Do Your COBRA Notices Comply with the Law? If Not, Your Organization Could be Susceptible to a Class Action Lawsuit

Pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), employers with twenty (20) or more employees that provide health insurance must furnish covered employees and their families with certain specific notices that summarize their rights under COBRA after certain events such as termination of employment.  The notices must explain how continuation coverage is offered, how qualified beneficiaries may elect such coverage, and when such coverage can be terminated.

Last month, a federal court held that Marriott International, Inc. must defend a proposed class action lawsuit alleging that the hotel chain provided its employees with deficient COBRA notices of their rights to continued healthcare coverage in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended by COBRA.  In Vazquez v. Marriott International, Inc., the United States District Court for the Middle District of Florida dismissed Marriott’s motion to dismiss a complaint filed by former housekeeper Alina Vazquez (individually and on behalf of all others similarly situated to her) on the grounds that it was premature to determine whether Marriott’s contention that the former employee’s loss of healthcare coverage was attributable to the fact that she could not afford it, as opposed to any deficiency in the COBRA notice.

In her complaint, Ms. Vazquez alleges that Marriott’s COBRA notice violated the law because it failed to:

  1. provide a notice of continued healthcare coverage rights under COBRA in Spanish;
  2. adequately explain the procedures to elect healthcare coverage; and
  3. provide a notice that an average participant would understand.

According to Ms. Vazquez, as a result of Marriott’s deficient COBRA notice, both she and her husband lost their healthcare coverage for approximately two months, incurred significant medical expenses, and now have medical bills that remain unpaid.

Marriott is just the latest employer to be faced with class action suits claiming they failed to comply with COBRA’s notice requirements.  Other companies, including Wal-Mart, SunTrust Banks, and American Bottling Company have also faced similar suits.  In 2016, SunTrust Banks agreed to pay almost $290,000 to settle class action claims that it provided defective COBRA notices to its employees.

In light of these recent cases, employers are well advised to have their COBRA notices reviewed to ensure they comply with the law.

If you would like any assistance in reviewing and, if necessary, revising your COBRA notices, please contact any of the attorneys within the Labor, Employment & Employee Benefits Group.

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Previously Enjoined Salary Basis Test for White Collar Exempt Employees Has Been Permanently Struck Down by U.S. District Court Judge in Texas

As previously reported in, “Breaking News: DOL’s Final Rule Increasing Salary Threshold for White Collar Exempt Employees Enjoined and Will Not Take Effect on December 1,” Judge Mazzant of the U.S. District Court for the Eastern District of Texas had enjoined the Department of Labor’s Final Rule under the Fair Labor Standards Act that was slated to go into effect on December 1, 2016.  The Final Rule, had it gone into effect, would have raised the minimum salary threshold for white collar exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).

Since Judge Mazzant’s ruling in late November 2016, the legal challenge to the Final Rule continued in the form of a motion for summary judgment filed by the plaintiffs, Plano Chamber of Commerce and national business groups.  In their motion, the plaintiffs sought to permanently invalidate the Final Rule as having been improperly issued by the Department of Labor.  Specifically, the plaintiffs argued that the Department of Labor exceeded the authority granted to it by Congress when it more than doubled the salary threshold.

On August 31, 2017, Judge Mazzant agreed with the plaintiffs and permanently struck down the Final Rule.  As a result of Judge Mazzant’s ruling, the current salary threshold of $455 per week for white collar exempt employees will remain in effect for the foreseeable future.  In its decision, the Court stated that “the Department [of Labor] does not have the authority to use a salary-level test that will effectively eliminate the duties test” for white collar exemptions.  The Court found it troublesome that the Final Rule would reclassify over 4.2 million currently exempt employees to non-exempt employees without regard to an analysis of (or any change in) their job duties.  Instead, the Final Rule’s reclassification effect would be based solely on a change in the minimum salary threshold.  As stated by the Court:

“Congress unambiguously directed the Department [of Labor] to exempt from overtime pay employees who perform ‘bona fide executive, administrative, or professional capacity’ duties.  However, the Department creates a Final Rule that makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.”

The Court went on to state that the Final Rule was inconsistent with Congressional intent and was, therefore, “unlawful.”

Another interesting aspect of the Court’s opinion is found in a footnote where the Court referenced the following statement it made during oral argument:

“If [the salary level] had been just adjusted for inflation . . . we wouldn’t be here today . . . because [the salary level] would still be operating more the way it has . . . as more of a floor.”

The import of this statement is clear – the Court would find permissible an attempt by the Department of Labor to adjust the salary threshold in response to inflation.

