July 15, 2003

OSHA Site-Specific Targeting for 2003

Holland & Knight Alert
Howard Sokol


Illegal Strike Affects All Hiring Hall Registrants

Frederick D. Braid

Reversing the NLRB, the District of Columbia Circuit Court of Appeals has held that a union’s failure to provide all § 8(d) notices prior to striking makes all of the hiring hall’s registrants unlawful strikers. The union had given the appropriate 60-day notice of intention to renegotiate, but had failed to provide the required 30-day notice to the mediation agencies. Not only were the employer’s employees who struck engaged in illegal activity subject to termination, but all of the hiring hall’s registrants were similarly considered participants in the illegal strike, thereby relieving the employer from calling upon the hiring hall for replacements because they, too, were subject to termination.


Senate to Consider Genetic Information Nondiscrimination Act

The Senate will be considering a bill called the Genetic Information Nondiscrimination Act of 2003 (S.1053), which will affect employers, as well as health insurers, in their use of workers’ genetic information.  Genetic information includes information about an individual’s genetic tests, family members’ genetic tests, or the occurrence of a disease or disorder in family members. As currently proposed, the act would prevent employers from using genetic information in making decisions regarding hiring, firing, compensation, terms, conditions, or privileges of employment, and also require protecting the privacy of genetic information. Privacy concerns are addressed in the bill’s acknowledgment of HIPAA regulations, but the proposed bill goes beyond HIPAA to ban use or disclosure of genetic information for purposes of underwriting. Thus, health plan and insurance issuers are prohibited from even collecting genetic information for certain purposes. Exceptions are provided for (1) genetic monitoring of biological effects of toxins in the workplace; (2) employers providing genetic services with the employee’s consent; or (3) federal, state or local law compliance. There are currently many states that have genetic discrimination laws, and the passage of a new federal law would raise issues concerning overlapping coverage and preemption.


Promise to Pay Severance not Preempted by ERISA

An employer's oral promise to pay employees severance benefits was found not to be covered by the Employee Retirement Income Security Act (ERISA), in Eide v. Grey Fox Technical Services Corp. The former employer promised to pay severance to 27 employees in the event they were laid off within one year, in order to induce the employees to accept employment with the purchaser of the company. A few months after the change in ownership, the purchaser discharged the employees. Both the purchaser and the former employer refused to pay severance, and the employees sued in state court for breach of contract, promissory estoppel and other state law actions. The employer argued that the state law claims were preempted by ERISA. The U.S. Court of Appeals for the Eighth Circuit held that the promise of severance was not a benefit plan subject to ERISA, because it was a one-time offer that did not require an ongoing administrative program. The practical impact of this ruling is significant because ERISA does not provide the compensatory or punitive damages available in state law actions. While certain severance practices qualify as ERISA plans others do not, making it essential to examine the specific terms of each severance arrangement to determine whether it would be covered by ERISA.

New COBRA Rules Proposed

The Labor Department's Employee Benefits Security Administration has proposed minimum standards for the content and timing of COBRA notices. The proposed rules include model notices for continuation of health coverage for employees. A general notice would have to be provided when employees and their dependents first become covered under a health plan. Upon the occurrence of a qualifying event that triggers the loss of coverage (e.g., loss of job, death of employee), the plan administrator would have to provide an election notice notifying the employees and covered dependents about available health plan options, premium payment requirements, and other relevant information needed to decide whether to elect continuation of coverage. Under the rules, covered employees are responsible for notifying the plan administrator of a qualifying event affecting their coverage (e.g., divorce or dependent's loss of coverage due to age or change of higher education status). The regulations require plans to establish reasonable procedures for providing notices and establish timing and delivery requirements as well. The EBSA has requested comments on the proposed rules, which are expected to become effective on or after January 1, 2004.

