North Carolina has joined the growing number of states imposing strict limits on smoking in public places and places of employment. The new statute prohibits smoking in state government buildings and state owned motor vehicles. It also bans smoking in state psychiatric hospitals.

In addition, smoking is now prohibited in all “enclosed areas” of restaurants and bars.

The statute allows smoking in “designated smoking” guest rooms hotels, motels, or other “lodging establishments.” However, no more than 20% of the rooms may be designated as smoking rooms.

Smoking is also permitted in “cigar bars” so long as the cigar bars are freestanding and the smoke from the bar does not migrate into areas where smoking is prohibited. The term “cigar bar” is clearly defined as an establishment that generates at least 60% of its revenue from the sale of alcoholic beverages and 25% from the sale of cigars. It must have a humidor on the premises and prohibit entry to anyone under age 21. Cigar bars will be required to make quarterly reports to the North Carolina Department of Health and Human Services regarding their revenues. Smoking is also permitted in private clubs.

Persons managing restaurants and bars where smoking is prohibited are required to post no smoking signs, remove indoor ashtrays, and to require anyone who smokes to extinguish his or her tobacco product. If a patron continues to smoke after being advised to stop doing so is subject to a fine of up to $50.00.

Local governments may elect to impose more re-strictive guidelines, so long as they do not conflict with the state statute. Local guidelines may include modestly higher penalties for repeat offenders.

The new law becomes effective January 1, 2010.

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Background and Introduction

Employees in Europe and much of the rest of the world have enjoyed generous vacation time mandated by law for many years. In fact, 147 nations mandate vacation of some sort. The United States is the only industrialized nation in the world without a minimum annual leave law. Even China mandates three weeks off. Canada mandates two weeks for all employees and three weeks for those with five years or more with the employer.

According to the Bureau of Labor Statistics, the average American today annually works a full month (160 hours) more than in 1976. Job-related stress costs American business $344 billion a year in absenteeism, lost productivity and health costs. Indeed, some 75% of visits to primary care physicians come from stress-induced problems.

Not surprisingly, the Pew Research Center reports that more free time is a number one priority for middle class Americans with 68% listing it as a high priority.

In 2008, only 52% of American workers took a vacation of a week or longer, and only 14% took two weeks or more of vacation time.

Men who do not take regular vacations are 32% more likely to die of heart attacks and 21% more likely to die early of all causes, while women who do not take regular vacations have a 50% greater risk of heart attack and they are twice as likely to be depressed as those who take regular vacations.

The foregoing is excerpted from the data contained in the proposed Paid Vacation Act of 2008 recently introduced into the House of Representatives by Rep. Grayson of Florida. I might add that there is data suggesting that European workers are more productive per hour worked (Americans are more productive per person because we work many more hours). I have long hypothesized that there might be a connection between more time off and higher productivity, not to mention better health.

Paid Vacation Act of 2009

The Paid Vacation Act of 2009 (HR 2564) would mandate one workweek of paid vacation during each 12 month period for employers with 100 or more employees beginning on the date of enactment. The provision would be added to the Fair Labor Standards Act as an amendment.

Beginning three years after the date of enactment, employees of employers with 50 or more employees would be entiteld to one workweek of paid vacation during each 12-month period. Employees of employers with 100 or more employees would be entitled to two weeks.

Employees would be obligated to give 30 days’ notice prior to taking vacation. Employees would be eligible if they had worked for at least 12 months for the employer and worked at least 1250 hours.

The time could not be accrued and rolled over.

The Significance of the Proposed Act

Although I do not have data in hand yet as to the number of employees in the United States whose employers provide paid vacation, my recent study of paid time off and sick leave in general suggests that a substantial majority of employers do provide such paid time off. Persons least likely to have paid vacation are those at the bottom of the wage and socio-economic scale.

Although this bill would increase cost for some employers, in theory it might reduce health care and other costs. Of course, whether the United States is willing to join its other industrialized colleagues in mandating time off remains to be seen. One way or another, though, 2009 is shaping up to be a very interesting year in the world of labor and employment law.

