employee, as expressed in written  agreements or contracts; and
6. Whether the individual shares in profits, losses, and liabilities of the organization.

The question of whether a “partner” in a partnership or a “shareholder” in a corporation is an “employer” or an “employee” under the ADEA is not always an easy one and must be determined on a case by case basis.  The EEOC and courts use the six factors above to analyze each case.  EEOC investigators are directed in every case to determine whether the individual acts independently and participates in the management of the organization or is subject to control of the organization.  For instance, in large partnerships or corporations, some of the partners and shareholders may be found to be employees if the EEOC determines that the control of the organization is vested in a smaller group of partners or shareholders.

The moral of the story is that just because an individual is an owner does not mean that such individual will not be considered an employee under the ADEA or the New York Human Rights Law, thereby affording him or her the protections under those laws.

If you are a physician joining a medical group or a hospital staff, chances are high that a non-competition clause will be included in your employment agreement.  Physicians are often told that the covenant not to compete is non-negotiable.  While that may be true, there are other provisions you can negotiate to protect yourself in the event the agreement is terminated down the road. 

• Term and Termination – Look carefully at the term and termination provisions in your contract.  If the term of your contract is three years, but either party can terminate on 60 days notice, you actually have a 60 day contract.  Negotiating a longer notice period will give you more time to plan you next career move if your employer decides to terminate your agreement and the non-compete forces you to move out of the area.
• Severance Payments – You can ask your employer for a severance package and use the additional compensation to relocate if necessary.
• Renewal Provision – If the non-compete in your employment agreement applies upon its expiration, you can ask for (i) an automatic renewal provision that can only be avoided upon notice from one party to the other; (ii) a requirement that mandates both parties negotiate the terms of a new agreement prior to the end of the term; or (iii) a provision that requires the employer provide notice to you if it does not intend to renew the contract.  All these options will give you time to plan your next steps. 
• Buy-out  – You can ask your employer for an option to buy-out your non-compete.  This type of provision will allow you to continue practicing without any restriction, provided you are willing to pay the price.

Non-competition clauses can have a significant impact on your life and your ability to practice, so be sure to read them carefully and engage qualified counsel to assist you and protect your interests.

On March 24, 2011, the Equal Employment Opportunity Commission ("EEOC") released its long awaited final regulations implementing the Americans With Disabilities Amendments Act of 2008 ("ADAAA").  The final regulations were published in the Federal Register on March 25, 2011 and  become effective on May 24, 2011. 

The ADA’s definition of a “disability” remains unchanged under the ADAAA.  A “disability” is still defined as (1) a physical or mental impairment that substantially limits one or more major life activities, (2) a record of such an impairment, or (3) being regarded as having such an impairment.  However, the ADAAA makes significant changes in how these terms are to be interpreted, and the EEOC’s final regulations implement those changes.

The following is a list of key points in the final regulations:

• Principles for determination of disability. The final regulations set forth a list of nine “rules of construction” in determining whether an impairment “substantially limits a major life activity.”  For instance, an impairment does not need to prevent or significantly restrict a major life activity to be considered “substantially limiting.”  Except for ordinary eyeglasses or contact lenses, “mitigating measures” like medication and assistive devices must not be considered when determining whether an impairment substantially limits a major life activity.  The term “substantially limits” is to be construed broadly to the maximum extent allowable under the ADA. 
• Major life activities.  The final regulations provide a “non-exhaustive” list of examples of “major life activities,” such as caring for oneself, seeing, hearing, eating, walking, sitting, reaching, bending, speaking, breathing, reading, concentrating, and interacting with others.  In addition, the final regulations clarify that the term “major life activities” includes “major bodily functions,” such as functions of the immune system, bladder functions, neurological functions, and respiratory functions.
• “Regarded as” element more easily established.  The ADAAA expands the “regarded as” disabled analysis by prohibiting discrimination based on an individual’s impairment or an employer’s perception of an impairment.  The focus is on how the individual was treated rather than on what the employer believes about the nature of an individual’s impairment. 
• Reasonable accommodations.  The final regulations clarify that an individual must meet either the “actual” or “record of” definitions of a disability in order to qualify for a reasonable accommodation.  An individual that meets only the “regarded as” definition of a disability is not entitled to a reasonable accommodation.

