New ACA Rule Changes Hospitals’ Obligations to Provide Auxiliary Aids to Patients and Companions

By Melissa Provost

On September 8, 2015, the Department of Health and Human Services (“HHS”) proposed regulations to implement Section 1557 of the Affordable Care Act.  Section 1557 prohibits certain entities that administer health programs and activities from excluding an individual from participation, denying program benefits, or discriminating against an individual based on his or her race, color, national origin, sex, age or disability.  On May 13, 2016, the HHS Office of Civil Rights issued the final rule implementing Section 1557.  The final rule also prohibits discriminatory practices by health care providers, such as hospitals, that accept Medicare or doctors who participate in the Medicaid program.  The final rule became effective on July 18, 2016.

Section 1557 builds on long-standing federal civil rights laws, including Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, Title III of the Americans with Disabilities Act (ADA), and the Age Discrimination Act of 1975.  The final rule addresses effective communication for individuals with disabilities at section 92.202.  One notable requirement of this new rule is that hospitals must give “primary consideration” to the individual’s preference regarding auxiliary aids for effective communication, such as requests for on-site ASL interpreters and other types of auxiliary aids.

In the proposed rule, OCR considered whether to incorporate the standards in the regulation implementing Title II of the ADA or the standards in the regulation implementing Title III of the ADA.  Under Title II, government entities are required to give “primary consideration” to the choice of auxiliary aid requested by an individual with a disability, whereas under Title III, the ultimate decision as to what auxiliary aid to provide rests with the private entity.

After addressing the public comments received regarding the proposed final rule pertaining to this section, HHS concluded that:

we believe it is appropriate to hold all recipients of Federal financial assistance from HHS to the higher Title II standards as a condition of their receipt of that assistance. We also noted that it is appropriate to hold HHS itself to the same standards to which the Department subjects the recipients of its financial assistance. (emphasis added)

What does it mean for a hospital to give “primary consideration” to an individual’s expressed choice of auxiliary aid?  In its technical assistance manual for Title II of the ADA, the DOJ explains that:

When an auxiliary aid or service is required, the public entity must provide an opportunity for individuals with disabilities to request the auxiliary aids and services of their choice and must give primary consideration to the choice expressed by the individual. ‘Primary consideration’ means that the public entity must honor the choice, unless it can demonstrate that another equally effective means of communication is available, or that use of the means chosen would result in a fundamental alteration in the service, program, or activity or in undue financial and administrative burdens. — Dep’t of Justice, The Americans with Disabilities Act: Title II Technical Assistance Manual 38 (1993) (emphasis added).

State and local government services under Title II must give the person with a disability an opportunity to make an express choice, and the “public entity shall give primary consideration to the requests of the individual with “to request the auxiliary aids and services of their choice.”  This contrasts with Title III of the ADA (which applies to public accommodations, including hospitals), which permits a public accommodation to consult with disabled individuals whenever possible to determine what type of auxiliary aid is necessary to ensure effective communication, but the ultimate decision as to which aid to use is left to the hospital.

Very few courts have analyzed the “primary consideration” test in the context of visually or hearing impaired plaintiffs.  However, Bonnette v. District of Columbia Court of Appeals, 796 F. Supp. 164 (2011), provides some useful guidance.  In Bonnette, the plaintiff was a legally blind law school graduate who sought an order allowing her to take the D.C. bar exam with the assistance of a computer equipped with an accessible screen-reading program commonly used by individuals with visual impairments, and other accommodations.  Her request was partially granted, but her request to use the specially equipped computer to take the Multistate portion of the bar exam was denied.  In its place, the NCBE, which administers the bar exam on behalf of the Court of Appeals, offered plaintiff the use of an audio CD or a human reader, who was also an attorney.  NCBE also claimed that it ran on a very tight budget, and could not afford the extra $5,000 that the special computer would cost.  Plaintiff presented evidence as well as expert testimony that the accommodations she requested were optimal for her skill set and in this particular situation.