ERISA Disability Plans Need Not Follow "Treating Physician Rule"

The Supreme Court has held that the recommendation of a treating physician concerning a disability claim is not entitled to special deference. In Black & Decker Disability Plan v. Nord an employer's disability plan rejected an employee's claim for benefits even though the employee's treating physician stated that the employee was medically unable to perform his job functions due to a degenerative disc condition, because an independent medical examiner determined that the employee could perform his job with certain accommodations. The employee challenged the plan's decision and the U.S. Court of Appeals for the Ninth Circuit ruled in favor of the employee, relying on the rule followed by the Social Security Administration, which credits the reports of a claimant's regular treating physician over other reports or evidence. The Supreme Court reversed the Ninth Circuit, distinguishing employee benefit claims from Social Security disability claims. While the Social Security Administration requires uniformity and predictability in administering a national benefits program that is regulated and funded by the government, employee benefit plans are voluntary, with great leeway given to employers as to their design, benefits and implementation. Accordingly, the Supreme Court held that administrators of employee benefit plans are free to evaluate all information in processing a claim and are not required to give added weight to the opinion of the employee's treating physician.


OSHA Site-Specific Targeting for 2003

Howard Sokol

The Occupational Safety and Health Administration (OSHA), in an effort to concentrate its resources and ensure that employees most exposed to health and safety risks are protected, declared that it will target more than 3,000 high-hazard worksites under its site-specific targeting (SST) plan for 2003. OSHA will be using either the Days Away from Work Injury and Illness (DAWII) Rate or the Lost Workday Injury and Illness Rate (LWDII), to select those worksites for inspection, targeting those whose DAWII or LWDII rates are significantly higher than average. Those employers who reported a LWDII rate of 14.0 or more or a (DAWII) rate (for each 100 full-time employees) of 9.0 or higher will be subject to comprehensive safety and health inspections. The national average DAWII rate for private industry in 2001 was 1.7 and the average  LWDII rate was 2.8. The construction industry, nursing homes and personal care facilities are excluded from this SST. 


New York

Asthmatic Worker Wins $5.2 Million Verdict against Employer for Workplace Exposure to Smoke

A New York state court jury awarded over $5 million to an asthmatic employee against her employer, which ignored her complaints that workplace cigarette smoke was aggravating her condition and otherwise harming her health in Gallegos v. Elite Model Management Corp. The plaintiff, Victoria Gallegos, was hired into a management position by Elite. In a pre-hire interview, Gallegos told the agency that she was asthmatic and asked it to restrict the pervasive workplace smoking she had observed in the offices, consistent with New York city and state laws banning most smoking in indoor commercial spaces. Despite receiving these assurances, the workplace smoking continued unabated, causing Gallegos to experience breathing and other exposure problems. When she complained, she was put in situations exposing her to even more smoke. After providing the agency with a letter from her doctor that she needed a smoke-free workplace, she was fired. She subsequently brought suit under state and city human rights laws, among other causes of action. The jury found that Elite failed to accommodate Gallegos' asthma, subjected her to a hostile work environment, and terminated her in retaliation for her complaints. She was awarded approximately $5.2 million in damages, including $2 million for emotional pain and suffering and $2.6 million in punitive damages.       


Punitive Damages of $13.3 Million for Reverse Discrimination

The U.S. Court of Appeals for the Eleventh Circuit (AL, GA, FL) upheld a jury verdict in favor of seven white employees of the Atlanta-Fulton County (Georgia) Public Library System that included $13.3 million in punitive damages in Bogle, et al. v. McClure. Several members of the library board and management were held personally liable. The plaintiffs testified that they were transferred from management jobs at the Central Library to relatively menial positions in the branches. Evidence included statements to the effect that the "white dominated administration" at the Central Library was a problem and that there were "too many white faces". The decision was made to move white employees from Central to the branches and bring black employees from the branches into Central. A document contained the names, races, genders, locations and classifications of all of the system's managers. The reorganization was accomplished before there was a complete plan, and despite warnings from the county personnel department that any moves should not have a negative impact on classifications. One of the county attorneys wrote a cautionary memo, noting that the decision-makers knew that the county had been held liable in several recent "reverse discrimination" cases. This case should be a strong warning against taking actions that decision-makers know to be for an unlawful reason and trying to justify those actions after the fact.

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