Kansas Employment Law Blog

The U.S. Department of Labor has released a final rule that describes the criteria for establishing a “bona fide” association health plan under ERISA. This rule implements an October 2017 directive from President Trump to make association plans easier to form and available to more employers.

There is a lot of detail in the rule that is relevant to organizing and operating an association health plan, but here are three big-picture things employers should know about the rule at this early stage in its existence.

Don’t Give Up Your Current Plan Just Yet. The DOL rule is intended to provide employers—particularly smaller employers—with additional options for purchasing health coverage, and the rule makes it easier to use an association structure to allow unrelated employers to jointly purchase coverage. But, there are still a lot of hoops to jump through to get a new association plan off the ground. Don’t expect to see them popping up overnight. And, if a new one does emerge, make sure you ask lots of questions before signing up. Not all association plans are created equal. Some are very well managed and provide a reliable source of coverage for employers and their employees. Others, not so much.
Sharing Is Caring, But Do You Want to Share Health Expenses? One anticipated benefit of association plans is providing small employers with an alternative to purchasing insurance in the small group insurance Continue Reading...

Eighty years ago today, President Franklin Delano Roosevelt signed the Fair Labor Standards Act (FLSA) into law. The New Deal legislation established minimum wage, overtime pay, recordkeeping, and child labor standards. In response to criticism that the law would overregulate private business, President Roosevelt stated during a “fireside chat” the night before the signing, "Do not let any calamity-howling executive with an income of $1,000 a day, ... tell you ... that a wage of $11 a week is going to have a disastrous effect on all American industry."

Other happenings in the summer of 1938? Joe Louis knocked out Max Schmeling in their rematch to retain his title, the first Superman comic book was issued, and Lou Gehrig retired from baseball and gave his “Luckiest Man on the Face of the Earth” speech.

The 80 years since then have seen radical changes in technology and the workplace. But, the core principles of the FLSA—a mandatory minimum wage, and premium pay for overtime pay to nonexempt workers—remain in place.

Despite its long history, the FLSA did not become a hotbed for employment lawsuits until a decade ago. Today, lawyers representing employees are eager to bring FLSA claims for a variety of reasons:

The law is technical, and even employers with the best intentions can inadvertently violate its requirements.
It’s much easier to show a failure to comply with minimum wage or overtime pay requirements than it is to prove discrimination or retaliation.
Violations often Continue Reading...

In 2015, we discussed the ban-the-box movement, in which employers have voluntarily decided to eliminate questions about criminal convictions and arrests from their employment applications. We discussed how Koch Industries, a Kansas-based company and one of the country’s largest private employers, was part of the leading edge of the movement. Now, Kansas Governor Jeff Colyer is joining the movement with a recent executive order.

What is the “ban-the-box” movement?

“Ban-the-box” refers to the box that has historically appeared on many job applications asking the applicant whether he or she has ever been arrested or convicted of a crime. The “ban-the-box” movement has been an effort organized by civil rights organizations composed primarily of formerly incarcerated people and their families. Statistics show that lack of employment makes it more likely that ex-offenders will re-offend, so those supporting this movement argue that employing more individuals with criminal convictions will have a positive impact on society. In essence, supporters of the movement advocate for enabling people with prior convictions to show their qualifications for a position before being automatically excluded from the job based on their criminal record.

Is it legal to ask applicants about their criminal history on the application?

Maybe; maybe not. Currently, 31 states and more than 150 cities and counties have adopted laws or policies “banning” the box for government positions. In other words, public-sector employers in these states and cities cannot include inquiries on application forms that would require the applicant to disclose arrest and conviction information. Eleven states (California, Connecticut, Continue Reading...

The early years of the ACA were fraught with existential threats. Plans were laid to repeal or defund it. Litigation challenged the validity of various aspects of the law, going all the way to the Supreme Court in a couple of cases. And yet it has survived, more or less intact.

But then something curious happened late last year. Buried within a massive package of federal tax reform legislation was a short provision that eliminated the tax penalty associated with the ACA’s “individual mandate” but left the mandate itself on the books. It was effectively a repeal of the mandate (would anyone obey speed limits if the police said they would never issue speeding tickets?), but for reasons related to legislative procedure, the mandate technically remained.

Why does this matter?