The Court held that the Court of Appeals was subject to the heightened standards of Title II, whereas NCBE was subject to the standards set forth in Title III.  Although the Court agreed that the defendants were not required to provide plaintiff with her requested accommodation, it did find that:

both the Title II regulations applicable to the Court of Appeals (through the “primary consideration” requirement) and the Title III regulation applicable to NCBE (through its “best ensure” requirement) require that Bonnette be provided with an accommodation that is at least “as effective” as her preferred accommodation. Therefore, if Bonnette can establish that the alternative accommodations offered to her by Defendants do not make the MBE accessible to her in the same way that [her requested accommodation] does, then Defendants must provide her with [her requested accommodation] unless they can establish that doing so would fundamentally alter the nature of the examination or constitute an undue burden.

The new ACA rule now requires hospitals to honor the patient’s and/or companion’s requested auxiliary aid unless it can demonstrate that another equally effective means of communication is available, or that use of the means chosen would result in a fundamental alteration in the service, program, or activity or in undue financial and administrative burdens.  Non-compliance with the new final rule could result in investigations by the Department of Justice, OCR reviews, and lawsuits by aggrieved individuals.  In addition, a recent Supreme Court decision held that non-compliance with a material statutory or regulatory requirement also could result in liability under the False Claims Act.

How can hospitals meet this new, heightened standard?  Hospital staff should be trained on what auxiliary aids are appropriate and necessary in any given situation.  Hospital staff should also be reminded to document the patient’s and/or companions requested auxiliary aid in the medical record, as well as any complaints by the patient and/or companion about the auxiliary aid provided by the hospital.  Most importantly, hospital staff should engage in a dialogue with the patient and/or companion, to ensure that the auxiliary aid provided by the hospital is meeting his or her needs throughout the hospital stay.

The Split Among Circuit Courts in Compelling Individual Arbitration in Class Actions Continues

By Pascal Benyamini

Earlier this week, the Ninth Circuit Court of Appeals issued a ruling in Morris v. Ernst & Young and aligned itself with the Seventh Circuit[1] in holding that an employer cannot compel individual arbitration of an employee’s class and collective action claims.

In Morris, Plaintiffs Stephen Morris and Kelly McDaniel (“Plaintiffs”) worked for the accounting firm Ernst & Young. As a condition of their employment, Plaintiffs were required to sign an agreement that the Ninth Circuit determined Plaintiffs could only “(1) pursue legal claims against Ernst & Young exclusively through arbitration and (2) arbitrate only as individuals and in ‘separate proceedings.’” In a relatively surprising move and 2-1 decision, the Ninth Circuit found that the employer violated Sections 7 and 8 of the National Labor Relations Act (NLRA)[2] by “requiring employees to sign an agreement precluding them from bringing, in any forum, a concerted legal claim regarding wages, hours, and terms and conditions of employment.”  In doing so, the Ninth Circuit overruled the lower court’s ruling in favor of Ernst & Young in its motion to compel individual arbitration and held that the agreements in question precluded Plaintiffs from “initiat[ing] concerted legal claims against the company in any forum—in court, in arbitration proceedings, or elsewhere.”

The Morris Court explained that it did not view the arbitration requirement as a problem. But rather, “[t]he problem with the contract at issue is […] that the contract term defeats a substantive federal right to pursue concerted work-related legal claims.” The Court continued:

“The NLRA establishes a core right to concerted activity. Irrespective of the forum in which disputes are resolved, employees must be able to act in the forum together. The structure of the Ernst & Young contract prevents that. Arbitration, like any other forum for resolving disputes, cannot be structured so as to exclude all concerted employee legal claims. As the Supreme Court has instructed, when ‘private contracts conflict with’ the NLRA, ‘they obviously must yield or the Act would be reduced to a futility.’ [citation omitted].”

Accordingly, the Ninth Circuit remanded the case back to the lower court to determine whether the “separate proceedings” clause in the agreement could be severed from the rest of the agreement.

