What legal and administrative changes the new political landscape may bring for employers in 2011 Featured

12:15pm EDT February 22, 2011
M. Alim Malik, shareholder, Jackson DeMarco Tidus Peckenpaugh M. Alim Malik, shareholder, Jackson DeMarco Tidus Peckenpaugh

Despite the “shellacking” — to borrow a turn of phrase from President Obama — the Democrats took in the midterm congressional elections in November and the divided government those election results will bring, 2011 still promises to be a year fraught with challenges for employers both within California and across the nation. From new legal mandates contained in obscure provisions of health care reform to new enforcement initiatives undertaken by various government agencies and the continued increase of wage and hour claims, business owners will have to remain vigilant to ensure compliance with the various legal and administrative changes coming in 2011.

Smart Business spoke with M. Alim Malik and Jonathan M. Werner of Jackson DeMarco Tidus Peckenpaugh about what labor and employment law developments are on the horizon for business owners in 2011.

How will the recent congressional elections impact employers in 2011?

From an immediate standpoint, a divided political landscape will mean that business owners should not have to worry about any new significant legislation impacting the workplace coming out of Congress in 2011. However, while Congress may be deadlocked, the Obama administration will remain busy implementing the various laws that were passed in the most recently adjourned Congress and initiating new enforcement initiatives to achieve the administration’s political objectives by executive fiat. Several areas of particular concern warrant discussion.

What is the discussion surrounding employers’ use of credit checks?

On Dec. 21, 2010, the U.S. Equal Employment Opportunity Commission announced that it was suing Kaplan Higher Education Corp. for refusing to hire a class of job applicants based on their credit history. While refusing to hire applicants with poor credit does not in and of itself constitute unlawful discrimination, such a practice can be illegal if it has a ‘disparate impact’ on a protected category of individuals, and if an employer cannot show that the practice is job-related and justified by ‘business necessity.’

Having just emerged from the deepest economic slump since the Great Depression, and with unemployment still hovering above 10 percent, it stands to reason that a significant percentage of applicants for any job are going to have poor credit. Moreover, it is not always clear what relevance an applicant’s credit history has in making a hiring decision for most categories of jobs. Given its negligible utility in the hiring process, and the EEOC’s renewed interest in its use by employers, business owners should refrain from using the results of credit checks to justify hiring or promotion decisions in most contexts. Such information should only be used when employers can show a strong ‘business necessity’ for applicants to possess good credit (for example, in jobs where employees handle large amounts of cash or other financially sensitive positions).

Why is the Department of Labor encouraging hourly employees to keep a separate record of hours worked?

Wage and hour law is one of the most active areas of labor and employment law nationwide. Perhaps because of this, the U.S. Department of Labor is actively encouraging hourly employees of private businesses to keep a separate, daily log of the hours they work and the breaks they take in order to ensure that business owners’ timekeeping methods are fully recording all employee work time. The Department has even created a free, downloadable ‘Work Hours Calendar’ for employees to use to track their own time. In view of this, business owners should take the time to audit their timekeeping practices to ensure that they are accurately and completely recording all hours worked by their employees.

What new accommodations do employers need to make in light of health care reform?

Congress included a provision in the Patient Protection and Affordable Care Act requiring employers to provide a reasonable amount of break time to employees to express breast milk as frequently as needed by the nursing mother. Additionally, employers must provide a separate, private space (restrooms don’t qualify) for these employees that is free from intrusion by fellow employees or the public.

While California has had a similar law on the books for several years, employers should nevertheless take this opportunity to review their internal procedures for accommodating nursing mothers.

How is businesses’ use of interns changing?

Both the Obama administration and the state of California are cracking down on business owners’ use of unpaid interns. Generally speaking, under federal law, unpaid interns are only permissible in situations where the internship is similar to the training given in a vocational school or academic institution, the intern does not displace regular paid workers and the employer derives no immediate advantage from the intern’s activities. Business owners considering internships should seek competent legal counsel.

What new provisions in wage and hour law should employers look for?

In California, 2011 should see the resolution by the California Supreme Court of perhaps the most significant wage and hour issue since Gov. Gray Davis signed legislation restoring daily overtime in 1999.

In recent years, hundreds of class-action lawsuits have been filed over the issue of whether business owners must ‘ensure’ that employees take their mandated meal and rest breaks or merely make such breaks ‘available’ to employees. The California Labor Code provision on this issue is ambiguous, and parties on both sides are eagerly awaiting the court’s ruling in a landmark case currently before it.

Regardless of what the court decides, prudent business owners in 2011 should review their meal and rest break policies to ensure that employees are taking the breaks afforded them under California law.

M. ALIM MALIK is a shareholder with Jackson DeMarco Tidus Peckenpaugh and chair of the Employment and Litigation Groups. Reach him at (949) 851-7458 or amalik@jdtplaw.com.

JONATHAN M. WERNER is a senior counsel with Jackson DeMarco Tidus Peckenpaugh. Reach him at (949) 851-7422 or jwerner@jdtplaw.com.