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Searching for Articles published in October 2015.
Found 12 Results.

2016 Qualified Plan Cost of Living Increases, 2016 Social Security Taxable Wage Base

Posted on October 21, 2015, Authored by Mary Ellen Schill,

2016 Qualified Plan Cost of Living Increases, 2016 Social Security Taxable Wage Base The Internal Revenue Service has announced the cost-of-living adjustments for the various qualified retirement plan limits. All of the limits shown below remain unchanged from last year.   All of the above are plan year limits (i.e., for the plan year which begins in 2016), with the exception of the Code Section 401(k) and Code Section 403(b) elective deferral limit, which is a calendar year limitation. In addition, the Department of Health and Human Services has set the maximum taxable wages for the OASDI portion of the social security tax at $118,500 for 2016, which is the same as for 2015.  If you have questions regarding the above, please contact Attorney Mary Ellen Schill, who prepared this article, or any of the attorneys within the Employment, Benefits & Labor Relations Group of Ruder Ware.

Strength Exam May Cause Discrimination Complaint

Posted on October 20, 2015, Authored by Dean R. Dietrich, Filed under Employment

A recent news article reported that a trucking company has settled an age and sex discrimination charge filed by the Equal Employment Opportunity Commission over a strength exam that it used when hiring drivers for its business.  The EEOC claimed that the strength test mandated by the company for truck driver applicants supported a claim for age and sex discrimination because employees over 40 and women were unable to pass the test.  EEOC also alleged that the exam created a standard of strength requirements that were more than what was needed for the truck driver position.   This is another example of the aggressive activities of the EEOC to pursue claims of discrimination against local businesses.  The trucking company agreed that it would no longer use the strength exams as a condition of employment and reiterated its commitment to anti-discrimination policies going forward.  Businesses have to recognize that any test used as part of the hiring process must be work related and validated to show that it was properly measuring the skills that were needed for the position being filled.  Business necessity is a critical component of a determination that a test used to screen applicants is appropriate for use by the company.

Clean Water Rule: Definition of “Waters of the United States” under the Clean Water Act

