Transcript of "Patton Boggs Employment Law Insight ~ June 2013"
PattonBoggs.com Employment Law Insight 1JUNE 2013This newsletter provides onlygeneral information and shouldnot be relied upon as legal advice.This newsletter may be consideredattorney advertising under courtand bar rules in certainjurisdictions.IN THIS ISSUEIntroduction 1EEOC Issues Guidance on theADA and Cancer, Diabetes,Epilepsy and IntellectualDisabilities 2Continued Vigilance Requiredfor Nonqualified DeferredCompensation Arrangements 4Employment Law Update:Immigration Reformon the Hill 6U.S. Customs and BorderProtection Revises I-94Processes 6EMPLOYMENT LAW INSIGHTINTRODUCTIONBy Douglas B. Mishkin, Partner and Co-Chair, Employment Law Practice GroupWelcome to the inaugural edition of the Employment Law Insight, a service of theEmployment Law practice group at Patton Boggs LLP.Employers are best served by integrated legal services that address their coreneeds: employment (discrimination and harassment, compensation andnoncompetition); benefits; immigration; and health and safety. Our EmploymentLaw practice group provides such services to our clients throughout the UnitedStates and internationally.Why “Employment Law Insight”? Employers have available to them, and indeedare besieged by, a wealth of legal information about the workplace on a daily basis.Our purpose is to select from that wealth of information those nuggets we thinkare most worthy of your attention and then to offer insight – a different way oflooking at an issue, of conducting your workplace, of addressing your thorniestproblems.Our group comprises litigators and counselors and policy professionals.Collectively we bring an array of perspectives to the challenges that employersface as employers. Staying out of court, litigating aggressively when necessary toprotect your interests, monitoring legislative and agency developments andoccasionally examining the possibilities for changing the law all have their timeand place. An employer should expect its law firm to determine and provide theright approach for the right situation. Our Employment Law practice group doesjust that.We hope you will find our Employment Law Insight a helpful addition to yourprofessional reading. You will find author contact information for each articleprovided. We welcome your questions, comments and other feedback, and lookforward to “speaking” with you from time to time.
PattonBoggs.com Employment Law Insight 2EEOC ISSUES GUIDANCE ONTHE ADA AND CANCER,DIABETES, EPILEPSY ANDINTELLECTUAL DISABILITIESJennifer L. Keefe, PartnerCaroline Davidson-Hood, AssociateOn May 15, the Equal Employment OpportunityCommission (EEOC) issued new guidance on theapplicability of the Americans with Disabilities Act(ADA) to job applicants and employees with cancer,diabetes, epilepsy and intellectual disabilities. Acomplete overview of the new guidance is provided onthe EEOC website, in a section on disabilitydiscrimination is available here.As EEOC Chair Jacqueline Berrien explained, “Whilethere is a considerable amount of general informationavailable about the ADA, the EEOC often is askedabout how the ADA applies to these conditions.” Theguidance anticipates and responds to some of thosequestions, providing examples of reasonableaccommodations employers may be expected to makefor employees with one of the conditions.PROTECTED DISABILITIESThe guidance defines each of the four conditions andidentifies them as protected disabilities under theADA as amended by the American with DisabilitiesAmendments Act of 2008 (ADAAA). Just as theADA’s definition of “disability” includes a “record” ofimpairment that rises to the level of a disability, cancerthat is in remission or diabetes that is controlled bymedication or diet are considered disabilities.According to the EEOC, an “intellectual disability”exists if one’s IQ is below 70-75; one is limited in“adaptive skill areas” such as communication, self-care, home living, social skills, health and safety, self-direction, functional academics such as reading,writing or math; and the disability originated beforethe age of 18.OBTAINING AND DISCLOSING MEDICALINFORMATIONThe ADA has long prohibited employers from askinga job applicant about his or her disability before anoffer is made unless the disability is obvious orvoluntarily disclosed. Inquiries are permitted after anoffer is made, so long as all similarly-situatedapplicants are treated the same. Once the employerobtains medical information, it may follow-up withquestions such as whether the condition will interferewith the employee’s ability to do the job.The guidance explains, for example, that if a candidatefor a chef position discloses his epilepsy in his post-offer medical evaluation, the employer may askwhether he can safely work with hot and sharpobjects. If the epilepsy is controlled by medicationand the candidate has safely worked as a chef forseveral years, the employer may not withdraw theoffer. An employer may request documentation fromthe candidate’s doctor verifying the condition. Exceptin specified circumstances, an employer must notdisclose any information about the employee’scondition.