As noted above, the decision in Morris was not unanimous. In her dissent, Judge Ikuta was quite critical of the majority opinion, finding it “breathtaking in its scope and in its error; […] directly contrary to Supreme Court precedent; […] join[ing] the wrong side of a circuit split; […] lead[ing] to a result that is directly contrary to Congress’s goals in enacting the [Federal Arbitration Act].” Indeed, Judge Ikuta specifically acknowledged the holdings by the Second, Fifth and Eight Circuits (which have concluded that the NLRA does not invalidate collective action waivers in arbitration agreements) and further stated that: “the majority’s reasoning is specious because it is based on the erroneous assumption that the waiver of the right to use a collective mechanism in arbitration or litigation is ‘illegal.’ But such a waiver would be illegal only if it were precluded by a “contrary congressional command” in the NLRA, and here there is no such command.”

In sum, now that the Seventh and Ninth Circuit Court of Appeals have aligned themselves against the Second, Fifth and Eighth Circuit Court of Appeals, a decision by the U.S. Supreme Court is greatly needed to provide clarity and certainty for employers with respect to class action/collective action arbitration waivers.

In the meantime, employers need to know that class and collective action waivers will not be enforced in federal courts in the Seventh and Ninth Circuits.[3] Such employers who have existing agreements containing such waivers or employers that are considering such waivers should carefully evaluate and discuss this matter further with their counsel.


[1] For our previous discussion of the Seventh Circuit decision in the Lewis v. Epic-Systems Corp. case and background on the enforceability of class action waivers, please click here.

[2] The NLRA establishes the rights of employees in Section 7 and provides: “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. Section 8 of the NLRA is viewed as an enforcement provision which enforces the rights under Section 7 by making it “an unfair labor practice for an employer . . . to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in [§ 7].” 29 U.S.C. § 158.

[3] There are three (3) states within the Seventh Circuit: Illinois, Indiana and Wisconsin. There are eleven (11) states and jurisdictions within the Ninth Circuit: Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, Washington.


Back to School Update on School-Related Parental Leave

By Lynne Anne Anderson

As the summer comes to a close, employees are preparing for their children’s return to school, and will need to attend various school events and activities during the workday.  An increasing number of states now mandate that public and private employers provide unpaid leave for this purpose, including the following states that have laws covering private employers:

California – 40 hours (but no more than 8 per month)

District of Columbia – 24 hours

Illinois – 8 hours (no more than 4 on any day, and only when no other type of employee leave is available)

Louisiana – 16 hours

Massachusetts – 24 hours

Minnesota – 16 hours

Nevada – 4 hours

North Carolina – 4 hours

Rhode Island – 10 hours

Vermont – 24 hours (no more than 4 in any 30-day period)

Many of these state laws provide for leave beyond the standard school concert or classroom activity.  For example, California’s law allows for a parent to take time off for visits to find, enroll, or re-enroll a child in a school or childcare facility.  Massachusetts allows leave to participate in a broad range of school activities directly related to the educational advancement of the employee’s child, such as parent-teacher conferences or interviewing for a new school.  California employees can also use the leave when they get the call that their child needs to be picked up and taken home due to discipline problems or unexpected closures. District of Columbia and North Carolina laws provide for leave to attend PTA events and sports games or practices.

You do not need to be a biological parent to be eligible for leave under some of these laws.  The District of Columbia Parental Leave Act provides leave to employees who are:  a biological parent; granted legal custody; acting as a guardian (regardless of whether he or she has legally been appointed as such); an aunt, uncle or grandparent; or married to – or in a domestic partnership with – a parent.  California’s law also provides leave to guardians, step-parents, foster parents, grandparents and employees who stand-in as a parent (in loco parentis).