Posted on October 12, 2015, Authored by Russell W. Wilson,

I. Introduction The terms “waters of the United States” and “navigable waters of the United States” are two separate definitions applied by the United States Army Corps of Engineers (“Corps”) in different contexts pursuant to different statutes.  Let’s suppose you want to construct a hydroelectric plant.  A fundamental concern would be whether the newly constructed generating facility and dam would obstruct navigation.  In that context the jurisdiction of the Corps would turn on whether the particular body of water meets the definition of the “navigable waters of the United States” pursuant to the Rivers and Harbors Act of 1899 (“RHA”). The regulatory definition of the “navigable waters of the United States” means: “…those waters of the United States that are subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be susceptible for use to transport interstate or foreign commerce.  A determination of navigability, once made, applies laterally over the entire surface of the waterbody, and is not extinguished by later actions or events which impede or destroy navigable capacity.”  (33 C.F.R. § 329.4) The RHA and the “navigable waters of the United States” are concerned with navigation and navigation in the traditional sense. This article is not about navigation in the traditional sense.  Rather, our purpose here is to explore the meaning of the “waters of the United States” under the Clean Water Act (“CWA”).  Let’s suppose that you want to develop a mixed use commercial/residential project in an area where wetlands exist.  If the wetlands meet the definition of the “waters of the United States,” then they are under the jurisdiction of the Clean Water Act.  Under section 404 of that statute, the Corps regulates the dredging and filling of wetlands through its permitting process. The definition of the “waters of the United States” under the CWA (the subject of this article) is broader than the definition of the “navigable waters of the United States” under the RHA.  But how much broader?  Why is it that such controversy has arisen over the meaning of the term the “waters of the United States”?  Because Congress chose an unhelpful word when it passed the CWA in 1972.  The statute applies to “navigable waters” which Congress further defined in Section 502 as the “waters of the United States.” 33 USC § 6207 (emphasis mine).  Congress omitted, however, to define the “waters of the United States,” leaving that phrase to be developed by the agencies that administer the Clean Water Act, i.e. the U.S. Environmental Protection Agency (“EPA”) and the Corps. So when the phrase “waters of the United States” is broader than the term “navigable waters of the United States” and when “navigable waters” means the “waters of the United States,” what then is the significance of the adjective “navigable”?  That puzzle is the source of the controversy.  Widely divergent views of the significance of the word “navigable” have emerged in three United States Supreme Court cases that have interpreted the “waters of the United States.”  The opinion of one justice (Kennedy) articulates the significance of “navigable” in areas beyond waters that are navigable in the traditional sense.  This analytical framework is Justice Kennedy’s “significant nexus” test, which is an “ecological inquiry.” The EPA and the Corps have jointly proposed a new regulation defining the “waters of the United States” in response to the Supreme Court cases.  The proposed definition is premised on the ecological inquiry that is the significant nexus test of jurisdiction.  In order to understand the proposed definition, we first need to review its history. II. Timeline of Legislative, Regulatory, and Judicial Developments This section merely identifies the milestones in the development of the definitions of the “waters of the United States” under the CWA.  To describe each development is a more ambitious and lengthy undertaking.  The legislative, executive, and the judicial branches of the federal government added, pruned, and interwove individual strands since the 92nd Congress passed the Federal Water Pollution Control Act Amendments of 1972, which President Nixon signed into law. Legislative bodies – federal and state – authorize regulatory agencies in the executive branch to formally develop regulations to refine statutes so they can be implemented and enforced.  The judiciary has the last word as to whether regulations exceed the scope of the legislation. In 1974 the Corps initially issued its definition of the “waters of the United States” under Section 404 of the CWA to coincide with its definition of  “navigable waters of the United States” under the RHA.  The EPA, which administers the CWA overall, called out to the Corps’ its mistake.  As would later be noted in Riverside Bayview, SWANCC, and Rapanos, the “waters of the United States” under the CWA is broader than the “navigable waters of the United States” under the RHA.  The question is not whether the definition is broader; it is how much broader and how to define it? The Corps then issued its interim definition 1975.  One definition in particular, “fresh water wetlands” contained the requirement that such wetlands be “periodically inundated.”  In 1977 two events took place.  First, Congress amended the CWA, and in doing so, rejected a bill that, if enacted, would have changed the definition of “navigable waters” from the “waters of the United States” to the “navigable waters of the United States.”  Second, the Corps adopted its then final rule defining the “waters of the United States.”  Notably, the Corps removed the “periodic inundation” component of “freshwater wetland” from the 1977 definition.  The Corps then made some language changes in 1982 that did not affect the substance of the definition. The stage was set for the U.S. Supreme Court’s decision in Riverside Bayview.  There, the deletion of the “periodic inundation” definition was instrumental in the unanimous opinion: “wetlands” that are “adjacent” to water that is navigable in the traditional sense are within the Corps’ jurisdiction under Section 404 of the CWA. The Corps next promulgated its regulatory definition of the “waters of the United States” in 1986.  At that time it added what would become known as the “Migratory Bird Rule.”  That was the stage for the Court’s next ruling in 2001 in SWANCC.  There, the 5 to 4 majority ruled that the 1986 definition, which contained the Migratory Bird Rule, did not extend to isolated ponds and mud flats that were confined to the state of Illinois.  Looking back at its decision in Riverside Bayview, the Court in SWANCC voiced the notion of a “significant nexus” between the scope of jurisdiction under Section 404 of the CWA and traditional navigable water.  It is important to note what SWANCC did not do: it did not overturn any portion of the Corps’ definition of the “waters of the United States.”  SWANCC held that the reach of the “waters of the United States” did not extend to the facts in that case: wholly intrastate, isolated ponds and mud flats, which could serve as stop-over points for migrating birds. In 2006 the Court issued its decision in Rapanos.  The four justices who took the narrow, states-rights view (plurality opinion) and the four who took the broad, federal view (dissenting opinion) cancelled each other out insofar as creating a framework to analyze these cases.  The plurality opinion and the dissenting opinion cannot be reconciled.  In the view of the plurality, Congress’ choice of words by which it defined “navigable waters” as the “waters of the United States” was not ambiguous.  Further, the plurality would require that in order for the Corps to have jurisdiction under Section 404 of the CWA, there must be (1) a relatively permanent (not intermittent or ephemeral) body of water that must have (2) a surface connection to water that is navigable in the traditional sense.  Those elements were fashioned in the plurality opinion; they do not appear in any version of the regulatory definition or in cases that apply the definition. In stark contrast, the dissenting view is that the definition of “navigable waters” as the “waters of the United States” is ambiguous.  