PattonBoggs.com Employment Law Insight 3REASONABLE ACCOMMODATIONUnder the ADA as amended, an employer mustprovide a reasonable accommodation if an employeerequests one or the need for the accommodation isevident, so long as the request does not impose anundue burden. For each of the four conditionsdiscussed, the EEOC suggests a number of reasonableaccommodations.For a person with an intellectual disability, reasonableaccommodations might include reading writteninstruction aloud, expanding trainings and usingdemonstrations, placing pictures or color-codinginstead of words on labels. If an employee is limitedfrom performing functions that are marginal to a job,like closing out the register at a concession stand at theend of an evening, that person may be assignedalternative tasks, such as cleaning.Reasonable accommodations for diabetes includeproviding a private place to administer injections andbreaks to eat, drink, take medication or check bloodsugar levels as needed. For cancer, reasonableaccommodations include leave for doctor’sappointments, rest or medication breaks, a modifiedschedule, permission to work from home, or change inoffice temperature. The guidance encourages flex-time schedules or shift changes to permit employees toattend weekday radiation treatments or doctor’sappointments during regular business hours.For epileptics, common reasonable accommodationsinclude permission to bring a service animal to work,providing a driver for meetings and other work-relatedevents, or permitting work from home.SAFETYEmployers must be careful not to act on the basis ofmyth, fears or stereotypes in addressing workplacesafety concerns. Refusing to hire--or terminating--anindividual with a disability for safety reasons must bejustified by a “direct threat” of substantial harm thatcannot be eliminated or reduced by reasonableaccommodation. The harm must be serious and likelyto occur, not speculative.For example, an epileptic welder who fails to takemedication and experiences sudden and unpredictableseizures is a direct threat. An employer may notdemote a cancer survivor because of fears that jobstress may cause a relapse. Similarly, an employershould not assume that a person with intellectualdisabilities may not work in a kitchen with sharpknives and hot ovens unless it has specific informationindicating that the employee cannot understand andfollow safety procedures. Finally, to preventharassment in the workplace, the EEOC suggests thatemployers maintain and enforce a written policy andconduct periodic training.In light of recent EEOC lawsuits under the GeneticInformation Non-Discrimination Act, the newguidance suggests that the EEOC is paying heightenedattention to the intersection of health matters anddiscrimination in the workplace, particularly whensuch discrimination may be related to one of the fourconditions specified.Employers with current or prospective employees withany of the conditions specified should review the newguidance to ensure compliance. Complex questions or
PattonBoggs.com Employment Law Insight 4issues may be discussed with any member of thePatton Boggs Employment Law practice group.Please contact Jennifer L. Keefe at 214.758.1563 firstname.lastname@example.org or Caroline Davidson-Hood at 202.457.5257 email@example.com with any questionsor concerns about the issues raised in this article.CONTINUED VIGILANCEREQUIRED FORNONQUALIFIEDDEFERRED COMPENSATIONARRANGEMENTSStacey Grundman, Benefits AttorneyThe newness of the IRC Section 409A regulationsgoverning deferred compensation is long-gone, butthe complexities of this regulatory scheme remainburdensome and all should be vigilant to ensurecompliance as penalties can be severe.If you have been avoiding addressing potential Section409A problems or think some have been overlooked,there are voluntary corrections programs available tobring deferred compensation plans into compliance.BACKGROUNDAs a refresher, Section 409A and its implementingregulations impose sweeping restrictions on a broadrange of deferred compensation arrangements. Thepenalties for noncompliance are steep – immediateinclusion in income for all vested benefits and a 20percent excise tax on all such amounts.All compensation that is earned, or to which there is alegally binding right, in one taxable year, but that ispayable and includable in income, pursuant to theterms or a plan or arrangement, in a subsequent taxyear is considered deferred compensation subject toSection 409A. Thus, deferred compensation isdefined broadly – raising Section 409A issues in avariety of plans and arrangements including:→ SERPs, excess benefit plans, and othernonqualified retirement plans;→ Separation and severance plans;→ Bonus plans;→ Salary continuation arrangements;→ Employment agreements;→ Performance/incentive pay arrangements;→ Stock option plans;→ Guaranteed payments under partnership andLLC agreements;→ Warrants or other rights to acquire interests inpartnerships and LLCs;→ Leave programs;→ Sick pay plans; and→ Split dollar life insurance arrangements(providing benefits other than death benefits).Code Section 409A limits the distribution of benefitsto specified events or times and prohibits the delay oracceleration of the benefit payment schedule unlesscertain conditions are met. Specifically, distributionsmay only occur upon a separation from service(provided that a “specified employee” of a publiccompany may not receive distributions until at least sixmonths after separation); a fixed time, or pursuant to afixed schedule, specified under the plan; death;