On May 18, the Healthy Families Act was introduced in the House of Representatives. The bill would require employers with 15 or more employees to provide workers with paid sick leave.

The proposed statute, which had been introduced in the previous Congress in 2007, would require employers to provide workers with up to seven days of paid sick leave annually on an accrued basis. Similar legislation has been introduced in the Senate by Sen. Edward Kennedy.

Under the proposed statute workers would earn one hour of paid sick leave for every 30 hours worked to a maximum of seven days (56 hours) per year. Employers would be permitted to allow employees to accrue more than 56 hours but would not be required to do so.

The statute would require that workers begin accruing leave on their first day of employment. A worker could begin using accrued leave after completing 60 days of employment. Accrued but unused leave would carry over from one year to the next to a maximum of 56 hours, unless the employer allowed greater accumulation.

Employees would be allowed to use leave for their own illness or to care for sick parents or children. In addition, leave could be used to visit a physician or other health care provider for preventive care. Further, leave could be used for absence which resulted from “domestic violence, sexual assault, or stalking,” in order to obtain medical care, to obtain services from a victim services organization, or to participate in related legal proceedings.

The proposed legislation would allow employers to require that employees provide certification by their doctor if they are absent for more than three consecutive days.

According to Representative DeLauro of Connecticut, the bill’s sponsor, almost half of all U.S. private sector workers have no paid sick leave. Among the lowest quartile of wage earners, 79% have no leave.

A recent report by the Center for Economic and Policy Research comparing laws and policies related to sick leave in 22 different countries, notes that the United States and Japan are the only countries of the 22 examined that do not provide any short-term paid sick leave to workers. All of the countries, except for the United States, provide long-term paid sick leave to workers with serious illnesses.

In this era of Swine Flu concerns, there is some data suggesting that paid sick leave helps to reduce the spread of contagious illness.

One major employer concern is the abuse of sick leave. Large employers lose about $850,000 annually from unscheduled sick and other personal days. However, San Francisco, which enacted mandatory sick leave in 2007, reports no negative impact on business compared to businesses in surrounding communities.

Wisconsin has now become the 27th state to adopt legislation prohibiting smoking in bars and restaurants. The new legislation becomes effective July 5, 2010.

The statute is expansive, prohibiting smoking in any “public place” or “place of employment.” In addition, it bans all indoor smoking with the exception of private homes, designated rooms in hotels and similar facilities, and some rooms in assisted living facilities.

The legislation also reaches bowling alleys, taverns, halls used for private functions and areas in buildings used to assemble goods, products, or merchandise. Existing cigar bars and specialty tobacco shops will be grandfathered in, but those opening after July 5, 2010 must be smoke-free.

The act defines a “place of employment” as “any indoor place that employees normally frequent during the course of employment,” including an office, work area, employee lounge, restroom, conference room, meeting room, classroom, or hallway. A “public place” is a place “open to the public or a place to which the public has access or may be invited.”

For purposes of the ARRA, the term “involuntary termination” means more than simply being laid off or downsized. An employee is considered to be involuntarily terminated if:

  • Layoff.The employee is laid off, regardless of whether or not the employee enjoys recall rights.

  • Other Suspension.The employee is suspended in some other fashion which results in the loss of group health insurance coverage.

  • Resignation-Transfer.The employee resigns as the result of a material chagne in the geographic location of employment. For example, an employee living and working in New York resigns rather than moving to California when her employer relocates.

  • Resignation–Hours Reduction.The employee resigns when the employee’s hours are cut sufficiently to constitute a “material negative change” in the employment relationshiip for the employee. A reduction from 40 hours per week to 35 hours per week is unlikely to be considered a “material negative change,” while a reduction from 40 hours per week to 40 hours per month would almost certainly constitute such a change. The range in between such extremes will be open to interpretation and likely litigation. A reduction of hours which does not constitute a “material negative change” does not make an employee eligible for the subsidy.

  • Retirement.An employee who retires in lieu of being terminated is deemd “involuntarily” terminated, if he or she knows that the only alternative to retirement is termination.