In the dissenting view, the Corps has developed its definition of the “waters of the United States” based upon its technical expertise after having applied that expertise for over 30 years.  The dissenting opinion views the Corps’ definition of the “waters of the United States” as a reasonable interpretation of congressional intent.  Therefore, the dissent would defer to the Corps’ regulatory definition. The cancellation of the plurality and the dissent left Justice Kennedy standing alone to articulate the “significant nexus” analytical framework for defining the jurisdictional reach of Section 404 of the CWA.  And articulate it he did.  In response to Riverside Bayview, SWANCC and Rapanos, Justice Kennedy’s articulation of the “significant nexus” analytical framework, on May 26, 2015, the EPA and the Corps jointly proposed their “Clean Water Rule: Definition of “Waters of the United States.”  In the meantime, a wetlands case reached the United States Court of Appeals in 2015 that applied Justice Kennedy’s “significant nexus” analytical framework.  That case is Precon Development Corporation v. United States Army Corps of Engineers, decided by the Fourth Circuit.  See The Fourth Circuit U.S. Court of Appeals Applies the "Significant Nexus" Test in Wetlands Litigation. On the facts before it the Fourth Circuit found that the “significant nexus” between the wetlands in question and traditional navigable waters was satisfied.  In doing so, the Fourth Circuit quoted Justice Kennedy’s “significant nexus” analytical framework verbatim and applied it.  That test is a flexible ecological inquiry.  Likewise, the jointly promulgated “Clean Water Rule: Definition of ‘waters of the United States’ ” rests ultimately on Justice Kennedy’s test.  That wording serves as our segue to the content of the new regulatory definition: “A significant nexus exists when the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical and biological integrity of traditional navigable waters…No significant nexus exists when the wetlands’ effects on water quality [of traditional navigable waters] are speculative or insubstantial.” III. The Revised Definition of the Waters of the United States For convenience I will use the acronym “WOTUS” in place of “Waters of the United States.”  The revisions established in subsections (a), (b), and (c) to part 328.3.  Subsection (a) identify what is included in WOTUS in conjunction with further definitions of words and phrases in subsection (c).  Subsection (b) identifies specific exclusions from WOTUS. Let’s begin with the features that are specifically exempted in subsection (b) from WOTUS “even where they otherwise meet the terms of paragraphs (a)(4) through (a)(8) of this section.” The exemptions are: 1)  Waste treatment systems including treatment ponds or lagoons designed to meet the requirements of the CWA; 2)  Prior converted cropland; 3)  The following ditches: (i) ditches with ephemeral flow that are not a relocated tributary or excavated in a tributary; (ii) ditches with intermittent flow that are not a relocated tributary, excavated in a tributary, or drain wetlands; (iii) ditches that do not flow, either directly or through another water, into a water identified in paragraphs (a)(1) through (3) of this section [i.e. traditional navigable waters, interstate waters and wetlands, and the territorial seas]; 4)    The following features: (i)  artificially irrigated areas that would revert to dry land should application of water to that area cease; (ii)  artificial, constructed lakes and ponds created in dry land such as farm and stock watering ponds, irrigation ponds, settling basins, fields flooded for rice growing, log cleaning ponds, or cooling ponds; (iii)  artificial reflecting pools or swimming pools created in dry land; (iv)   small ornamental waters created in dry land; (v)    water-filled depressions created in dry land incidental to mining or construction activity, including pits excavated for obtaining fill, sand, or gravel that fill with water; (vi)    erosional features, including gullies, rills, and other ephemeral features that do not meet the definition of tributary, non-wetland swales, and lawfully constructed grassed waterways; and (vii) puddles. 5)  Groundwater, including groundwater drained through subsurface drainage systems 6)   Stormwater control features constructed to convey, treat, or store stormwater that are created in dry land. 7)  Wastewater recycling structures constructed in dry land; detention and retention basins built for wastewater recycling; groundwater recharge basins; percolation ponds built for wastewater recycling; and water distributary structures built for wastewater recycling. With respect to prior converted cropland, other federal agencies may have differing definitions, but subsection 328.3(b)(2) states that “for purposes of the Clean Water Act … jurisdiction remains with the EPA.” The identification of exempt ditches in subsection 328.3(b)(3) includes the phrases “ephemeral flow” and “intermittent flow.”  These technical terms, along with “perennial flow,” are defined in the Preamble (Section IV) to the new rule.  “Perennial streams” flow year-round during a typical year from groundwater or contributions of flow from higher in the stream or river network as primary water sources.  “Intermittent streams” flow continuously only during certain times of the year and have as their water sources a mix of groundwater and precipitation (which includes snow melt).  “Ephemeral streams” are composed entirely of precipitation and flow only during precipitation events. We turn now to the six categorical inclusions under Section (a): (1)  All waters which are currently used, were used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters which are subject to the ebb and flow of the tide [i.e. traditional navigable waters]; (2)  All interstate waters, including all interstate wetlands; (3)  The territorial seas; (4)  All impoundments of waters otherwise identified as waters of the United States under this section; (5)  All tributaries, as defined in paragraph (c)(3) of this section, of waters identified in paragraphs (a)(1) through (3) of this section; (6)  All waters adjacent to a water identified in paragraphs (a)(1) through (5) of this section, including wetlands, ponds, lakes, oxbows, impoundments, and similar waters; Subsection 328.3(a) lists eight types of waters.  The first six have been determined categorically to possess a significant nexus to the establishment and maintenance of the chemical, physical, and biological integrity of the Nation’s waters.  The seventh and eighth categories require case-specific significant nexus determinations. “Significant nexus” is defined (as Justice Kennedy did) at subsection 328.3(c)(5) to mean “…that a water, including wetlands, either alone or in combination with other similarly situated waters in the region, significantly affects the chemical, physical, or biological integrity of a water identified in paragraphs (a)(1) through (3) of this section” [i.e. traditional navigable water, all interstate waters, including all interstate wetlands, and the territorial seas].  Section 111 – (the significant nexus standard) clarifies that just one of the attributes of water integrity (chemical, physical, or biological) need be significantly affected. The definition provides that “similarly situated” means the watershed that drains to the nearest traditional navigable water, interstate water or wetland, or territorial sea are functions to be considered in significant nexus evaluation: (i)     sediment trapping; (ii)    nutrient recycling; (iii)   pollutant trapping, transformation, filtering, and transport; (iv)   retention and attenuation of flood waters; (v)    runoff storage; (vi)   contribution of flow; (vii)  export of organic matter; (viii) export of flood resources; and (ix) provision of life cycle dependent aquatic habitat (such as foraging, feeding, nesting, breeding, spawning, or use as a nursery area) for species located in a water identified in paragraphs (a)(1) through (3) of this section. Subsection (c)(3) identifies the characteristics that make a given tributary jurisdictional.  