Popular, But Risky Method of Avoiding Obamacare: Cutting Hours

The employer mandate portion of the Affordable Care Act (ACA) or what most are referring to as Obamacare has been delayed until 2015, but many companies are already searching for ways to get around the new requirements. One of the most popular techniques companies are putting in place is purposefully cutting hours to circumvent the mandate. It’s risky and it could land stick those who try it with some tough legal issues.

As of the first of the year in 2015, employers with 50+ full time (or full time equivalent) employees will be required to provide health coverage to those employees. For this mandate full time is defined as workers who put in 30 or more hours/week. Employers who don’t provide the required coverage will be required to pay $2,000/year per full time employee. The mandate excludes the first 30 employees and is dependent upon at least one employee using the federal premium tax credits to purchase insurance through the Marketplace. Employers who try to get around the mandate by providing coverage that is not “affordable” will also incur penalties.

Companies who have decided to cut employee hours in order to avoid the mandate include Subway, Forever 21, Regal Entertainment Group, etc.) These groups plan to cut their employees hours to less than 30 hours/week. This will ensure they do not meet the 50 full time employee mark or at least drastically reduce the number of employees that would qualify under the current definitions as set down in the ACA.

While it may seem like a smart move, companies embracing such tactics may be doing more than cutting corners. They may be breaking the law. The Employee Retirement Income Security Act of 1974 (ERISA) includes an often overlooked provision (Section 510) that makes it illegal for employers to make employment decisions solely in order to prevent an employee from obtaining or retaining benefits.  Experts are speculating on the financial damage that could be on the horizon for companies who try to avoid the ACA mandate by cutting employee hours due to potential class action lawsuits down the road. Employers at the greatest risk will most likely be those who arranged employment in order to remove benefits/coverage from employees who previously qualified.

In addition to the potential legal issues due to Section 510 and the popular trend to cut hours to avoid the mandate coming in 2015, companies also need to consider their work force’s demographics. Companies who cut back hours on older workers could leave themselves open to age discrimination lawsuits. Company brands could see notable damage due to their maneuvering and it could decrease their chances of recruiting top notch employees in future.

Employers are encouraged to steer clear of the temptation to cut hours in order to avoid the employer mandate. There are better ways to deal with the upcoming changes. Some will find that they will be best served by filling their work force with contractors employed by staffing services. In this instance, the staffing service will be responsible for ACA compliance. This will avoid the hassle of meeting requirements of the new mandates as well as meeting the expectations of quality workers. They’ll still receive quality benefits packages; it will just be through the staffing service.

We’re not trying to sell anyone on the line that Obamacare isn’t an issue. As trusted employment experts, Blumenthal, Nordrehaug & Bhowmik is available to help you navigate the upcoming changes. 

Labor Board: Northwestern University Football Players Can Unionize

As of Wednesday, and according to the National Labor Relations Board in Chicago, football players are employees. For the players at Northwestern University this is good news because they can now unionize. The players petitioned in order to increase their bargaining power in the college sports arena. The ruling could change the landscape of the NCAA. In response to the petition, Northwestern University claimed that their players are not employers, they are students.

The board’s decision that the players should be classified as employees was based on several factors:

·       Athletes at the university get “paid” in scholarships
·       They work between 20 and 50 hours/week
·       They generate millions of dollars of revenue for the university

Players claimed the reason behind their petition was to receive better medical coverage (including concussion testing), four-year scholarships and the potential for outright payment for athletic services.

Northwestern plans to appeal. Richard Epstein, labor law professor at New York University, said the ruling has “vast implications for the structure of the sport, if upheld.” Individuals opposing the board’s decision claim that while the reform issues players are looking to address may be appropriate, unionizing may not be the best method of achieving change in this instance because of the negative effect it could have on the success of Northwestern athletics. An appeal would likely take years to resolve.

The NCAA responded to the issue by saying that, while it wasn’t directly involved in the proceedings, it didn’t agree with the decision of the board and disagreed with the idea that student athletes should be classified as employees.

For up to date information on the issue or to discuss other current affairs related to employment status, wage issues, etc. contact the experts at Blumenthal, Nordrehaug & Bhowmik today. 

Obama Signs Memo to Strengthen Overtime Pay Rules

President Barack Obama signed a presidential memo this month directing the Dept. of Labor to come up with new overtime rules in order to make more workers eligible for time and a half pay. Obama has made it clear that he will bypass Congress when necessary to take action on economic initiatives. This is currently one of his most far-reaching executive actions this year even though new rules wouldn’t take effect most likely until 2015.

The new overtime pay rules would be focused towards workers on salary who earn more than $455/week and are ineligible for overtime due to management titles even though their actual job duties include few supervisory capacities. New regulations could change the definition of “supervisor” according to employment law. The salary/week limit separating workers who get paid overtime and those who don’t was last raised in 2004 by the Bush administration. Prior to 2004 it hadn’t changed since the 1970’s.  

Those in support of new overtime rules feel that millions of American workers could benefit from a change. Those who are against the change feel that increasing the number of workers eligible for time and a half pay for overtime would create a burden too heavy for small businesses and could potentially cost Americans jobs.  

Obama’s focus isn’t limited to overtime pay rules. This year, the President is also focused on federal minimum wage. He hopes to increase worker pay this year by calling on Congress to increase the minimum from $7.25 to $10.10.

For additional information on employment law, federal minimum wage and overtime regulations get in touch with the experts at Blumenthall, Nordrehaug & Bhowmik. 

Multiple Class Action Suits Filed Against McDonald’s by Fast Food Workers

Earlier this month, multiple class actions were filed in California, Michigan and New York against McDonald’s alleging that the fast-food giant is systematically stealing employee wages. Fast food workers filed the class action lawsuits against McDonald’s and some its franchisees claiming widespread wage theft that was accomplished by forcing employees to work off the clock, shave hours off time cards, and refusing to pay overtime.

