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As mentioned at the last Williams Kastner Labor & Employment Practice Group Seminar (Reductions in Force: Reducing the Legal and Personal Risks, March 12, 2009), many pension plans sought to take advantage of the boom market before the latest economic turndown and converted their trust fund pension plans from defined contribution plans to defined benefit plans. This led to extraordinary returns and assets for these plans until the current economic crisis. Now employers participating in these plans are hearing a term not heard since the early Eighties - - unfunded vested liability. This represents the shortfall between the amount of trust fund contributions going in and the vested benefits due retirees. Recent headlines announced that pension plans sponsored by the automobile industry had unfunded benefit liabilities totaling more than $60 billion. The employer bill for this unfunded vested liability typically comes due when the employer leaves the plan as a result of a closure of operations, termination of a union plan in favor of an employer plan or a decertification by unionized employees. Read the full article.

As promised, on March 19, 2009 the Department of Labor issued Model Notices for COBRA which were mandated by the COBRA continuation requirements of the new American Recovery and Reinvestment Act of 2009 (ARRA). The Model Notices can be found at www.dol.gov/ebsa/COBRAmodelnotice.html. That site also includes brief instructions on the use of each of the four notices. The notices include:

• A General Notice to be sent to all qualified beneficiaries who experienced a qualifying event between September 1, 2008 and December 31, 2009.
• An abbreviated version of the General Notice which does not include the general COBRA election information, which may be sent to individuals who elected COBRA coverage after September 1, 2008 and still have it.
• An Alternative Notice for use by insurance issuers be sent to persons who become eligible for continuation coverage under a State law.

In an effort to increase union membership, some unions have directed their attention to business owners and those doing business with non-union firms. Under the guise of protesting the failure of non-union contractors to meet "area standards" (ostensibly only possible if the targeted contractors agree to union contracts), the unions contact business owners via office visits, letters, and telephone calls to advise them that the owners will be subject to a very visible campaign protesting the owners' use of "substandard" non-union contractors. In some cases that campaign includes 4 ft. x 20 ft. banners advising the public that the business owner is "undermining area standards." Read the full article.

One of the most confusing wage and hour questions for employers is whether or not to pay employees for attending training when the training occurs off-hours. The Federal Department of Labor' apostrophes Wage Hour Division recently released several opinion letters providing some clarification. In one case, childcare workers could voluntarily sign up for "in-service training," allowing employees to maintain their state certifications. The employer-provided training was similar to training offered by institutions of higher learning. The second case involved Web-based courses preparatory to paid training for technicians employed by a communications company. The Web-based programs were offered at employees' homes. The third case involved attendance at training programs offered by a municipal employer intended to help employees become more proficient at their jobs. Again, as with the training by the communications company, the class required the study of preparatory materials during the employees' spare time. Read the full article.

As a result of the current economic climate, many companies are implementing furloughs as a cost cutting measure. Furloughs typically consist of employer-mandated periods of unpaid employee time off. In response, the Department of Labor (DOL)'s Wage and Hour Division issued two new letters on March 6, 2009, warning employers that such cost-cutting measures, if carried out improperly, could jeopardize the exempt status of salaried employees under the Fair Labor Standards Act (FLSA). Generally, exempt employees must meet three tests: (1) the salary levels test; (2) the duties test (whether administrative, executive or professional); and (3) the salary basis test. The new DOL letters suggest that implementing a reduction of hours with a resulting reduction in salary may, if done incorrectly, deprive the employer of the ability to meet the "salary basis" test. Read the full article.

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Williams, Kastner & Gibbs PLLC - 2009