Said another way, not all tributaries will meet the definition set forth in subsection (c)(3); those that do not will not be subject to the CWA.  This new definition represents a reduction in scope because under the previous definition, all tributaries of the waters listed in subsections (a)(1) through (3) were included categorically. Without repeating the lengthy definition verbatim here, in order to meet the definition of “tributary” or “tributaries,” a water must contribute, directly or indirectly, flow sufficient to produce physical indicators of (1) a bed and banks and (2) an ordinary high water mark.  These physical markers demonstrate the requisite volume, frequency, and duration of flow to qualify as a covered tributary. Tributaries may be natural, altered, or man-made.  A tributary does not lose its character as a tributary by the presence of natural breaks (such as wetlands, debris piles, or boulder fields) or constructed breaks (such as bridges, culverts, pipes, or dams).  Covered tributaries may flow through water that does not meet the definition of “tributary” or other non-jurisdictional water without losing its status so long as its flow reaches traditional navigable water, interstate waters or wetlands, or the territorial seas. Again without quoting the full definition of “adjacent” verbatim, that term means “bordering, contiguous, or neighboring a water identified in paragraphs (a)(1) through (5)… including waters separated by constructed dikes or barriers, natural river berms, beach dunes, and the like…”  The definition further provides that “…an open water such as a pond or lake includes any wetlands within or abutting its ordinary high water mark.  The definition encompasses not only adjacent waters located laterally, but headwaters to those identified in subsections (a)(1) through (5).  However, “[w]aters being used for established normal farming, ranching, and silviculture activities are not adjacent.” Under the new rule, the term “neighboring” is now defined as: (i) All waters located within 100 feet of the ordinary high water mark of a water identified in (a)(1) through (5)…  The entire water is neighboring if a portion is located within 100 feet of the ordinary high water mark; (ii) All waters located within the 100-year flood plain of a water identified in paragraphs (a)(1) through (5)… and not more than 1,500 feet from the ordinary high water mark of such water.  The entire water is neighboring if a portion is located within 1,500 feet of the ordinary high water mark and within the 100-year floodplain; (iii) All waters located within 1,500 feet of the high tide line of water identified in paragraphs (a)(1) or (a)(3)… and all waters with 1,500 feet of the ordinary high water mark of the Great Lakes.  The entire water is neighboring if a portion is located within 1,500 feet of the high tide line or within 1,500 feet of the ordinary high water mark of the Great Lakes. There are two non-categorical types of WOTUS, they require case-specific significant nexus analyses. Subsection (a)(7) requires the case-specific significant nexus analysis for certain types of water bodies that have been determined to be “similarly situated.”  They are prairie potholes, Carolina bays and Delmarva bays, pocosins, western vernal pools, and Texas coastal prairie wetlands. In performing the significant nexus analysis these similarly situated water types may not be combined with adjacent waters. Subsection (a)(8) allows for case-specific significant nexus analysis for “all waters located within 4,000 feet of the high tide line or ordinary high water mark of a water identified in paragraphs (a)(1) through (5)…”  If these waters meet the definition of “adjacent” however, the significant nexus analysis is not required.  But if they do not meet the adjacency definition, these waters may not be combined with adjacent waters in the significant nexus analysis.  The “if any portion, then the entire water” clause applies to subsection (a)(8). Section (c) contains additional definitions: Wetlands “means those areas that are inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions.  Wetlands generally include swamps, marshes, bogs, and similar areas.” (a)  Justice Kennedy’s now-familiar definition of “significant nexus” is set forth in subsection (c)(5).  This definition includes development by the Corps of phrases that Justice Kennedy used but did not define.  The phrase “in the region” refers to the watershed that drains to the nearest traditional navigable water, interstate water or wetland, or territorial sea.  The word “significant” means “more than speculative or insubstantial.”  “Similarly situated” waters are those that “function alike and are sufficiently close to function together in affecting downstream waters.”  The nine functions listed above are to be used in the significant nexus analysis.  “A water has a significant nexus when any single function or combination of functions performed by the water, alone or together with similarly situated waters in the region, contributes significantly to the chemical, physical, or biological integrity of the nearest” traditional navigable water, interstate water or wetland, or territorial sea.  There are also definitions for ordinary high water mark and high tide line. IV.  Technical and Scientific Support We will end with a brief word about the support for the definition of WOTUS.  Section III states that the EPA and Corps: “interpret specific aspects of the science, the law, and the agencies’ technical expertise: the scope of the region in which to evaluate waters when making a significant nexus determination, the waters to evaluate in combination with each other; and the functions provided by waters and strength of those functions, and when such waters significantly affect the chemical, physical, or biological integrity of the downstream traditional navigable waters, interstate waters, or the territorial seas.” The legal analysis focuses on the Supreme Court decisions in Riverside Bayview, SWANCC, and Rapanos.  Scientific support came in large measure from “Connectivity of Streams and Wetlands to Downstream Waters: A Review of the Scientific Evidence” (the “Science Report”).  In September 2013, the draft of the Science Report was released for review by the Science Advisory Board, the agency established in 1978 to provide independent scientific and technical advice to the EPA.  Twenty-seven technical experts were nominated by the public to perform the peer review of the draft report.  The reviewers come from academia, non-profit organizations, a federal agency, and consulting firms.  Their technical specialties included hydrology, biology, wetland and stream ecology, geomorphology, biochemistry, and freshwater science.  The selection process screened nominees for conflicts of interest.  The panel solicited over 133,000 comments from the public, and all of its proceedings, agendas, and minutes were made available to the public.  The draft report reviewed and synthesized scientific literature from over 900 peer-reviewed articles. The science advisory panel was highly supportive of the conclusions drawn in the draft Science Report.  The final peer review Science Report was issued in January 2015 and is available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=238345. The terms “significant” and “nexus” are legal terms.  The Science Report uses the scientific concept of “connectivity” between streams and wetlands to downstream waters to describe the gradient of connectivity among them.  The final Science Report reviewed and synthesized over 1,200 peer reviewed scientific articles. In addition to the support contained in the Science Report, the EPA and the Corps based the new rule in part on their own expertise.  Those agencies made over 400,000 CWA jurisdictional determinations, covering all of the states, since 2008.  Recall that Justice Kennedy’s significant nexus analysis was issued in Rapanos in 2006.  Of those, 120,000 were case-specific jurisdictional determinations.  At the time of this writing, lawsuits challenging the validity of the new definition of WOTUS have been filed.  Bills seeking to require a re-write of WOTUS have been introduced in the U.S. House of Representatives and the Senate.  Stay tuned for developments on the judicial and legislative fronts.