In 2012, the Supreme Court was asked to rule on the constitutionality of the ACA’s individual mandate. The challengers argued that Congress did not have the authority under the U.S. Constitution to require Americans to purchase health insurance coverage. The Supreme Court agreed with them but went on to say that the mandate was still okay, because Congress does have the authority to impose taxes, and the individual mandate was a type of tax.

But now there’s no longer any tax. Just the mandate.

See the problem?

The NCAA Men’s Basketball Championship, better known as “March Madness,” is just around the corner. Things will be extra crazy in Kansas this year, with KU, K-State, and Wichita State all qualifying for the tournament, and Wichita hosting first- and second-round games.

March Madness also means betting pools in which participants fill out brackets to predict the winners. While the practice is common, it may be illegal. And when done on company premises, it can create legal concerns for the employer and affect employee productivity.

Technical Fouls

Gambling is a class-B nonperson misdemeanor in Kansas. In other words, it’s against the law. The penalty can range from a fine to six months in jail.

Kansas law defines gambling as making a bet. A bet is a bargain in which the parties agree that dependent upon chance, one stands to win or lose something of value specified in the agreement. A bet doesn’t include prizes paid to the contestants in any bona fide contest for the determination of skill.

Unauthorized lotteries are also specifically prohibited by the state’s gambling law. A lottery is "an enterprise wherein for consideration the participants are given an opportunity to win a prize, the award of which is determined by chance." Thus, the three elements of a lottery are consideration, chance, and a prize. “Consideration” is the payment of money or anything of value.

Basketball pools, in which contestants fill out a bracket to predict the winner of each Continue Reading...

Foulston Siefkin LLP will host its annual full-day Employment Law Institute (formerly the Employment Law Seminar) on Thursday, May 24, 2018, in Wichita. Join us for this this informative, entertaining, and highly rated event, which will cover timely topics such as sexual harassment, wage-and-hour and FMLA compliance, the latest agency activity and court cases, and more. Sessions will be led by experienced Foulston Siefkin employment lawyers, guest speakers, and a very timely keynote speaker whose topic has been in the headlines. This seminar’s goal is to help business owners, HR professionals, and employee supervisors more fully understand the laws governing the employment relationship in order to avoid the liability and high costs of litigation that could result from uninformed decisions.

Register and learn more at www.foulston.com.

It seems as though every few months we need to update our understanding of what discrimination “because of... sex” means under Title VII. Gay and lesbian employees continue to bring discrimination claims against employers, arguing that Title VII’s prohibition against discrimination “because of... sex” extends to sexual orientation discrimination. Well, it’s time for another update.

Last month, the Second Circuit Court of Appeals issued a ruling in Zarda v. Altitude Express, Inc., finding that sexual orientation discrimination is motivated, at least in part, by sex, and is thus a subset of prohibited sex discrimination under Title VII. In Zarda, the plaintiff, a skydiving instructor, claimed he was terminated due to his failure to conform to male sex stereotypes solely because he was gay. The plaintiff did not claim that he failed to conform to a masculine look or behavior. Rather, he claimed it was simply the fact that he was gay and referenced his sexual orientation to clients and coworkers that led to his termination.

The Zarda court recognized the long-standing rule that gender-based stereotyping can violate Title VII’s prohibition on discrimination “because of... sex.” For example, in Price Waterhouse v. Hopkins, a case decided in 1989, the U.S. Supreme Court found in favor of a female plaintiff who alleged that she was denied partnership, because she did not fit the male partners’ idea of what a female employee should look and act like. Male partners instructed her that she would have a better Continue Reading...

Late last year, the IRS began issuing “226J” letters to employers with proposed ACA penalty assessments for 2015. Employers that received these letters often saw eye-popping penalty amounts. Most assessments were at least $100,000, with reports of assessments well into seven figures.

But the news has not been all bad. Employers who have engaged with the IRS have generally found the IRS willing to work with them to provide additional time to evaluate the assessments and prepare a response. Some employers have succeeded in securing significant reductions in the assessed penalties.

A consistent theme among employers who received penalty assessment letters has been a problem with their reporting on Forms 1094-C and 1095-C. Many of the proposed penalty assessments can be traced directly to errors in the forms that were filed for 2015.

For example, employers who failed to answer the question on Form 1094-C about whether they offered coverage to enough of their full-time employees were presumed not to be offering coverage. Problems with the month-by-month codes used on Form 1095-C, such as for months during which an individual was not employed, also have been a source of issues.