What does this mean for employers? 

The EEOC’s final regulations expand the protections of the ADA, largely because more individuals will fall under the protection of the statute as having a “disability.”  While this may not have as much impact upon New York employers, given the very broad definition of a “disability” under the New York Executive Law, there are additional remedies (such as recovery of attorneys’ fees) available under the ADA that cannot be recovered under New York State law. 

Going forward, employers need to focus more on accommodation and not on whether a person is considered disabled.  Employers should engage in an interactive process with the individual requesting or appearing to need an accommodation.  Individualized assessments of accommodations should be conducted, and the accommodation process should be clearly documented.  Examples of documentation can include whether the requested accommodation is reasonable and whether the accommodation can be provided without an undue hardship on the employer. 

Imagine the following: An employee comes to you, the HR manager, complaining about location of a time clock in the company’s plant. He tells you verbally that placing the time clock between the area where the workers put on and take off their work-related protective gear and the area where they carry out their assigned tasks is illegal under the Fair Standards Labor Act, but he does not submit a written complaint. The President of the company then comes to you and tells you that he wants to fire that same employee because he has failed to clock in and out after repeated warnings. Would there be any risk in firing this employee? If you said no, you would be wrong.

According to a recent decision by the US Supreme Court, an oral complaint of a violation of the FSLA is protected conduct under the Act’s anti-retaliation provision. If you decide you need to terminate an employee after the employee files an FSLA complaint, whether written or verbal, you need to tread with caution to protect your company against a lawsuit for unlawful retaliation.

The FSLA contains an anti-retaliation provision that prohibits an employer from firing an employee because the employee has reported illegal working conditions or practices. At issue in Kasten v. Saint Gobain Performance Plastics Corporation, was the type of complaint that qualifies for protection under the FSLA. Under the Act, employers may not “discharge or in any other manner discriminate against any employee because such employee has filed any complaint . . . related to the Act. . . ” The Court held that “filed any complaint” includes oral as well as written complaints. According to the decision, any other interpretation would undermine the Act’s basic objective to prohibit detrimental labor conditions. The Court noted that to gain protection under the anti-retaliation provision of the FSLA, “the oral complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.”

Lessons for all employers

• Develop and implement a policy to handle all FSLA complaints filed by employees, whether oral or written.

• If an employee files an oral FSLA complaint, be sure to memorialize the complaint in writing as well as the actions taken to address the complaint.

• If you decide to terminate an employee after he/she files an FSLA complaint, be sure to seek advice from legal counsel well-versed in employment law.

Since October 2009, employers have been required under New York Labor Law § 195(1) to provide all new hires with written notification of their rate of pay, overtime rate (if applicable) and regular payday.  Moreover, employers have been required to secure a written acknowledgment from each new hire confirming receipt of this information. The Wage Theft Protection Act (“WTPA”), which goes into effect on April 12, 2011, significantly increases the notice requirements under Labor Law § 195(1), both in terms of the information that must be given to employees and the frequency with which it must be provided.  

With respect to new hires, employers will now be required to provide written disclosure of the following additional information:

• The basis of the employee’s rate of pay (i.e., hourly, daily, weekly, commission, etc.)
• Allowances claimed against the minimum wage (tips, meal or lodging allowances)
• The name (including any d/b/a names), address and telephone number of the employer
• Any other information the Commissioner of Labor deems necessary 

This new notice must be provided in both English and the language identified by the employee as his or her primary language.  The notification must be signed and dated by the employee and retained by the employer for at least six years.

With respect to current employees, the WTPA mandates that employers provide the notice described above by February 1, 2012, and on or before February 1 in each subsequent year.  As is the case with new hires, the employee’s acknowledgment of such notification must be signed and dated by him or her and retained by the employer for at least six years.  In addition, employers must now provide the following information along with every wage payment (some of which were previously required): 

• Dates of work covered
• Employer’s address and telephone number
• Gross wages
• Net wages
• Deductions
• Allowances against minimum wage
• Regular rate of pay and manner in which it is paid (hourly, salary, commission, etc.) and, for non-exempt employees, the overtime rate of pay and the number of regular and overtime hours worked

The WTPA provides greater protection and rights to employees who have complained about wage and hour violations or whom the employer believes to have made such complaints. 

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