The practical result of the Court’s decision is that employers may continue to conduct business as usual with respect to their prior white collar classifications and may continue to rely on the $455 per week salary threshold.  Employers must, however, ensure that employees are properly classified based on an analysis of their job duties.

Although it is difficult to predict future actions of the Department of Labor, it is likely that the Department will explore a much more modest increase to the salary threshold through future rulemaking efforts – possibly tied to inflation.  Any such attempt, however, will take months, and perhaps years, to accomplish. It should also be noted that the Department of Labor may elect to file an appeal to the 5th Circuit Court of Appeals.

If you would like any assistance with respect to proper classification of employees under the Fair Labor Standards Act or any other labor and employment-related issue, please contact any of the attorneys within the Labor, Employment & Employee Benefits Group.

Posted in DOL, Wages | Tagged , | Leave a comment

BREAKING: EEO-1 Pay Reporting Requirements Suspended Immediately

On August 29, 2017, Victoria Lipnic, the Acting Chair of the U.S. Equal Employment Opportunity Commission (“EEOC”), announced that the Office of Management and Budget’s (“OMB”) Office of Information and Regulatory Affairs has issued an immediate stay of the new EEO-1 pay reporting requirements, which were scheduled to be due in March 2018 for employers with 100 or more employees.

According to the OMB, the stay is based, in part, because the OMB “believe[s] that continued collection of this information is contrary to the standards of the [Paperwork Reduction Act]. Among other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”

For employers, the OMB’s stay means that – unless otherwise announced – the current EEO-1 form will remain in effect, but there will be no change to the 2017 EEO-1 report filing deadline of March 31, 2018. In addition, this means that the incredibly burdensome requirements being imposed by the new form will not be going into effect – at least not at this point in time.

If you have any questions about the EEO-1 pay reporting suspension or your company’s obligations with respect to the EEO-1 reports, please contact a member of Mirick O’Connell’s Labor and Employment Group.

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Massachusetts Enacts Pregnant Workers Fairness Act

On July 27, 2017, Governor Charlie Baker signed the Massachusetts Pregnant Workers Fairness Act (“PWFA”).  Historically, courts have struggled with the issue of whether pregnancy is a “disability” that must be accommodated under the Americans with Disabilities Act (the “ADA”) as well as under Massachusetts law.  The PWFA resolves that issue and conclusively establishes that pregnancy, and any related conditions, must be accommodated and that discrimination against pregnant workers is prohibited.

The PWFA goes into effect April 1, 2018 and amends Chapter 151B to:

  • Add “pregnancy or a condition related to said pregnancy, including, but not limited to, lactation, or the need to express breast milk for a nursing child” as a protected classification;
  • Require employers to provide a reasonable accommodation (see below) for an employee’s pregnancy, or any condition related to the pregnancy, unless the employer can demonstrate that the accommodation would impose an undue hardship;
  • Prohibit employers from retaliating against an employee for requesting an accommodation;
  • Provide that employers must reinstate the employee to her original employment status or equivalent position with equivalent pay and accumulated seniority when the need for reasonable accommodations ceases; and
  • Prohibit employers from requiring pregnant employees to accept a reasonable accommodation or take a leave of absence.

With respect to the requirement that employers provide reasonable accommodations to pregnant employees, the PWFA specifically enumerates several reasonable accommodations, including: (1) more frequent or longer paid or unpaid breaks; (2) paid or unpaid time off to recover from childbirth; (3) acquisition or modification of equipment or providing seating; (4) temporary transfer to a less strenuous or hazardous position; (5) job restructuring; (6) light duty; (7) private non-bathroom space for expressing milk; (8) assistance with manual labor; and (9) modified work schedules.  Under the ADA, employers can require employees to submit documentation to support their need for a reasonable accommodation.  The PWFA, however, prohibits employers from requiring documentation to support four reasonable accommodations: more frequent restroom, food, and water breaks; seating; limits on lifting over 20 pounds; and private non-bathroom space for expressing milk.

Employers must provide notice of the protections and rights created by the PWFA to all employees in a Handbook or by other means, and must provide notice to: (a) all new employees at the commencement of employment; and (b) any employee who notifies the employer of a pregnancy or related condition within 10 days of such notification. Employers should act now to create policies to satisfy this provision.

Please contact a member of our Labor and Employment Group if you have any questions about your organization’s obligations under the PWFA, including the drafting and implementation of policies.