All of these notifications point to at least one clear conclusion: Getting the ACA reporting correct makes a difference. Reporting is not just an academic exercise. The IRS Continue Reading...

Recently, the Kansas Court of Appeals affirmed the district court and the Kansas Department of Labor’s (KDOL) finding that nail technicians at a salon were employees rather than independent contractors for unemployment-tax contribution purposes. This case has important tips for handling classification issues in any industry.

Review of the Record

In 2014, Leander and Hongmin (Amy) Fisher began doing business as Amy’s Spa Services, LLC (the Spa). The Spa classified all of its nail technicians as independent contractors. The KDOL audited the business to determine whether the Spa properly classified the technicians for unemployment-tax withholdings. For unemployment-tax contributions in Kansas, an individual is an employee if the employer has the right to control the manner and means of the work performed; whether the employer exercises that right is inconsequential.

The auditor reviewed the Spa’s independent contractor agreement, interviewed three nail technicians and Leander Fisher, and reviewed some of the Spa’s financial documents. The auditor’s review of the independent contractor agreement stated that the parties intended to form an independent contractor relationship. Under the agreement, the Spa purported to require the technicians to clean their workstations, supply the tools necessary to complete their jobs, and gave the technicians discretion to set their own prices, as long as they did not undermine the Spa’s prices. The agreement also provided that the Spa would receive all payments that were later distributed to the technicians, and that Continue Reading...

The Naughty List

Santa’s list wouldn’t be complete if it didn’t have a few coal recipients. The following are true stories of office parties that went horribly awry.

A California bank branch held an annual holiday party at a local restaurant. There were only about 15 people in attendance, but they included a female bank teller, the teller’s female boss, and the boss’ boyfriend (a manager at a different bank branch). The entire affair, including the alcohol, was funded by the bank’s budget. The office party officially ended, but the party-goers continued their revelries. But once the bank’s party ended, the bank employees had to fund their own cocktails. The party continued into the restaurant bar area, then moved to another bar as the night progressed, and finally ended up at the boss’s house. You can probably see where this is going. The teller ultimately accused her boss and the boss’s boyfriend of sexual harassment, and brought suit against the bank, alleging that the bank should have foreseen the harassment, particularly in light of the alcoholic drinks that were provided at the holiday party. The trial court ultimately found the bank wasn’t liable, largely because the office party ended, and the drinking that continued wasn’t on the bank’s dime.

A restaurant in New Hampshire employed a head chef who trended toward the vulgar – on a daily basis. The other employees in the kitchen had just about had it when the restaurant held an Continue Reading...

‘Twas the eve of the holidays and all through the plant, There was hustle and bustle from all plus an ant. The boss was pondering -- What should I offer? A holiday bonus, perhaps? Is there enough in the coffer? A bonus sounds good -- could it be any trouble? Our employees will love it; they may even work double. There must be a catch, else why this ol’ rhyme? You must understand -- it may affect overtime.

No employer wants to be a Grinch this holiday season, but every employer should be aware of how Christmas and other end-of-year bonuses can affect overtime. If you decide to give a bonus this holiday season, the manner in which it's announced and calculated could affect whether you also have to go back and recalculate your nonexempt employees' overtime pay. This probably isn't the thank-you that you wanted for your holiday bonus.

General rule on bonuses

As our faithful readers are aware, nonexempt private-sector employees are entitled to be paid overtime for all hours worked over 40 in a workweek. The Fair Labor Standards Act (FLSA) requires that you base your overtime calculations on the employee's “regular rate.” This is typically her hourly wage rate adjusted to reflect certain specific forms of additional compensation you may provide in exchange for her services.

Bonuses that are provided as a direct or indirect incentive for employees to work harder or more efficiently are one type of additional compensation that must be included in an employee's regular rate. These Continue Reading...

Q: Every year, the holiday season seems to get more stressful. On the one hand, I have a couple of employees who want to make everything about Christ. They insist on wishing everyone, including our customers, a merry Christmas rather than happy holidays or not saying anything.

They claim that saying “happy holidays” denies their faith by taking “Christ” out of Christmas. I have no reason to disbelieve their conviction, but they seem to overdo it, making it more like a political battleground than a joyous celebration.

On the other hand, I have employees who want there to be no mention of Christ. At our traditional end-of-the-year employee holiday party, the staff sings songs they've selected. They sing winter songs like “Let It Snow,” and religious songs like “Away in a Manger.” A couple of employees have complained that some of the religious songs are offensive because they do not believe in Jesus Christ. They want me to ban the mention of Christ in the workplace. How do I keep everyone happy? Any words of wisdom?

