Employment Law Watch : Employment & Labor Lawyer & Attorney : Reed Smith Law Firm

This post was written by John T. McDonald and Don A. Innamorato.

The United States Bankruptcy Code prohibits an employer from taking adverse action against an existing employee because of a bankruptcy filing.

In December, the United States Court of Appeals for the Third Circuit refused to extend that same protection to applicants for employment. In Rea v. Federated Investors, the court ruled that the phrase "discrimination with respect to employment" in section 525(b) of the Bankruptcy Code was not broad enough to encompass discrimination in the denial of employment, and concluded that an employer may refuse to hire a job applicant based on a prior bankruptcy filing. Thus, the court upheld the dismissal of the plaintiff's case on a motion to dismiss for failure to state a claim. 

Despite this ruling, employers should be wary of using prior bankruptcy filings, and more generally credit reports, when making employment decisions, as several U.S. states have laws strictly limiting the use of such information. Also, the EEOC recently filed a nationwide hiring discrimination lawsuit asserting that an employer's use of job applicants' credit histories discriminated against applicants on the basis of race under the disparate impact theory of employment discrimination under Title VII. EEOC v. Kaplan Higher Education, Inc., No. 1:10-cv-02882 (N.D. Ohio), filed December 21, 2010. In the past, the EEOC expressed its position that unless a credit history is strongly related to the position at issue (e.g., a position in which the employee is charged with handling cash), use of credit histories may be discriminatory, resulting in liability, even if the discrimination was unintentional. 

Thus, employers should review their hiring policies to the extent they use credit checks, and should consult with employment counsel as necessary.

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This post was written by Cindy S. Minniti and Daniel A. Schleifstein.

In light of recent high-profile lawsuits in New York involving defendants such as Starbucks and Del Posto, employers must be aware of important new changes to New York labor laws that can significantly affect their business and profits. 

Minimum Wage Increase for Tipped Employees

Minimum wages for tipped workers in the hospitality industry, such as restaurant and hotel workers, will increase as follows effective January 1, 2011:

• Tipped non-food service employees in the hospitality industry must now receive at least $5.65/hour (up from $4.90/hour)
• Tipped food service employees in the hospitality industry must now receive at least $5.00/hour (up from $4.65/hour)
• Service workers for resort hotels must now receive at least $4.95/hour (up from $4.35/hour)

Employers have until February 28, 2011 to make any necessary changes to their payroll systems, but must pay employees the new wage rates retroactive to January 1, 2011.

Employers May Mandate Tip Pooling

Under the new law, restaurants also may now mandate tip pooling, the distribution of tipped food service workers' gratuities among tipped and nontipped workers. Restaurants using tip pooling must maintain a daily log of tips collected and handed out for at least six years. Tip sharing, when food service workers give a cut of their tips to nontipped employees, is also allowed. However, unlike the practice of tip pooling, employees conduct these transactions themselves.

Tips for Employers

• Maintain accurate payroll records
• Maintain accurate tip pooling records (if applicable)
• Know your employees' current tipping practices and remediate as necessary

Reed Smith is ready to assist employers in complying with all New York and federal labor laws and regulations while minimizing the adverse impact and cost to the employer. Please feel free, at any time, to contact Cindy Minniti, Daniel Schleifstein or any Reed Smith lawyer you work with to discuss these important new changes.

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On January 10, 2011, employers will become subject to new regulations issued by the U.S. Equal Employment Opportunity Commission (“EEOC”) that interpret the Genetic Information Nondiscrimination Act of 2008 (“GINA”). Employers must now comply with GINA’s tough restrictions on the acquisition, use, and disclosure of genetic information about applicants, employees, former employees, and all such individuals’ family members. In particular, employers must take affirmative steps to avoid receiving genetic information about applicants, employees, or any of their family members.

The following addresses some key questions about how the new EEOC regulations will affect employers.

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This post was written by Nicolas C. Sauvage and Michaela L. Mc Cormack.

On November 2, Nicolas C. Sauvage gave a seminar at top French business school HEC as part of the new specialized executive Masters programme for international Human Resources Directors, “Human Resources Management & Sustainable Development.” 

Nicolas’ presentation covered the themes of diversity and discrimination, retracing the emergence in both European and international texts of important ideas such as direct and indirect discrimination, discriminatory harassment, and showing that the idea that diversity and non-discrimination are central to economic growth has been a constant theme of these texts. 

A series of court rulings from various EU states and central jurisdictions were employed to help trace the development of case law in the area, thus highlighting the rules and boundaries that must be respected by HR directors and general management at every stage, from recruitment to the termination of the employment contract. 

Comparisons were made with the United States in order to explore the progression of contentious discrimination matters and to study the pros and cons of positive discrimination/ affirmative action, a particularly topical and somewhat controversial issue in Europe at the moment. Over the past few years, legislation in France has installed a series of requirements concerning quotas and/or salary for disabled workers, “senior” workers and women. Positive discrimination is also an important theme in the UK’s newly enacted Equality Act 2010.

The final section dealt with the business risks and advantages related to discrimination and diversity. Besides the various legal and financial risks surrounding litigation, examples were used to illustrate the stakes regarding the image of a company, in terms of both clients and talent. The executives present at the seminar were reminded of the central place of discrimination and diversity within other HR and management issues, such as IT and Internet policies, psychosocial risks, and questions of work-life balance. 

Practical advice was given on steps that can be taken (such as management training; review of recruitment, evaluation and promotion policies; focus on social dialogue; and involvement in outreach and community projects), to instill best practices within a company to improve its position in terms of diversity. Finally, besides the general benefits attached to a diverse workforce, the tangible competitive and financial advantages of these diversity policies, such as the fact that the achievement of a diversity label is now often part of the criteria for calls for tender, were presented. 

In these times of responsible consumerism and changing expectations on the part of job candidates, non-discrimination and diversity were shown to be a central part of any company’s policy for sustainable development, holding an important place in the growing search for a triple bottom line: “People, Planet and Profit.”

Please download the slides here to read Nicolas’ presentation.

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Nearly everyone has become a part of the social media phenomenon that includes Facebook, Twitter, MySpace and other websites. The growth of social media has been staggering. However, along with that growth comes new legal risks, including employment issues, which we haven't seen before.

As you may know, in fall 2009, we published a social media white paper on United States law entitled:  Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon. As a result of the overwhelming response that we received from clients and colleagues around the globe, we published a second edition of the white paper in spring 2010 that included a chapter on employment practices that may arise from the use of social media in the United States and Europe.

We continue to receive overwhelming interest in social media issues relating to employment; therefore, we recently released a third edition of the white paper that addresses employment issues that could arise in France.

Click here for the new edition, and please bookmark the webpage to be sure to receive ongoing revisions to the white paper.

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