Category Archives: Benefits & Compensation

Employer Violated NLRA By Firing Employee For Discussing Salaries

A Texas engineering firm landed itself in hot water with the National Labor Relations Board after firing an employee for discussing salaries with her co-workers.

The Administrative Law Judge’s decision, which the NLRB affirmed, ruled that the employer’s policy prohibiting employees from discussing wages with their co-workers violated employees’ rights to discuss their working conditions under the National Labor Relations Act. It’s crucial to remember that this provision of the NLRA applies to non-unionized workplaces, a fact that is often overlooked because the NLRA deals so extensively with labor unions.


The company wound up paying the employee over $100,000 in back pay, 401(k) contributions, medical expenses, and interest.

The decision noted that:

the [National Labor Relations] Board has long held that an employer cannot lawfully prohibit employees from discussing matters such as their pay raises, rates of pay, and perceived inequities.

The ruling also confirmed that, even without enforcing it, simply having such a policy could violate the NLRA if it reasonably tends to chill employees’ NLRA-protected rights. Where, as was the case here, employers carry out the policy and fire someone, they most certainly violate the NLRA and expose themselves to a claim before the NLRB.

With the NLRB’s renewed efforts to shape employment law beyond the agency’s historical scope, eliminating policies like this one is an easy check-off any employer can make to stay out of trouble.


A Parting Gift to Remember

When Minnesota grocer Joe Lueken wanted to retire at the end of 2012, he apparently had no trouble finding a succession plan: give away the company to the employees. For free.

Leuken, who ran a local grocery store, created an employee stock ownership plan, or ESOP. Typically, employees have to contribute money to an ESOP to own shares in the company. But Leuken opted for the road less traveled: he didn’t ask the employees to pay for them, effectively giving his 400 employees the company for free.

His reasoning?

My employees are largely responsible for any success I’ve had, and they deserve to get some of the benefits of that. You can’t always take. You also have to give back.

There’s no word on what Leuken has planned after retirement.


Payroll Tax Cut Lapses for 2013

As part of the so-called “fiscal cliff” deal Congress hammered out this week, the 2% payroll-tax cut will lapse.

The tax cut, which was only temporary, reduced the employee share of Social Security withholding from 6.2% to 4.2%. Now that it has expired, the employee portion will switch back to 6.2%, meaning employees will take home a bit less in each paycheck than they’re used to.

Stalled Legislation May Reappear in 2013

Given the hectic pace at the end of this Congress’ term, it’s no wonder they left many tasks unresolved, including some pending employment-law legislation. Here are a few things to keep an eye on in 2013 (via Jackson Lewis):

  • The Employment Non-Discrimination Act, which would ban employment discrimination on the basis of sexual orientation
  • The Paycheck Fairness Act, which would place the burden on the employer to explain gender-based pay differentials
  • The Healthy Families Act, which would mandate paid time off

Of course, the Patient Protection and Affordable Care Act’s details continue to trickle out, and the Supreme Court is expected to rule on the constitutionality of same-sex marriages, which would greatly impact employee benefits.

Stay tuned.


Rounding Time

Employers rounding hourly employees’ time has reared its head recently, leading to many valid questions. Obviously, the most important one is whether the practice is legal.

The Department of Labor allows rounding time as long as it “averages out over a period of time.” So employers can round hourly employees’ time to the nearest 15 minutes on every clock-in/clock-out and still be on solid footing.

They just have to make sure it doesn’t have an unfair effect–for example, forcing employees to clock in or out at times that would roundĀ down every day instead of letting them clock in and out at natural times that would even out over time.

Falling With Grace

Although not new, severance pay for executives has piqued public interest lately. Critics argue that executives–often leaving under questionable circumstances–receive multi-million dollar payouts on the way out the door. Two recent departures help reaffirm that view.

Former Citigroup CEO Vikram Pandit is collecting just over $6.5 million on his way out. After abruptly resigning (or facing termination) and creating speculation about the pay he left on the table, a disclosure filed Friday afternoon revealed he would, in fact, take $6,653,333 with him as an “incentive award.” He will also continue to vest in company stock.

And Christopher Kubasik, who was about to become CEO of defense contractor Lockheed Martin, also quit after confirming a “close, personal” relationship with a subordinate employee. His haul: a $3.5 million “separation payment.”

Obama’s Next Four Years (In Employment Law)

With the unsurprising reelection of President Obama, what major shifts in employment law will we see? Here’s one guess, from the Proactive Employer:

  1. Paycheck Fairness Act, which puts the burden on employers to explain gender-based pay gaps, will be revitalized
  2. Federal contractors’ compensation practices will be scrutinized
  3. The government will press for more contractors to hire disabled workers
  4. The EEOC will continue its adverse-impact focus on items like criminal records, high-school graduation, and other various topics
  5. Wage and hour law will be vigorously enforced to support increased revenue via penalties

Obviously the National Labor Relations Board will also continue to play a larger role than it traditionally has, likely continuing its entry into areas it historically left alone.

The continued roll-out of the Patient Protection and Affordable Care Act will go on unabated, with many major changes becoming effective in 2014.