Some employers have not provided group health coverage to some or all of their employees. Instead of providing group health coverage, some of these employers have chosen to reimburse employees for the cost of individual coverage that those employees purchased directly from insurance companies. Prior to 2014, the IRS permitted employers to reimburse employees for the cost of the individual coverage and to deduct the reimbursement expense. The IRS also agreed that the employees would not be taxed on the amount of the reimbursement. Obamacare changed that tax treatment beginning in 2014.
In a May 13, 2014 guidance, the IRS stated that employers who offer standalone premium reimbursement arrangements in violation of their guidance and the related regulations will be subject to a $100 per day per person penalty. This penalty is considered an excise tax, and therefore is not a tax deductible business expense for the employer.
On December 11, 2014, the NLRB overruled its previous doctrine set forth in Register Guard, and ruled that employees have a Section 7 right to use their employer’s email system for union organizing purposes during their non-working time. Purple Communications, 361 NLRB No. 126 (December 11, 2014). In its 3-2 ruling, with the two Republican members dissenting, the Board presumes that employees have a rightful access to their employer’s email system in the course of their work with a right to use the email system to engage in Section 7-protected communications on non-working time. While the NLRB indicates that an employer may rebut the presumption by demonstrating special circumstances necessary to maintain production or discipline justifying restricting such rights, the discussion indicates that such circumstances will be rare. The Board majority further indicates that its ruling does not prevent an employer from establishing uniform and consistently enforced restrictions, such as prohibiting large attachments or audio/video segments, if the employer can demonstrate that they would interfere with the email system’s efficient functioning.
One of the first concerns raised by employers addressed in the majority opinion is that the rationale of the majority ruling would also extend to other company-owned property and equipment, such as copy machines, bulletin boards, conference rooms, pagers, tablet-computers, phone networks, and audio/visual equipment. The Board expressly limits its holding to the employer’s email system, but acknowledges that other interactive electronic communications, like instant messaging or texting, may ultimately be subject to a similar analysis. The Board also expressly refused to address what rights employees may have to communicate via their employer’s social media accounts.
A second issue raised in the dissenting opinions relates to a concern that the decision "effectively requires employers to pay employees for the time reading and writing emails directly or even tangentially relating to terms and conditions of employment. While the Board expressly limits these new rights to non-working time, the majority recognizes that email use may be more difficult to identify as occurring on working time or non-working time, particularly since the sender may be on non-working time but the receiver may be on working time. The majority fails to directly answer this concern, other than to acknowledge the blurring of the line between working time and non-working time regarding emails, and to state that it cannot turn the calendar back to a simpler era with clearer boundaries.
In response to the dissenting members’ concerns that the new rule will have a "debilitating impact on productivity," the Board majority acknowledges that employers can monitor for misuse and reduced productivity. In response to the dissenting members’ concerns that such monitoring will be deemed unlawful surveillance by the NLRB, the Board majority asserts that any surveillance activity by employers will be subject to the same standards that it applies to alleged surveillance in the brick-and-mortar world. The Board majority asserts that an employer’s monitoring of electronic communications on its email system would be lawful as long as the employer does nothing out of the ordinary, such as increasing its monitoring during an organizational campaign or focusing its monitoring efforts on protected conduct or union activists. The Board states an employer may notify its employees that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees may have no expectation of privacy in their use of the employer’s email system.
The dissenting Board members note the challenges associated with applying the standard set forth by the current NLRB majority. That is, the majority’s standards make it basically impossible for anyone to understand, in real time, what non-business emails, if sent, reviewed, and/or responded to using the employer’s email system, will and will not subject employees to lawful discipline or discharge. The dissenters contend there will be substantial confusion, and a significant risk of discipline and NLRB litigation, where the employer lawfully prohibits employees from reading or transmitting non-business emails during working time, and prohibits or limits employee access to the employer-provided email system outside of working time.
Editor’s Note: The Purple Communications ruling will require almost every employer in the country to revise its email policies. A further dilemma for an employer will be whether to modify its email policies now, or await a likely review of the Purple Communications ruling by a federal court of appeals. The nature of the issue, the history of NLRB rulings on the issue, and the strength of the two dissenting opinions, suggest that at least some circuits may not enforce the new NLRB ruling. The issue will be particularly sensitive in the course of any union organizational campaign, as unions will likely attempt to use the employer’s email system through employee organizers, and ask for an injunction for such use should the employer resist. Further, even if no injunction is granted, an employer’s policy that follows the earlier Register Guard ruling may result in objections to the election filed by the union should the employer prevail.