In terms of verification of the need for leave, most of these state laws do allow for the employer to request documentation from the school as proof that the employee participated in a school activity on a specific date and time.  However, the employer must accept whatever documentation the school deems appropriate and reasonable.  Employees are generally obligated to provide reasonable advance notice of a request to leave to attend a school-related event or activity.

None of these laws require employers to pay for the mandated time-off to attend school activities.  However, employers can generally require an employee to use accrued PTO/vacation to participate in these activities, if the requirement is specified in the applicable policy.  However, it is important to carefully check each state law.  While California law allows the employee to choose whether to use existing PTO or take the time off without pay, Massachusetts law requires non-exempt employees to substitute any available accrued PTO for the unpaid leave.

These laws also contain provisions protecting employees from discrimination or retaliation for taking leave to participate in school activities if the employee provides reasonable notice.

Companies that have employees in these states should include reference to the mandated time-off for school related activities in employee handbooks, and cross-reference the interplay with existing PTO/vacation policies. Multi-state employers that seek to have a comprehensive policy for all locations should be aware that these laws vary in terms eligibility requirements, amount of leave, notice requirements, etc. Colorado employers should also note that, as one exception to this trend, Colorado repealed it’s Academic Leave Act that required employers to provide full-time employees with up to 18 hours leave per academic year.  As a result, Colorado employers should provide notice that school-related parental leave is no longer available, or, if the company decides to continue to offer such leave, be sure to outline any terms that are different than what was provided in the repealed statute.

Finally, in tracking time used for the statutory leave, employers should be mindful that they should not dock exempt employees for hourly time-off.

What Employers Need to Know about the Government’s Recent Scrutiny of Non-Competes

By Lawrence J. Del Rossi

For more than 400 years, private businesses have used non-compete agreements in one form or another to protect their legitimate business interests, such as long-standing customer relationships, investment in specialized training, or development of trade secrets. They are commonplace in many employment contracts in a variety of industries ranging from retail, insurance, healthcare, financial services, technology, engineering, and life sciences.  Some state legislatures and courts have curtailed their use in certain industries or professions.  California, for example, prohibits them unless limited exceptions apply.  Cal. Bus. Code §16600.  Most states prohibit them for legal professionals.  Many courts can modify or “blue pencil” them if the restrictions are found to be broader than necessary to protect an employer’s legitimate business interests.

Historically, federal and state agencies have generally stayed out of the mix in terms of regulating or challenging private businesses’ use and enforcement of non-competes.  However, a recent uptick in government enforcement activity suggests a new wave of challenges is on the horizon for employers.

The U.S. Government Takes Aim at Non-Competes

In March 2016, the Office of Economic Policy of the U.S. Department of the Treasury issued a report titled, “Non-Compete Contracts: Economic Effects and Policy Implications.”  According to the report, an estimated 18% of all workers, or nearly 30 million people, have non-compete agreements.  The report discusses the effects of non-competes on worker mobility and economic growth, and recommends greater transparency and communication with employees.

Two months later in May 2016, the White House released a report titled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses.”  The report’s preamble explains that, “the President has directed executive departments and agencies to propose new ways of promoting competition and providing consumers and workers with information they need to make informed choices, in an effort to improve competitive markets and empower consumers’ and workers’ voices across the country.”  It outlines States’ efforts to curtail the use of non-competes, and announces that “[i]n the coming months, as part of the [Obama] Administration’s efforts to support competition in consumer product and labor markets, the White House, Treasury, and the Department of Labor will convene a group of experts in labor law, economics, government and business to facilitate discussion on non-compete agreements and their consequence.”  The goal of this initiative is to identify “key areas where implementation and enforcement of non-competes may present issues,” examine “promising practices in states,” and put “forward a set of best practices and call to action for state reform.”

State Agencies File Lawsuits to Limit Use of Non-Competes

Apparently hearing the White House’s “call to action for state reform,” some states appear to have stepped up their enforcement efforts.  For example, on August 4, 2016, the New York Attorney General’s Office issued a press release announcing that a nationwide medical information services provider agreed to stop using non-competes for most of its employees in New York.  The non-competes had prohibited all employees, including “rank-and-file workers,” from working for competitors after their employment ended, regardless of whether they had access to trade secrets or other sensitive information.