A: Our society has changed quite a bit over the last 30 years. People have become more vocal about whether the holiday season surrounding December 25, traditionally known as Christmas, is a religious or secular observance. In this country, it is both. Some people view the holiday season as a time to commemorate the birth of Christ, with varying levels of enthusiasm. Others celebrate Hanukkah, and in some years, it is also the time of Ramadan. Some Continue Reading...

In the holiday classic National Lampoon's Christmas Vacation, family patriarch Clark Griswold is distressed because he has not yet received his Christmas bonus, which he is counting on to cover a check he wrote for a new swimming pool. Finally, on Christmas Eve, a courier arrives with a delivery. As his family looks on, Clark opens the envelope to find a one-year membership to the Jelly of the Month Club, not the bonus he is expecting.

Naturally, Clark has an epic meltdown. Well-meaning but misguided Cousin Eddie then kidnaps Clark's boss and drags him to the family's home so Clark can confront him about canceling employees' bonuses: “I was expecting a check. Instead, I got enrolled in a jelly club. Seventeen years with the company. I've gotten a Christmas bonus every year but this one. You don't want to give bonuses, fine. But when people count on them as part of their salary--well, what you did just plain . . .”

“Sucks,” Clark's son, Rusty, interrupts.

After looking around at the family, the boss has a change of heart and announces that he is reinstating the bonuses. And it's Merry Christmas to all and to all a good night--until a SWAT team breaks into the family's home to rescue the boss and Uncle Lewis inadvertently triggers a sewer gas explosion.

Promises, promises

Although canceling employee bonuses is a great setup for a comedy, year-end bonuses can lead to legal snags that are no laughing matter for employers. Under Kansas wage payment laws and general principles Continue Reading...

Are injuries that one of your employees sustains as the result of a “holiday trip” covered by Kansas workers’ comp laws? They are when the “trip” in question happens in the workplace. Confused? Read on.

‘Twas the night before Christmas and all through the plant ...

It’s Christmas Eve. Your plant is shut down for the holidays. One of your employees -- let’s call her Virginia -- has waited until the last minute to do her holiday shopping. Even though the plant is closed to the general public, your employees have been told that they can pick up their final paycheck for the year on December 24 or wait until the plant reopens on the 27th.

Virginia needs money to do her shopping, so she goes to the plant to get her check. Unfortunately for her, as she’s leaving her manager’s office, she trips over a scale, falls, and injures herself severely. Is she entitled to make a workers’ comp claim for that “holiday trip‘?

Getting Grinchy

No way that could really happen, right? Wrong, Reindeer Breath! This exact situation was the subject of a Kansas Court of Appeals ruling.

Did the court find this “mistletoe mishap” covered by workers’ comp? Well, you think, for an employee’s injury to be covered by workers’ comp, it must “arise out of and in the course of” her employment. Virginia wasn’t working when she was injured, was she? And your plant wasn’t really even open, was it? Therefore, you merrily conclude, her claim obviously isn’t covered. Wrong again, Elf Continue Reading...

Each day’s headlines and new Equal Employment Opportunity Commission (EEOC) guidance combine to send a strong reminder of employers’ responsibilities to help prevent workplace harassment. All employers should take these steps to help protect their employees and themselves:

Review (and update, if needed) anti-harassment policies, including appropriate reporting, investigation, and anti-retaliation policies.
Remind employees of the importance of reporting workplace harassment and how to do it, and that employees are protected from retaliation for such reports.
Refresh workplace harassment training or introduce it if not provided previously. Use recent news stories as an opportunity to communicate and emphasize the importance of your policies. All employees should be included in this training on preventing, spotting, and addressing harassment. Annual training on preventing workplace harassment is recommended to reinforce the message and introduce the topic to new employees.
Get buy-in from top leadership and consider having the top executive send a written message to employees. Also have them speak at the start of training sessions to underscore that providing a harassment-free workplace is important to the organization, and harassment will not be tolerated.

While these recommendations help create a safe workplace, they also demonstrate an employer’s commitment to preventing harassment. If a harassment complaint is filed, employers who have taken these types of preventive actions may be able to avoid or limit potential liability.

New Guidelines

The EEOC recently approved new sexual harassment guidelines for employers for the first time in 20 Continue Reading...