PattonBoggs.com Employment Law Insight 5disability; change in control; or an unforeseeableemergency.In order to comply with Section 409A, a deferralelection must be made by the end of the yearpreceding the calendar year in which services are to beprovided. Generally, a change in the time and form ofa distribution is permitted only if (a) the election todelay is made at least 12 months before a scheduledpayment and (b) the postponement of the distributionis at least an additional five years. The regulationsproscribe criteria for accelerating benefit distributionsas well.CORRECTING OPERATIONAL ANDDOCUMENTARY DEFECTSThe Internal Revenue Service (IRS) has issuedguidance to address situations where a deferredcompensation arrangement does not comply withSection 409A (a “document failure”), or the deferredcompensation agreement is not administered in amanner that complies with Section 409A (an“operational failure”).IRS Notice 2008-113 provides procedures forcorrecting inadvertent failures to operate a plan oragreement in compliance with Section 409A and theSection 409A Rules. These procedures can befollowed to correct mistaken accelerations, mistakendeferrals, and options with exercise prices mistakenlyset below its fair market value of the date of grant.Utilization of these procedures trigger significantreporting requirements.IRS Notice 2010-6 provides procedures forcorrecting provisions in plans and agreements thatinadvertently fail to comply with Section 409A andSection 409A Rules. It clarifies that certain ambiguousplan terms will not be treated as Section 409Aviolations as long as the plan is not under examinationby the IRS. The Notice also provides specificcorrection procedures for certain types of inadvertentdocument failures. Most require plan amendmentsand some require partial income inclusion if non-compliant provisions will be triggered within one yearof the correction. These procedures are not availableto stock right plans or plans linked to othernonqualified or qualified plans. Plan sponsors thatmake corrections under this Notice are subject tospecial reporting requirements.IRS Notice 2010-80 modifies the guidance given byNotice 2008-113 and Notice 2010-6 by clarifyingcertain provisions of each notice, expanding the reliefprovided by each notice and reducing reportingrequirements, and providing certain additionalmethods of correction.Proposed Section 409A regulations on incomeinclusion provide additional correction options forcertain operational failures – but only for deferredcompensation that is not yet vested. In addition, theremay be general income principles that serve as basisfor corrections.Notably, each approach provides opportunities forvoluntary corrections in only limited situations. Plansponsors are advised to take action regarding Section409A compliance with respect to both existing plansthat should be reviewed for compliance and in draftingnew plans.
PattonBoggs.com Employment Law Insight 6Please contact Stacey Grundman at 202.457.6178 firstname.lastname@example.org with any questions orconcerns about the issues raised in this article.EMPLOYMENT LAW UPDATE:IMMIGRATION REFORM ONTHE HILLKristin D. Wells, Of CounselThis month, all American employers should keep awatchful eye on the debate on comprehensiveimmigration reform. The expansive bill that has takencenter stage on the floor of the U.S. Senate, willimpact recruiting and hiring practices, benefitspackages and HR management processes for mostU.S. companies. The bill not only seeks to legalize 11million undocumented U.S. residents, but also, forexample, requires electronic verification of the legalstatus of all new hires and will determine whetherlegalized immigrants can receive health care insuranceand other benefits. In addition, the bill will createthousands of visas under new and expanded programsfor agricultural workers, lower-skilled guest workersand high-skilled workers, and it makes importantchanges to many existing visa categories, such asadditional recruitment requirements for all employersseeking to hire a foreign national under the popular H-1B visa program.After a thorough review and amendment process inthe Senate Judiciary Committee, Senate MajorityLeader Harry Reid brought S. 744, the “BorderSecurity, Economic Opportunity and ImmigrationReform Act of 2013” to the Senate floor for threeweeks of debate in early June. He promises to hold afinal vote on the bill prior to the July 4th recess. In