In June 2016, the Illinois Attorney General’s Office filed a lawsuit against Jimmy John’s franchises “for imposing highly restrictive non-compete agreements on its employees, including low-wage sandwich shop employees and delivery drivers whose primary job tasks are to take food orders and make and deliver sandwiches.”  [Press Release] The Complaint alleges that Jimmy John’s has engaged in unfair conduct in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, seeks a declaration invalidating the non-competes and $50,000 per violation.  Jimmy John’s previously had reached a deal with the New York Attorney General’s Office, agreeing to not use non-compete agreements for most of its workers in New York.

The NLRB Strikes Down Private Employer’s Non-Competes

In addition to the uptick in state enforcement activities, the NLRB has weighed in.  On July 29, 2016, a three-member panel of the National Labor Relations Board found that steel product company, Minteq International, Inc., violated federal labor law by requiring new employees to sign non-compete and confidentiality agreements as a condition of their employment without giving Local 150 of the International Union of Operating Engineers the opportunity to bargain on this issue. Minteq Int’l, Inc. & Specialty Minerals Inc. v. Int’l Union of Operating Engineers, 13-CA-139974, 364 NLRB No. 63 (7/29/2016).  Local 150 filed an unfair labor charge after Minteq sent letters to a former employee reminding him of his 18-month post-termination non-compete obligations.  The Board found the non-compete was a mandatory term of employment, and as such, the Union should have been notified and given the opportunity to bargain prior to its implementation.  It concluded that Minteq’s unilateral imposition of the non-compete as a condition of employment violated Section 8(a) of the National Labor Relations Act.

Key Takeaways

Most often a “one size fits all” approach to non-competes is not necessary to protect an employers’ legitimate business interests.  In light of the government’s recent focus on and scrutiny of non-competes, employers should evaluate the scope and structure of their non-competes.  Agencies appear focused on companies that require all employees, regardless of whether they have access to trade secrets or other sensitive information, to sign post-termination non-competes.  Consider whether such across-the-board agreements are necessary to protect their legitimate business interests.  Selective use of non-competes may go a long way to staving off challenges to an employer’s use of non-competes.

SEC Charges Another Company for Anti-Whistleblower Provision in Severance Agreements

By Mary Hansen and Rachel Share

The SEC announced on Wednesday that BlueLinx Holdings Inc. has agreed to pay a $265,000 penalty for including a provision in its severance agreements that required outgoing employees to waive their rights to monetary recovery if they filed a charge or complaint with the SEC or other federal agencies. Press Rel. No. 2016-157. According to the SEC’s order, approximately 160 BlueLinx employees have signed severance agreements that contained the provision since it was added to all of BlueLinx’s severance agreements in or about June 2013.

The provision violates Rule 21F-17 of the Exchange Act, which became effective on August 12, 2011, and prohibits any action to impede an individual from communicating with the SEC about a possible securities law violation. The purpose of the adoption of Rule 21F-17 was “to encourage whistleblowers to report possible violations of the securities laws by providing financial incentives, prohibiting employment-related retaliation, and providing various confidentiality guarantees.” See In the Matter of BlueLinx Holdings Inc., Release No. 78528. Because the severance agreement required employees leaving the company to waive potential whistleblower awards or risk losing payments and other benefits under the agreement, it ran afoul of Rule 21F-17.

In addition to the civil penalty, BlueLinx committed to (1) amend its severance agreements to make clear that employees may report possible securities law violations to the SEC and other federal agencies without BlueLinx’s prior approval and without having to forfeit any resulting whistleblower award and (2) make reasonable efforts to contact former employees who had executed severance agreements after August 12, 2011, to notify them that BlueLinx does not prohibit former employees from providing information to the SEC staff or from accepting SEC whistleblower awards.