On December 15, 2014, the NLRB adopted as a final rule its "quickie election" process for union elections. The new rule will take effect on April 14, 2015. The changes include the following:
- After the union files a representation petition, a hearing on the petition will be scheduled eight (8) days after hearing notice is served. The non-petitioning party, usually the employer, will be required to respond to the petition and state its positions the day before the pre-election hearing opens. The petitioner, usually the union, will respond to the issues raised by the non-petitioning party at the opening of the hearing.
- Only issues necessary to determine whether an election should be conducted will be litigated at the pre-election hearing. The NLRB will defer litigation of eligibility and inclusion issues affecting a small percentage of the appropriate voting unit to the post-election stage.
- As part of its statement of position, the employer will be required to provide a list of prospective voters with their job classifications, shifts and work locations, to the NLRB’s regional office and to the union, generally one business day before the pre-election hearing opens.
- In addition, the employer must submit a voter list within two (2) business days of the NLRB regional director’s approval of an election agreement or decision directing an election. The voter list will now include personal phone numbers and email addresses if available to the employer.
Editor’s Note: This new long-anticipated NLRB rule is known in some circles as the "ambush" election rule. The reason is that it will reduce the time period between the union filing a petition (request) for an election and the election itself to approximately twenty-five (25) days. Since there is no requirement on the part of the union to give the employer early notice of its organizing campaign and/or the filing of an election petition, the employer will have only approximately three (3) weeks to understand the issues, determine its legal position and comply with numerous NLRB requirements, educate its management staff on NLRB speech issues, and communicate its position on unionism to the workforce.
We will devote more discussion in the next newsletter to this issue, as the "quickie election" rule is probably the most important NLRB pronouncement in the past 65 years. It currently takes a median of forty-two (42) days to conduct an NLRB election, a time period which will be significantly reduced under the new procedures. Historical data shows that the longer the employer has to communicate and explain its position about unions, including their disadvantages, the greater the employer’s chances of prevailing in the election. This advantage was the very reason the NLRB majority changed its procedures.
The quickie election rule was passed on a 3-2 vote of the NLRB, with the two Republican members dissenting. Undoubtedly the new procedures will be challenged in court, but employers should not count on the quickie election rules being overturned in court.
On November 20, 2014, President Obama in an address to the nation announced his immigration plans to defer deportation for as many as 5 million immigrants in the country illegally. He announced that his unilateral action is necessary because the Republican-led House of Representatives has failed to pass a Senate-approved immigration plan for more than a year. The President noted the contributions that immigrants make to the nation and said it would be unrealistic to deport all 11 million illegal immigrants. The Administration says it has legal authority to exercise "prosecutorial discretion" by allowing illegal immigrants to remain in the country and work by "deferring action" on their status.
The program would allow a chance for work permits and a reprieve from deportation to illegal immigrants who have been in the U.S. at least five years and who have children who are citizens or legal permanent residents. The plan also expands the previous program to young people brought to the U.S. as children by eliminating the age cap and moving the date of entry to the U.S. from 2007 to 2010. The anticipated implementation date of this deferred action program is approximately six months.
Strategists on both sides of the political spectrum debate the wisdom of the actions. In a CNN/ORC poll released November 26, 2014, 26% of those surveyed said Obama went too far, half said he got it right, and 22% said he should have gone further. However, in the same survey 56% said he should not have expanded the protection unilaterally without giving Congress a say in shaping the program. A Wall Street Journal-NBC News Poll found just 38% supported the President’s unilateral action even though there was broad support for a path to citizenship for unauthorized immigrants, while 48% said they oppose the unilateral action. Some commentators said unilateral action, even if appropriate, is counter to the national mood desiring some sort of reconciliation.
Republicans appear uncertain and divided on how to react to the President’s unilateral action. Options include trying to block funding for the unilateral measures, filing a lawsuit against the measures, and advancing their own immigration measures in Congress. On November 21, 2014, the House Republicans filed a long-threatened lawsuit against the Administration over unilateral actions on the healthcare law, as a abuse of the President’s executive authority, and the immigration issue might be added to this litigation.
Traditionally the courts are reluctant to intervene in political disputes between Congress and the President, and there is some precedent for the President’s unilateral action on immigration, although not on the current scale. The deportation system has recently been overburdened with thousands of children from Central America entering the U.S. illegally in an attempt to reunite with family or otherwise escaping violence and poverty.
There is much speculation as to the effect of the executive action once it is implemented. Some think only about half of those eligible will seek permits, because the unilateral executive action can be undone in the future and the illegals may fear future prosecution. Others feel that with work permits, illegal immigrants may seek higher-paying work in different industries. The action may also result in more competition for existing jobs.
Of particular concern is the impact of the President’s unilateral action on the ability to bring about Congressional immigration reforms, as well as other reforms needed for the guest worker and highly-skilled worker programs.