thedeliberative style of the Senate, debate will cover awide range of issues, but votes will only be held on alimited number of amendments.At present, the bipartisan Group of 7 in the Housecontinues to work on drafting a comprehensive bill.As the Senate completes its work, pressure is buildingon the House to move legislation and the Republicancaucus is beginning to respond. Under the leadershipof Judiciary Committee Chairman Bob Goodlatte (R-VA), Republican members have introduced topic-specific bills on core areas of reform–such as the E-Verify employment verification system, agriculturalworkers, and high-skilled workers. Two of these billswere marked up this week, and the third is scheduledfor a markup next week. A substantial border securitybill passed the Homeland Security Committee lastmonth.Speaker John Boehner and others in the Houseleadership have promised their members that they willnot take up the Senate bill in the House, and that theywill only pass a bill in the House that enjoys thesupport of the majority of the Republican caucus.Exactly what bills will be passed on the floor and howthis process will be managed remains to be seen.There is still a possibility that these bills could bemerged and conferenced with a Senate bill, if bills passin both chambers. Should a comprehensiveimmigration reform bill pass Congress and be signedinto law, it will have a strong impact on how hiringand benefits are handled by all American employers inthe foreseeable future. Policy advisors to theEmployment Law practice group at Patton Boggscontinue to monitor the progress of this important
PattonBoggs.com Employment Law Insight 7legislation and provide periodic updates to clients andother interested entities.Please contact Kristin Wells at 202.457.6422 email@example.com with any questions orconcerns.U.S. CUSTOMS ANDBORDER PROTECTIONREVISES I-94 PROCESSESShaoul Aslan, PartnerSam Mudrick, AssociateForeign nationals entering the United States throughan air or sea port will most likely not be issued an I-94Arrival-Departure Record, the small card normallystapled into the passports of foreign nationals. TheU.S. Customs and Border Protection agency (CBP)announced that, effective May 31, I-94 cards would nolonger be issued at air and sea ports of entry.Instead, passports will be stamped with the date ofarrival and the date that an individual’s approvedstatus in the United States will expire. I-94s will nowonly be available electronically by visiting the CBPwebsite, available here, and entering personal data andentry information on the foreign national. Foreignnationals will be then able to print a copy of theelectronic I-94. The following information on theindividual must be entered to obtain the I-94:→ Family and First names→ Date of Birth→ Passport Number→ Passport Country of Issuance→ Date of Entry→ Class of AdmissionA printed copy of the electronic I-94 will still berequired for various reasons, such as completing theemployee’s Form I-9, or applying for a change toimmigration status, so a copy of an individual’s I-94should be printed and retained upon entering theUnited States.Further, a printed copy of the I-94 ensures that thedate of status expiration matches the date stamped inthe passport. Inconsistent dates should immediatelybe brought to the attention of an individual’simmigration attorney to determine whether it isnecessary to contact CBP to correct the error. Failureto do so could result in overstays and futureimmigration problems.Please contact Shaoul Aslan at 202.457.6095 firstname.lastname@example.org or Sam Mudrick at202.457.5218 or email@example.com with anyquestions or concerns.
PattonBoggs.com Employment Law Insight 8For more information, contact your Patton Boggs LLP attorney, the author of the included articles, or any ofthe editors listed below.DOUGLAS B. MISHKIN202firstname.lastname@example.orgSHAOUL ASLAN202email@example.comCAROLINE DAVIDSON-HOOD202firstname.lastname@example.orgSTACEY GRUNDMAN202email@example.comJENNIFER L. KEEFE214firstname.lastname@example.orgSAM MUDRICK202email@example.comKRISTIN D. WELLS202firstname.lastname@example.orgABU DHABIMarina Office Park Villa A23P.O. Box 31808Abu Dhabi, United Arab EmiratesP: +971-2-651-5900ANCHORAGE601 West Fifth Avenue, Suite 700Anchorage, Alaska 99501P: 907-263-6300DALLAS2000 McKinney Ave, Suite 1700Dallas, Texas 75201P: 214-758-1500DENVER1801 California Street, Suite 4900Denver, Colorado 80202P: 303-830-1776DOHAThe Commercial Bank Plaza (CBQ),16th Floor , Dafna AreaP.O. Box 22632Doha, QatarP: +974-4-453-2500DUBAIThe Gate, Dubai InternationalFinancial CentreP.O. Box 121208Dubai, United Arab EmiratesP: +971-4-401-9738NEW JERSEYOne Riverfront Plaza1037 Raymond Blvd., Suite 600Newark, New Jersey 07102P: 973-848-5600NEW YORK1185 Avenue of the Americas(between 46th and 47th Streets)30th FloorNew York, New York 10036P: 646-557-5100RIYADHKing Fahad RoadSky Towers - 8th FloorRiyadh, Saudi Arabia 11372P: +966-1-416-9990WASHINGTON DC2550 M Street, NWWashington, DC 20037P: 202-457-6000