BlueLinx consented to the cease-and-desist order without admitting or denying the SEC’s findings.

This is the third time that the SEC has charged violations of Rule 21F-17. In June, Merrill Lynch agreed to settle charges that it violated Rule 21F-17 in connection with certain statements in its severance agreements, and last year KBR settled similar charges in connection with certain restrictive language in confidentiality agreements used in the course of internal investigations. Like those orders, the SEC’s latest order is yet another example of the SEC holding companies liable for Rule 21F-17 violations without any evidence that any employee had actually been prevented from disclosing confidential information to the government. Thus, even in the absence of whistleblower concerns, companies should expect the SEC to continue to scrutinize language included in employment agreements, severance agreements, and other employment policies.

In fact, the Enforcement Division has been sending out requests to public issuers asking for copies of corporate confidentiality policies. It is not clear whether the companies contacted have been the subject of a whistleblower complaint or whether the staff is randomly selecting issuers. Moreover, the Office of Compliance, Inspections and Examinations has been routinely asking registrants during examinations for copies of employment agreements, severance agreements, employment policies, and any other documents that contain “confidentiality” provisions to ensure that they do not contain language that could be construed as interfering with the rights of whistleblowers.

Based on the SEC’s interest in enforcing Rule 21F-17, all employers should review such agreements and policies to ensure that they do not contain provisions that violate the rule.

Massachusetts Joins California and New York with Aggressive Equal Pay Law

By Lynne A. Anderson

On August 1, Massachusetts added significant teeth to the state’s current equal pay law. The new law, “An Act to Establish Pay Equity,” not only targets compensation decisions, it also affects hiring practices.   As of July 1, 2018, when the new law takes effect, employers cannot ask an applicant to provide his or her prior salary history until after the candidate has successfully negotiated a job offer and compensation package.  This measure is intended to stop the perpetuation of gender pay disparities from one employer to the next.  In addition, employers cannot use an employee’s prior salary history as a legitimate basis to pay a man more than a woman for comparable work.

The definition of comparable work is broad: “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions: provided, however, that a job title or job description alone shall not determine comparability.”

Under the new law, employees can openly discuss their wages without fear of retaliation. As a result, non-disclosure provisions in handbooks and employment agreements will need to be modified.

Also, while the law recognizes seniority is a legitimate reason for a pay disparity, it prohibits the employer from reducing credit for seniority based on time off due to a pregnancy-related condition or protected parental, family and medical leave. Therefore, policies that take leaves of absence into account when determining pay will need to be adjusted.  As in California’s Fair Pay Act, an employer cannot reduce the wages of other Massachusetts employees to rectify any wage disparities.  Also, having an employee contract away any rights under the new law will not be a valid defense to an equal pay claim.

The new law also lowers barriers to litigation.   The statute of limitations to file an equal pay claim under the new law is extended to three years from the one year limitations period under the current statute.  Also, employees can now sue employers in court without having to first file a claim with the Massachusetts Commission Against Discrimination – which is required under the existing statute.

The law does encourage employers to self-audit in order to address pay disparities; the new law provides an affirmative defense to an employer that has completed a self-evaluation of its pay practices and can demonstrate that reasonable progress has been made towards eliminating wage differentials within the three years prior to the commencement of any lawsuit. In addition, claimants are barred from using evidence of a recent audit and remedial steps to prove their equal pay claims.

As far as next steps for the state, the Massachusetts Attorney General will issue regulations interpreting and applying the new law. The law also provides that a special commission will investigate, analyze and study causes of gender-based pay disparity as well as other protected characteristics, including race, color, religious creed, national origin, gender identity, sexual orientation, genetic information, ancestry, disability and military status. This commission must submit its initial findings to the Massachusetts legislature by January 1, 2019.

For more information on compliance with Title VII, the Equal Pay Act and various state laws regarding gender discrimination and fair pay, contact Kate Gold or Lynne Anderson.