McDonald’s executives are currently reviewing the allegations made in the lawsuits. The company claims that they (and their franchisees) are committed to fully investigating the claims and providing appropriate actions in response to any problems discovered.

These class action lawsuits are one more in a string of actions taken by fast-food workers protesting their pay. Many are paid minimum wage.

As recently as December, workers protesting minimum wage staged an extensive protest throughout the US. They were demanding that the federal minimum hourly wage be raised from the current $7.25 to $15.00. McDonald’s responded to protests by pointing out that their jobs provide workers with opportunities for advancement, competitive pay and benefits. A McDonald’s spokesperson also indicated that the company invests in training and professional development in order to aid workers in learning skills that are practical and transferable in business.

Experts agree that this string of actions being taken by fast-food employees upset with their wages, lack of overtime pay, etc. will continue.

If you feel your employer may be paying you unfair wages please get in touch with Blumenthall, Nordrehaug & Bhowmik to discuss potential resolutions to the issue. 

Federal Aviation Administration Authorization Act vs. California’s Meal and Rest Break Requirements

Initially, wage and hour putative class action brought by the same truck drivers was dismissed. Alleged claims were based on violations of California’s meal break laws. The class action was dismissed on the ground that the Federal Aviation Administration Act (FAAAA) preempted California meal break laws. It was the second time in recent months that a court upheld the argument that California’s break laws are preempted by the FAAAA. The FAAAA specifically preempts state laws when there is a significant impact on the “routes, service or prices” of motor carriers.

Truck drivers received a boost recently as their attempt to revive the class action suit against Vitran Express Inc. was supported by the Ninth Circuit court’s decision that the Federal Aviation Administration Act did not preempt California’s meal and rest break requirements. Many are watching the progress of the case.

Additional Background on the Case:

Plaintiffs were former truck drivers of Performance Food Group, Inc. (PFG), located in California. Plaintiffs claimed that PFG arranged delivery routes in order to ensure excellent customer service and timely delivery of cargo without taking into account “time pressure” on the truckers who were being given delivery windows and other policies that prevented them from taking meal breaks.

If you have questions about the California meal break laws, ask the experts at Blumenthal, Nordrehaug & Bhowmik. 

Not to be Left Out, a Cincinnati Bengals Cheerleader Filed a Class Action Complaint

After a Raiders cheerleader filed a class action suit earlier this year, many assumed it would spur others in similar organizations to protest payment and wage problems in the industry with additional suits. As predicted, another cheerleader has filed a Class Action Complaint, this time claiming that it is the Bengals that are in violation of the Fair Labor Standards Act and Ohio Minimum Fair Wage Standards Act. Alexa Brenneman, Cincinnati Bengals cheerleader from May 2013 through January 2014, claimed she was compensated $90 per home game (at most). Her Class Action Complaint against the Cincinnati Bengals claims that she was underpaid for the hours of work put in on behalf of the team and includes all persons “employed by Defendant as a Cincinnati Bengal cheerleader at any time from February 10, 2011 through the present.”

Brenneman specified that Bengal cheerleaders were required to attend mandatory practices, public appearances, pregame time in the stadium, photo shoots for calendars, promotions, etc. Hours required amounted to more than 300 hours per year. Considering the pay rate offered, Brenneman claims the actual pay rate when hours dedicated are considered comes out to less than $2.85/hour which is drastically lower than Ohio’s minimum wage rate in 2013 ($7.85).

It’s interesting to note that the Brenneman specified other organization in her complaint as having positive pay structures. She stated that the Seahawks cheerleaders are paid hourly wages and overtime as specified by law and for all hours required. She also stated that the Cavaliers’’ cheerleaders are provided compensation for required time outside of games.

Every employee should expect adequate compensation for all required job duties. If you feel you are not being treated fairly by your employer, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik today. 

Employees and Their Smartphones: Is Your Smartphone Overworking You?

In modern American culture most people are hopelessly attached to their smartphones. If that’s not the case, the remaining few (with rare exceptions) can’t deny that they have an extremely close relationship with other technology (i.e. their computer, laptop, tablet, etc.) There are a multitude of benefits that come from living in this technological day and age, but because of smartphones and all the other beloved technology, work is bleeding into employees’ personal time.

The recession put a lot of pressure on employers to get the most of their employees. As a result, American business owners are squeezing their workers and cutting costs at the same time. One way in which many American employers are doing so is by accessing their workers after hours through all of the convenient technology that leaves employees available 24/7. Vacations are often unrecognizable as such due to the fact that contact is never severed with the employer. Many employees find it hard to differentiate between hours worked and hours off due to the easy and frequent access employers avail themselves of freely.

Experts agree that if employers had to bear the actual expense of paying for the overtime hours they are demanding, they would have actively sought a different solution such as hiring more workers during the economic recovery.

In response to the seemingly never ending after hours access provided by technology, employees are asking the courts to find a solution. It’s a changing time as courts attempt to reconcile laws that have been in place for decades with technological trends that have drastically altered the workplace landscape. Never before have employees been so irrevocably connected to their employers without break.

In 2011, there were 7,006 wage-and-hour suits filed (many of them class action suits) in federal court. This was nearly quadruple the total in the year 2000. In 2011, the Labor Department was able to recover $225 million in employee back wages. This was up 28% from the previous year. 300 wage-and-hour investigators were added in 2010 and 2011 alone which resulted in a 40% staff increase (to a total of 1,050). This was done in what was openly declared and effort to protect America’s workers.

Consider the facts and then consider your employer/employee relationship. If you feel that you are stuck in a 24/7 job with 40-hour/week pay, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik today. Don’t let your smartphone take the blame.