Grievance Award: Missed Staff Meeting Results in Suspension

Posted on October 19, 2015, Authored by Ruder Ware Attorneys, Filed under Employment

In a grievance arbitration case, an employee of sixteen years, with no prior record of discipline,  missed a mandatory one-hour staff meeting at work.  Following an investigation, the private company suspended the employee for three days without pay.  The union grieved and a hearing was conducted before a staff arbitrator with the WERC.  The arbitrator upheld the grievance and found for the company. In American National Red Cross – Badger Hawkeye Blood Services Region, WERC, Case ID: 307.0000 (Jones, 9/25/15), the agreed issues were whether the company had just cause to suspend and whether a three-day suspension was an appropriate remedy.  The arbitral answer was yes and yes.  The shortened version of facts are that this long-term employee was informed of the mandatory nature of the one-hour staff meeting, but that he forgot about the meeting.  Mandatory staff meetings are important because that’s where this company’s training occurs.  Work performed by employees usually occurs away from the company’s premises.  The company’s 2013 policy on attendance, which was not negotiated, sought input and feedback from the union with some of that feedback being incorporated into the policy.  A policy rule equated missing a mandatory staff meeting with missing an entire shift.  A violation of this rule stated that the result was a suspension.  Prior suspensions for missing a shift were consistently meted out as three days in length.  The arbitrator found that the employee’s misconduct was established.  He further found that the severity of the penalty was appropriate, despite the employee’s length of employment, and emphasized doing otherwise would be unfair to others that had been previously disciplined to the same degree for misconduct stated under the rule as being the same.      This case supports the position that if an employer has clear rules and employees know about those rules, then they should follow them.  Certainly, rules also need to be fair, consistently followed, and have justifiable reasons behind them.  In this case, it was probably helpful to the company that it sought feedback from the union on the policy at issue and it had implemented some of the union’s feedback.  It was also probably helpful that the company consistently applied those rules, including the same penalties for their violation.  The bottom line is that each case has its own unique facts (usually in dispute), the interpretation of contract or policy language (also commonly in dispute), as well as strengths and weaknesses which must be examined.  Further, care and analysis should be taken when drafting contractual or policy rules, when applying those rules, and when analyzing the benefits or detriments of going forward with a grievance arbitration hearing.  By doing so, employers reduce the risk of an unfavorable arbitration decision. 

Governor Signs Bill Requiring School Boards to Adopt or Amend Policy Regarding School Board Vacancies

Posted on October 25, 2015, Authored by Kevin J.T. Terry,

Last Friday, October 23, 2015, Governor Walker signed Assembly Bill 325, relating to filling vacancies on a school board of a common, union high, or unified school district, into law as 2015 Wisconsin Act 63. This law requires Districts to have a policy in place that addresses how a school board vacancy is to be filled in the event that school board members are not able to make a decision within sixty (60) days of the date on which the vacancy first exists. While many Districts may already have a policy that addresses the filing of school board position vacancies, with the passing of 2015 Wisconsin Act 63, it is important to review current policy, or adopt a new policy, so that a policy is in place and up-to-date prior to July 1, 2016, as required by the new law. If you have questions about modifications to current policy or need assistance implementing a new policy that complies with the new law, please do not hesitate to contact Kevin Terry or Dean Dietrich.  

