January 2014
Mitchell Silberberg & Knupp llp
2014 EMPLOYERS’
LEGAL UPDATE
LABOR AND EMPLOYMENT LAW 2013: A YEAR-END REVIEW
By Steven M. Schneider, Anthony J. Amendola, Amara L. Russell and Whitney S. Nonnette
I. New Laws aNd ReguLatIoNs
A. Federal
Following U.S. Supreme Court Decision, Federal Agencies Extend Definition of “Spouse” to Persons in Same-Sex Marriages. In
United States v. Windsor, 133 S. Ct. 2675 (2013), the U.S. Supreme Court held unconstitutional a provision of the federal Defense
of Marriage Act (“DOMA”) that for purposes of all federal laws defined “marriage” to include only marriages between a man and a
woman. In striking down the law, the Court recognized the right of each state to define marriage and the long-standing deference
under federal law given to such state recognition. As a result of Windsor, it became clear that in those jurisdictions where same-sex
marriages are recognized (including, among others, California, New York, and the District of Columbia), all federal rights, benefits, and
privileges granted to spouses are extended to employees in same-sex marriages. Thereafter, the U.S. Department of Labor (Technical
Release 2013-04), the Internal Revenue Service (Revenue Ruling 2013-17), and the Department of Homeland Security
(www.uscis.gov/family/same-sex-marriages) announced that, for purposes of interpreting federal employee benefit, tax, and
immigration laws, same-sex couples who are lawfully married in any state (the so- called “place of celebration”) shall be treated as
married, regardless of their place of residence. Thus, even if a same-sex married couple resides in a state where they may not legally
marry, they will be recognized as married under these federal laws. This impacts a number of important employment rights that are
now extended to same-sex spouses, including:
•Enrollment in Health Plans – Under the Health Insurance Portability and Accountability Act, marriage is a “qualifying
event” that allows an employee to enroll a new spouse immediately in a company-sponsored health insurance plan.
•Tax Treatment of Spousal Health Insurance and Expenses – The Internal Revenue Service must now extend tax-free
treatment to company-paid premiums for health insurance for an employee’s same-sex spouse and pre-tax status to an
employee’s payments for spousal health costs via vehicles such as flexible spending accounts.
•Continuation of Spousal Insurance Under COBRA – Under the Consolidated Omnibus Budget Reconciliation Act of 1986
(“COBRA”), upon employment termination, most employees have a right to continued medical coverage for themselves,
their dependents, and their spouses under an employer’s plan.
•Pensions and Social Security – Same-sex spouses will have the same survivor rights as opposite-sex partners under private
pension plans regulated by ERISA and under Social Security.
•Immigration – A U.S. citizen or lawful permanent resident may sponsor a same-sex spouse who is a foreign national for a
family-based immigrant visa, and a U.S. citizen or permanent resident can file an immigrant visa petition for a same-sex
spouse.
However, for the time being, it appears that, for purposes of the federal Family and Medical Leave Act (“FMLA”), an employer is
obligated only to extend leave rights to an employee to care for a same-sex spouse if the marriage is recognized in the state in which
the couple resides. See DOL Fact Sheet #28, www.dol.gov/whd/regs/compliance/whdfs28f.htm. This is because the current FMLA
regulations expressly define “spouse” to mean a “husband or wife as defined or recognized under State law for purposes of marriage in
the State where the employee resides . . .” Nonetheless, there is speculation that the U.S. Department of Labor (”DOL”) may revise its
regulations to bring the treatment of same-sex spouses under the FMLA in line with other federal laws.
January 2014
Mitchell Silberberg & Knupp llp
2014 EMPLOYERS’
LEGAL UPDATE
New OFCCP Rules. In August 2013, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a Final Rule requiring
federal contractors and subcontractors to employ more individuals with disabilities and more veterans. OFCCP’s Final Rule will
impact both section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”). Under
OFCCP’s Final Rule, contractors must now establish a 7 percent goal for qualified individuals with disabilities. If the contractor has
more than 100 employees, this goal will apply to each job group, and if the contractor has 100 or fewer employees, this goal will apply
to its entire workforce. The Final Rule requires contractors to conduct an annual assessment of problem areas and establish specific
action-oriented programs to address them. The Final Rule also revises the OFCCP’s definition of “disability” to comply with the ADA
Amendments Act of 2008.
With respect to VEVRAA, OFCCP’s Final Rule requires that contractors establish annual hiring benchmarks for protected veterans
using one of two methods. Contractors may choose to either: (1) establish a benchmark equal to the national percentage of veterans
in the civilian labor force (currently at 8 percent) or (2) establish their own benchmarks tailored to their unique hiring circumstances
and using certain data that will be posted in the Benchmark Database on the OFCCP website. The Final Rule also introduces new
accountability and record-keeping requirements and clarifies job listing and subcontract requirements.
The Final Rules become effective on March 24, 2014. However, those contractors with a written affirmative action plan (“AAP”)
already in place on that date will have until the later start date of their successor AAP in 2014 to comply with the new requirements.
These new OFCCP rules are already being challenged by federal government contractors. On November 19, 2013, the Associated
Builders and Contractors (“ABC”) filed a complaint in the U.S. District Court for the District of Columbia stating that, while it
supports the OFCCP’s goals, it believes that the new rules set arbitrary and illegal hiring benchmarks, especially regarding the
7 percent goal for persons with disabilities.
FLSA Expands Certain Domestic Workers’ Rights to Minimum Wage and Overtime. Under the U.S. Fair Labor Standards Act
(“FLSA”), certain domestic workers are entitled to federal law minimum wage and overtime pay. However, Congress carved out an
exception to this rule, known as the “companionship exception,” which excludes workers who provide home-care “companionship
services” to elderly or disabled persons.
In 2013, the DOL announced that it is revising the definition of “companionship services” to narrow the term to include only
workers who provide the kind of limited, non-professional services Congress supposedly intended when creating this exception.
Specifically, “companionship services” under the revised regulations refers to the fellowship and protection of persons who are elderly,
disabled, injured, or ill and require assistance in caring for themselves. “Fellowship” means to engage the person in social, physical,
and mental activities, while “protection” means being present with the person in or outside the home and monitoring his or her
safety. “Companionship services” also refers to providing certain care, such as assisting the person with activities of daily living, in
conjunction with providing fellowship and protection, so long as the care does not represent more than 20 percent of the total hours
worked for a particular person per week. The DOL expressly excluded from the meaning of “companionship services” domestic services
that are performed mainly to benefit other members of the household, such as preparing meals or doing laundry for the household, and
medical-related services that typically require training, such as services performed by nurses. The DOL revision will mean that more
domestic workers will be entitled to FLSA minimum wage and overtime pay after January 1, 2015, when the new regulation takes
effect.
B. California
Increased Minimum Wage. Existing law requires that the minimum wage for all industries be not less than $8.00 per hour.
AB 10 amends Labor Code section 1182.12 and raises California’s minimum wage to $9.00 per hour beginning on July 1, 2014, and
to $10.00 per hour on January 1, 2016. As the minimum salary that must be paid to overtime-exempt (“exempt”) “administrative,”