Posted in 151B, Americans with Disabilities Act, Employment Discrimination | Tagged , , , , , , | Leave a comment

Revised Form I-9 Issued

On July 17, 2017, the U.S. Citizenship and Immigration Services issued a new Form I-9, Employment Eligibility Verification.  The new Form I-9 will be effective September 17, 2017, which means that employers must begin to use the form no later than September 18, 2017.  The new Form I-9 can be found here:
Employers should be aware that the revised Form I-9 changes the instructions on the first page to remove “the end of” when describing the day on which Form I-9 completion is required.  Now, Form I-9s must be completed “no later than the first day of employment.”  In addition, the new Form I-9 updates List C to reflect the most current version of the certification or report of birth issued by the U.S. Department of State and updates the name of the Department of Justice’s Immigrant and Employee Rights Section (formerly the “Office of Special Counsel for Immigration-Related Unfair Employment Practices”).
If you have any questions about the revised Form I-9 or your company’s compliance with the Form I-9 requirements, please contact a member of our Labor, Employment and Employee Benefits Group.
Posted in Form I-9 | Tagged | 1 Comment

Massachusetts High Court Recognizes Employee Right of Qualified Medical Marijuana Users To Allege Handicap Discrimination For Off-Site Use of Medicinal Marijuana

In a long-awaited decision, the highest court in Massachusetts – the Supreme Judicial Court (“SJC”) – ruled today in Cristina Barbuto v. Advantage Sales & Marketing, LLC, et al. that an employee who used medical marijuana to treat a debilitating medical condition may proceed with a claim of handicap discrimination after being terminated from employment based on her testing positive for her off-site use of physician-prescribed marijuana.

The facts in Barbuto were straightforward.  Ms. Barbuto was hired into an entry-level position by Advantage Sales & Marketing, where she would be assigned to supermarkets to set up and hand out food samples to supermarket customers.  After having accepted an offer of employment, Ms. Barbuto was informed that she would be required to submit to a mandatory drug test.  Ms. Barbuto immediately informed her supervisor that she would test positive for marijuana because she suffers from Crohn’s disease – a debilitating gastrointestinal condition.  To treat her condition, Ms. Barbuto’s physician had provided her with a written certification allowing her to use marijuana for medicinal purposes.  Specifically, Ms. Barbuto’s marijuana use enabled her to appropriately gain and maintain a healthy weight.
In response to Ms. Barbuto’s disclosure, the supervisor stated that her medicinal use “should not be a problem.”  Despite the supervisor’s confident assurance, Ms. Barbuto’s employment was terminated for testing positive for marijuana after only completing one day of work.  The employer’s stated rationale was that it followed Federal, and not state, law with respect to marijuana use, and marijuana is a Scheduled I Controlled Substance under Federal law.  According to the employer, it would have been “facially unreasonable” to accommodate the employee’s use, which constituted a crime under Federal law.
Barbuto’s Lawsuit
Following her employment termination, Ms. Barbuto filed a complaint with the Massachusetts Commission Against Discrimination (“MCAD”) and then withdrew her complaint to file her claims in Massachusetts Superior Court.  Ms. Barbuto’s Superior Court complaint pled six claims:  (1) handicap discrimination under M.G.L. chapter 151B; (2) interference with her right to be protected from handicap discrimination under the same state statute; (3) aiding and abetting the employer in committing handicap discrimination against the human resources representative for the employer; (4) invasion of privacy under M.G.L. chapter 214, Section 1B; (5) denial of the “right or privilege” to use marijuana lawfully as a registered patient to treat a debilitating medical condition, in violation of the medical marijuana act; and (6) violation of public policy by terminating her employment for lawful use of marijuana for medicinal purposes.
In May 2016, the Superior Court dismissed all of Ms. Barbuto’s claims except for the invasion of privacy claim, which it stayed pending her appeal of the dismissed claims.
The SJC’s Decision
Given the novelty and importance of the issues posed, the SJC accepted direct appellate review of the case.  After receiving multiple court briefs, including a comprehensive brief from the MCAD, the SJC made the following noteworthy findings – each of which will undoubtedly be cited in future cases both within Massachusetts and beyond:
  • “Under Massachusetts law, as a result of the [medical marijuana] act, the use and possession of medically prescribed marijuana by a qualifying patient is as lawful as the use and possession of any other prescribed medication;”
  • “Where, in the opinion of the employee’s physician, medical marijuana is the most effective medication for the employee’s debilitating medical condition, and where any alternative medication whose use would be permitted by the employer’s drug policy would be less effective, an exception to an employer’s drug policy to permit its use is a facially reasonable accommodation;” and
  • “A qualified handicapped employee has a right under G.L. c. 151B, § 4(16), not to be fired because of her handicap, and that right includes the right to require an employer to make a reasonable accommodation for her handicap to enable her to perform the essential functions of her job.”
In making the above findings, the SJC made clear – in response to the employer’s argument – “the fact that the employee’s possession of medical marijuana is in violation of Federal law does not make it per se unreasonable as an accommodation.”  As the Court noted, an employer “would not be in joint possession of medical marijuana or aid and abet its possession simply by permitting an employee to continue his or her off-site use.”  Thus, the Court reasoned, the “only person at risk of Federal criminal prosecution for [such] possession” is the employee.
The SJC was also clear that upon request by an employee for an accommodation in the form of off-site use of medical marijuana, the employer is obligated to participate in the interactive process to explore whether there are any alternative, equally effective medications that could possibly be used that would not run afoul of the employer’s drug policy.  As stated by the Court:  “[t]he failure to explore a reasonable accommodation alone is sufficient to support a claim of handicap discrimination provided the plaintiff proves that a reasonable accommodation existed that would have enabled her” to perform the essential functions of the job with or without a reasonable accommodation.
The end result of the SJC’s rulings is that the lower court’s dismissal of Ms. Barbuto’s  handicap-related claims is reversed, and Ms. Barbuto may continue to pursue her disability-related claims, along with her invasion of privacy claim, in Superior Court.
What About Safety Sensitive Positions?
Fortunately, the SJC provided additional guidance with respect to the rights of employers who prohibit marijuana use – both on and off-site – for safety sensitive positions and/or where such use would violate an employer’s contractual or statutory obligations.  As stated by the Court, “an employer might prove the continued use of medical marijuana would impair the employee’s performance of her work or pose an ‘unacceptably significant’ safety risk to the public, the employee, or her fellow employees.”  In such an instance, the employer would meet its burden to establish that the terminated employee’s use of medical marijuana is not a reasonable accommodation because it would impose an undue hardship on the employer’s business.  By way of example, the SJC noted:  “[w]e recognize that transportation employers are subject to regulations promulgated by the United States Department of Transportation that prohibit any safety-sensitive employee subject to drug testing under the department’s drug testing regulations from using marijuana.”  Thus, the SJC has clearly left open the door for employers to continue to prohibit marijuana use for safety-sensitive positions, provided the employer can establish that such use would pose an unacceptable safety risk.
Moving Forward
With respect to non-safety-sensitive positions, the law is now clear in Massachusetts:  employers must engage in the interactive process in an attempt to accommodate an employee’s lawful use of medical marijuana, and employers must provide a reasonable accommodation, including permitting the off-site use of medical marijuana, unless such use can be proven to result in an undue hardship to the employer’s business.
If you would like to discuss the specific application of this decision to your workplace or if you need guidance concerning modifying your drug-free workplace policies, please contact any member of the Labor, Employment & Employee Benefits Group.
Posted in 151B, Employment Discrimination, SJC | Tagged , , , , , , | 1 Comment