Beware of Past Practice Clauses in Collective Bargaining Agreements

Posted on October 15, 2015, Authored by Ruder Ware Attorneys, Filed under Employment

Last month, a staff arbitrator with the Wisconsin Employment Relations Commission (WERC) issued a grievance decision interpreting certain language in a collective bargaining agreement regarding past practices.  The WERC is a Wisconsin state agency responsible for the oversight and enforcement of the state’s public and private sector labor laws, including the conducting of hearings throughout the state regarding disputes under collective bargaining agreements and the issuing of grievance decisions.  Due to legislative changes, namely Act 10, there are significantly fewer WERC issued grievance decisions.  The following decision is noteworthy due to the current low frequency of such decisions and also due to the subject matter.     In Milk Specialties Global, Case ID: 442.0000 (Houlihan, 9/11/15), a private company and union were signatories to a collective bargaining agreement.  The bargaining relationship between the parties went back many years.  A clause within the collective bargaining agreement stated that the overtime policy and practices in effect under the prior agreement will continue in effect.  The company had a practice for at least 23 years, spanning numerous collective bargaining agreements, that paid employees time and one-half for all hours worked on Sunday regardless of the number of hours worked during the week.  Sunday work was regularly scheduled and employees working Sunday could work no more than 40 hours in the applicable workweek.  When the company stopped paying time and one-half for work on Sundays, the union grieved.  The Arbitrator sustained the grievance and found that this past practice was incorporated by reference into the collective bargaining agreement due to the overtime past practice clause.  This case is a good reminder for companies to check their collective bargaining agreements when considering a change to a past practice or a response to continue a claimed or actual past practice.  If there are contractual past practice clauses, an examination of the collective bargaining agreement should be made to determine if there must be mutual agreement between the parties prior to changing or eliminating a past practice.  Even in the absence of past practice clauses, an examination of the particular facts, the relevant bargaining history, the relationship between the parties, the subject matter of the past practice and its treatment, and the scope of the practice is needed to avoid an undesirable grievance arbitration award.

When it Comes to Criminal Background Checks, Honesty is the Best Policy (For Employers Too!)

Posted on October 28, 2015, Authored by Kevin J.T. Terry, Filed under Employment

Last week I was asked to present, along with a panel of attorneys, to a group of law students. For a group of students facing a tough job market, the most common theme of the discussion related to the hiring process and how these students could maximize their likelihood of landing a job. The panel’s message was simple – honesty is the best policy. When interviewing for a job, candidates are asked questions about their skills, their likes/dislikes, and their personal history. In every situation, it behooves the candidate, and the employer, for the candidate to answer honestly. This message, honesty is the best policy, is no more true than when an employer asks about a candidates criminal background. Lying on your application about your criminal history can get you out of the running before much consideration is given to the rest of your qualifications.  Eliminating the pool of applicants for an open position is often an overwhelming and tedious task. Some of the easiest applications to toss aside are those that contain lies or misinformation from an applicant. With the help of CCAP, many companies are quickly able to detect an applicant who has lied about whether or not they have been convicted of a crime in the past five years.  When the company finds an applicant who has lied or omitted the truth, the law supports the decision to deny hiring the candidate. So it is easy to see why honesty is always the best policy for applicants to a position. The flip side of this scenario, and the thing that employers tend to have trouble with, is that it is also always in the best interest of the employer to honestly communicate with an applicant the reasons for not hiring him or her. I am currently working with a client who denied an application because the criminal background check revealed two things: (1) that the applicant lied on his application; and (2) that the crimes the applicant was convicted of substantially relate to the position he was applying for. The employer appropriately denied the applicant employment for these reasons; however, when it sent a letter communicating the reasons why the applicant was not hired, it did not clearly state that the applicant lied about his criminal background and that the background check revealed the applicant was convicted of a crime that substantially related to the position he was applying for. The letter simply stated that a background check revealed that the applicant was “not a good fit” for the employer. This is a problem. In Wisconsin, employers, generally, may not discriminate against an applicant based on his or her arrest and conviction record. Employers may, however, deny employment to an applicant because he or she lied on their job application or because they have been convicted of a crime that substantially relates to the position they are applying for. This is not a new revelation in the law. It is the framework within which many employers are very comfortable. For some reason though, employers have difficulty being brutally honest with applicants who have not been selected for a position because they’ve lied or because their criminal conviction record substantially relates to the position they are applying for. Employers need to be told the same message that the panel shared with the law students – “Honesty is the best policy.” When an employer conducts a lawful background check and appropriately assesses the results, it needs to “tie the loop” and clearly communicate with the applicant the decision it made. If it doesn’t, the employer risks unnecessary litigation that starts with the employer behind the eight-ball.

Caveat Emptor: Labor Board Judge Gives Would-Be Buyers of Union Companies Reason to Beware

Posted on October 5, 2015, Authored by Ruder Ware Attorneys, Filed under Employment