  • Strikes and Lockouts. If employees strike, they do not have any rights to COBRA continuation coverage or the subsidy. Their suspension from work is voluntary. However, if an employer engages in a lockout so taht employees cannot work, the employees are deemed “involuntarily” terminated.

  • Buyouts. If an employee accepts a “buyout” in return for a severance package, the employee will be considered terminated “involuntarily” if after some period of time at lest some employees not bought out will be terminated.

  • Discharge. If an employee is discharged because of an extended illness or disability or “for cause” because of poor performance, poor attendance, or some other reason, the employee is deemed to have been involuntarily terminated for purposes of the ARRA. However, if the discharge is for “gross misconduct,” then the termination is not a qualifying event and the employee is not eligible for COBRA continuation coverage or the subsidy.

What Is Gross Misconduct?

Gross misconduct includes “intentional, wanton, willful, reckless, or deliberate indifference to an employer’s interest” by the employee. Illegal or dangerous acts committed in the workplace (and sometimes those committed away from work) will likely constitute gross misconduct. Examples include a teacher engaging in sexual activity with minor students or an airline attendant striking a coworker during flight.

One of the provisions of the stimulus bill known as the American Reinvestment and Recovery Act of 2009 is the COBRA subsidy. The statute provides a federal subsidy for COBRA premium for employees involuntarily terminated from their employment, The new law was signed on February 1, 2009. It became effective for most employers with 20 or more employees on March 1, 2009. (Employees in states with Mini-COBRA statutes covering employers with fewer than 20 employees may also be eligible for the subsidy.)

The new law has three major components:

  1. The federal government will pay 65% of the COBRA premium for eligible individuals who were involuntarily terminated between September 1, 2008 and December 31, 2009.

  2. Persons who were terminated after September 1, 2008 but who did not elect COBRA coverage or elected it and then dropped it (perhaps for financial reasons) now will have an opportunity to elect COBRA and pay only 35% of the premium.

  3. Employers have the option to offer coverage other than that which the employee had immediately prior to termination. (This is contrary to the longstanding COBRA provisiions which give the employee the right only to continue what the employee already has.)

The subsidy is available to “assistance eligible individuals” (“Eligible Individual”). The subsidy is available to any “Assistance Eligible Individual” (“Eligible Individual”). An Individual is eligible if:

  1. S/he Is a “qualified beneficiary” (an employee, spouse, or dependent);

  2. The qualifying event was the “involuntary termination of employment” between September 1, 2008 and December 31, 2009;
  3. The Individual is eligible for COBRA continuation coverage (or comparable State Mini-COBRA coverage) at any time during that 16 month period; and

  4. The Individual elects the COBRA coverage.

The first bill signed into law by President Obama was the Lily Ledbetter Fair Pay Act, which overruled a controversial 5-4 decision by the Supreme Court, Ledbetter v. Goodyear Tire & Rubber Co., Inc., issued in 2007. The Act amends both the Title VII and the Age Discrimination in Employment Act and modifies the operation of the Americans with Disabilities Act and the Rehabilitation Act of 1973. The Act provides that in cases involving discrimination in compensation, under Title VII or the ADEA, an unlawful employment practice (which would trigger the running of the statute of limitations) occurs (1) when a discriminatory compensation decision or other practice is adopted; (2) when an individual becomes subject to a discriminatory compensation decision or other practice; or (3) when an individual is affected by application of a discriminatory compensation decision or other practice, “including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.” (emphasis added)

The Act further provides that in addition to the damages recoverable under the Civil Rights Act of 1991, 42 U.S.C. § 1981a, Title VII claimants may recover back pay for up to two years preceding the filing of the charge, “where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.”

The provisions of the new statute are also extended to compensation claims under the Americans with Disabilities Act and the Rehabilitation Act of 1973.

Employers must now be aware that discriminatory compensation decisions made in the past which have a continuing effect on one or more employees today could now give rise to a sustainable claim of discrimination.

My advice to employers is to do a compensation audit in cooperation with employment counsel to determine whether there is any pay disparity in the work force. Even if the disparity is the result of a decision years ago, you could be subject to litigation today, including class action litigation. By taking steps now to remedy unlawful disparities,