“Remembered Information” Not Entitled to Trade Secret Protection

What happens when a former employee, who had signed a non-competition agreement with your company, starts calling on your customers?  Can you seek to enforce the agreement and prohibit the former employee from soliciting your customers?

Case law in Massachusetts has not been consistent or clear on if or when the identities of a company’s customers are considered “confidential” or a “trade secret” and entitled to protection under a non-competition agreement.

Judge Salinger of the Massachusetts Superior Court Business Litigation Session (“BLS”) recently issued an Order dismissing an employer’s case attempting to enforce a non-competition agreement, and the Order includes analysis that clarifies the issue. Specifically, in Oxford Global Resources, LLC v. Hernandez, the employer alleged that their former employee breached the non-competition agreement (which defined “trade secret information” to include the identity of the employer’s customers and prospective customers) by soliciting companies and individuals that “he knew” were customers of the employer.  In rejecting the employer’s argument, Judge Salinger stated:

An employee is free to carry away his own memory of customers’ names, needs, and habits and use that information, even to serve or solicit business from those very customers. Such “remembered information” is not confidential because the information itself, as distinguished from an employer’s compilation of such information into a list or database, is known to the customers and thus not kept secret by the employer.

There we have it: compilations of customer information are confidential and entitled to protection, but employers cannot prevent former employees from using “remembered information” regarding their customers – even if such information is defined as being “confidential” in an agreement.

While the decision is not binding on Massachusetts courts, we can expect that deference will be paid to Judge Salinger’s decision by state and federal Courts because he and the BLS are held in high regard.

Please feel free to call a member of Mirick O’Connell’s Labor and Employment Group if you have any questions about the decision or would like to discuss strategies for protecting your trade secret and confidential information.

Posted in Employment Agreements, Non-Competition Agreements | Tagged , , , , , | Leave a comment