Recently, one of the National Labor Relations Board’s administrative law judges (“ALJ”) issued a decision that reminds would-be purchasers of unionized companies to proceed with caution before taking the plunge.  The case is Riccelli Enterprises, Inc., available here: Riccelli Decision.   In Riccelli Enterprises, Inc., the ALJ was called upon to determine whether: (1) the purchaser of a unionized business was required to continue the preexisting union-employer collective-bargaining relationship between the seller and an operating engineers local union; and (2) whether the purchaser of the business was free to unilaterally establish the terms and conditions of employment for the workers at the newly purchased company [wages, hours and working conditions].  Ultimately, the ALJ concluded that the buyer not only had to continue the preexisting collective-bargaining relationship with the union, but acted in a manner such that it was legally obligated to assume the identical terms and conditions of employment enjoyed by the workers prior to the purchase.   There are several important takeaways for companies considering purchasing a unionized operation, as follows: “Key” factors taken into consideration in determining whether the buyer of a unionized business is a legal “successor” to the seller, and thus, must carry on the preexisting collective-bargaining relationship between the seller and union include whether: (1) buyer employs a majority of the seller’s employees at, or after, the time at which the union demands that the buyer bargain with it; and (2) the buyer’s business exists as a “substantial continuity” of the seller’s operations. Whether a “substantial continuity” exists depends upon an evaluation of the following factors: (1) whether the buyer’s and seller’s businesses are alike; (2) whether bargaining unit employees perform similar jobs, under comparable working conditions with unchanged supervision; and (3) whether production processes, product lines and clientele are the same before and after the purchase. A buyer that is found to be a legal “successor” to the seller is generally not bound to the substantive terms of the seller’s collective bargaining agreement, and is free to set its own initial terms and conditions of employment.  However, this right may be forfeited when a buyer inadvertently or intentionally fails to clearly announce to its newly-acquired workers [either directly, or indirectly through communications with a union business agent] that it will establish its own terms and conditions of employment prior to inviting the seller’s employees to accept employment.  In Riccelli Enterprises, Inc., the ALJ found that the buyer’s newly acquired mechanics and operators: (1) continued to perform the same job duties using the same tools and machinery; (2) generated the same products and completed the same steps in the production process; (3) worked analogous shifts; (4) received identical hourly wages; and (5) worked for the same customers.   The ALJ also concluded that the buyer had hired a majority of the seller’s union employees.  For these reasons, the buyer was a legal successor and is required to carry on the collective-bargaining relationship with the union.   Also, significantly, the buyer acted in a manner that nullified its legal right to unilaterally set the initial terms and conditions of employment for its newly-acquired workers—because buyer’s representatives told union agents, “when that agreements up and we renegotiate it, there’s going to be major changes…”  This simple and seemingly innocuous statement was enough to imply that the buyer had elected to continue the terms and conditions of employment the workers had enjoyed while employees of the seller. This case is a cautionary tale for companies considering purchasing unionized businesses.  There are many traps for the unwary—but careful consideration of these factors, and others, are worth the investment of time and energy. 

Comparative MRIs Support IME Opinion

Posted on October 13, 2015, Authored by Russell W. Wilson, Filed under Employment

The Wisconsin Court of Appeals has affirmed a Labor and Industry Review Commission (LIRC) decision that denied additional benefits for an initially conceded injury based on the independent medical examiner’s (IME) review of comparative MRIs.  David Dollar had pre-existing degenerative joint disease, as confirmed by a 2009 MRI.  On June 23, 2011, while at work Dollar was injured when a file cabinet fell and struck him in the head.  The injury was conceded; medical treatment and temporary total disability were paid for about eight months after the injury.  The treating physician opined that a surgical fusion would be necessary on account of the work-related injury.  The employee complained of increased pain, which he attributed to the cabinet incident.  At that point an independent medical evaluation was conducted. An MRI from 2009 demonstrated the existence of degenerative joint disease.  A repeat MRI was taken just two weeks after the work-related injury.  The IME read the second MRI as “largely unchanged” and showing “slight progression” of the degenerative process that had been on-going for several years.  The hearing record contained competing medical opinions as to whether the cabinet incident at work accelerated, precipitated, and aggravated the pre-existing degenerative condition beyond its normal progression. LIRC accepted the IME’s opinion over that of the treating physician.  There being credible and substantial evidence in the hearing record, the court of appeals affirmed LIRC’s decision.  While the employee argued on appeal that his subjective testimony of increased pain went unchallenged, the court of appeals noted that LIRC had simply concluded that the employee’s increased pain was caused by his underlying disc disease, rather than his work injury. The employee’s last argument was to assert that there is “no legitimate doubt that he is entitled to benefits.”  The court of appeals found this argument to be equally unavailing.  “This argument simply recasts his first argument that the Commission’s decision is not supported by credible and substantial evidence.  Therefore, we reject this argument.” The reported case is Dollar v. LIRC, 2015 WL 5554243, decided on September 22, 2015.  Final publication is pending.

Sixth Circuit Court of Appeals Issues Nationwide Stay of Proceedings in the Clean Water Rule

Posted on October 13, 2015, Authored by Russell W. Wilson,

Various challenges to the Clean Water Rule, issued by the EPA and the Corps of Engineers on June 29, 2015, and effective August 28, 2015, have been consolidated by the Judicial Panel on Multi-District Litigation in the Sixth Circuit Court of Appeals.  On October 9 the Sixth Circuit issued a stay of enforcement of the Clean Water Rule pending the Sixth Circuit’s ruling on whether it has subject-matter jurisdiction over the challenge to the rule.  The Sixth Circuit will decide in the near future whether, under the language of the Clean Water Act, subject matter jurisdiction to challenge the Clean Water Rule lies at the district court level or at the court of appeals level.  (See my article “WOTUS Legal Challenges Update” .  The briefing process on that issue will be completed within a matter of weeks. In the meantime, however, a panel of the Sixth Circuit by a two-to-one vote issued a stay of enforcement of the Clean Water Rule.  The Sixth Circuit determined that there is a substantial possibility that challengers to the rule may prevail for the following reasons: (a)  The Clean Water Rule’s treatment of tributaries, “adjacent waters,” and waters having a “significant nexus” to “waters of the United States” may be at odds with the Supreme Court’s ruling in Rapanos v. United States, 547 U.S. 715 (2006), even assuming that Justice Kennedy’s opinion in that case represents the “best instruction permissible” on the jurisdiction of the Clean Water Act.  (See my article “Rapanos v. United States:  The Narrow View, The Broad View, and the Search for the Significant Nexus to Clean Water Act Jurisdiction”). (b)  The distance limitations in the Clean Water Rule may have been adopted on inadequate notice in violation of the notice provisions in the rulemaking process; and (c)  The distance limitations may lack specific scientific support and thus may be “arbitrary and capricious under the Administrative Procedure Act. In issuing the stay, the Sixth Circuit voted to maintain the status quo nationally while the subject matter jurisdiction issue is pending. Several points are of great interest in the ruling of the Sixth Circuit.  First, at this early stage in the proceedings there does not appear to be specific scientific support for the distance limitations that pertain to the case-specific determinations.  (See “Clean Water Rule:  Definition of ‘Waters of the United States' Under the Clean Water Act”.)   Second, the Sixth Circuit expressed its frustration in gleaning a clear guiding principle from the splintered Rapanos decision.  In a footnote the court stated that “[t]here are real questions regarding the collective meaning of the [U.S. Supreme] Court’s fragmented opinions in Rapanos.”  Will Justice Kennedy’s “significant nexus” test ultimately be established as enduring rule?  Will an alternative test be established?  In its October 9 ruling the Sixth Circuit cited its prior decision in United States V. Cundiff, 555 F.3d 200 (Sixth Cir.; 2009), a post-Rapanos wetlands enforcement action that discussed the varying interpretations of Rapanos federal courts have made. Finally, the Sixth Circuit decision recognizes the need for careful consideration of the Clean Water Rule: “Given that the definitions of ‘navigable waters’ and ‘waters of the United States’ have been clouded by uncertainty, in spite of (or exacerbated by) a series of Supreme Court decisions over the last thirty years, we appreciate the need for the new Rule.  See Rapanos, . . .; Solid Waste Agency of N. Cook Cty. v. U.S. Army Corps of Engineers . . .; United States v. Riverside Bayview Homes . . . (internal citations omitted).  In one sense, the clarification that the new Rule strives to achieve is long overdue.  We also accept that respondent agencies have conscientiously endeavored, within their technical expertise and experience, and based on reliable peer-review science, to promulgate new standards to protect water quality that conform to the Supreme Court’s guidance.  Yet, the sheer breadth of the ripple effects caused by the Rule’s definitional changes counsels strongly in favor of maintaining the status quo for the time being. It should not be long before the Sixth Circuit decides whether it should decide the merits of the challenge to the Clean Water Rule in the first instance or whether it should remand the challenges to the district courts.

2016 Qualified Plan Cost of Living Increases, 2016 Social Security Taxable Wage Base

Posted on October 21, 2015, Authored by Mary Ellen Schill, Filed under Employment

Well, if you were hoping for a cost of living adjustment in the employee benefits part of your life, you aren’t going to get it from the 2016 qualified plan limits just issued by the IRS.  Here are the new limits.  Same as the old limits as you can see.  According to the IRS, “the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment.”  You see, to prevent having limits that aren’t in round numbers that benefits geeks have a hard time remembering, the cost of living adjustment provisions in the various tax code sections governing qualified plans include specified increments of adjustment, and more importantly provide for adjustment only when the cost of living adjustment would exceed the statutory threshold. I agree, the IRS explained it better than I did!   So, let your payroll department (and your plan participants) know that the limits important to payroll will not increase for 2016.

Legal or Professional Assistant Opportunity

Posted on October 1, 2015, Authored by ,

  Current Openings Ruder Ware L.L.S.C., a continuously growing business law firm with offices in both Wausau and Eau Claire, Wisconsin, is seeking a talented individual to fill a legal assistant position in our Wausau location. This opening is business-law focused, but may require assistance in other practice areas as well. The successful candidate should be ready to work in a fast-paced workplace and have an understanding of a law office environment.  The ideal candidate will be articulate in transcription, accurate in proofreading, and possess the ability to multitask, problem solve, and work well in a team environment.  Proficient knowledge of grammar and the Microsoft Office Suite of programs is necessary.  Previous law firm experience is a plus, and an Associate's Degree or equivalent work experience is preferred.   The Wausau office is located in the beautiful Dudley Tower in downtown Wausau overlooking the Wisconsin River.  The professional atmosphere of the Wausau office provides an excellent learning environment with up-to-date technology and continuous opportunities to develop your skills.  Along with a great working environment, Ruder Ware offers an excellent salary and benefit package including health and life insurance, short- and long-term disability, and a 401(k) profit sharing plan. If interested in applying for this position, please e-mail a resume and any other credentials to lhuss@ruderware.com.