Hospitals Servicing Federal Employees Ruled Covered by Affirmative Action Regulations

Legislation Update

Legislation Effective Now

Hospitals Servicing Federal Employees Ruled Covered by Affirmative Action Regulations

The Office of Federal Contract Compliance Programs (OFCCP) has jurisdiction over three hospitals receiving payments from a health plan for providing medical services to U.S. government employees, a U.S. District Court for the District of Columbia judge has confirmed. UPMC Braddock v. Harris, No. 09-1210 (D.C. D.C. Mar. 30, 2013). The decision is the latest chapter in a long-running jurisdictional dispute between OFCCP and three Pittsburgh-area hospitals.
In 2009, the U.S. Department of Labor’s Administrative Review Board (ARB) upheld an administrative law judge’s finding that three hospitals were federal subcontractors required to comply with OFCCP regulations. OFCCP v. UPMC Braddock, No. 08-048 (DOL ARB May 29, 2009) (see our article, Affirmative Action Regulations May Cover Hospitals Servicing Federal Employees Through HMOs). The decision of the D.C. District Court confirmed the order requiring the hospitals to comply with the affirmative action obligations enforced by OFCCP.
Background
The three hospitals, UPMC Braddock, UPMC South Side and UPMC McKeesport (the “hospitals”), contracted with UPMC Health Plan to provide medical services for individuals insured by the Health Plan. Though none of the hospitals held a federal contract, UPMC Health Plan did. The Health Plan had a contract with the Office of Personnel Management (OPM) to provide, among other things, health services to federal employees.
The hospitals consistently have argued they are not subject to OFCCP jurisdiction because:

·  UPMC’s contract with OPM explicitly excluded medical service providers as “subcontractors”;

·  The hospitals did not provide “nonpersonal services,” as set forth in OFCCP’s definition of a covered “subcontract”;

·  The hospitals did not have notice of OFCCP jurisdiction; there was no EEO (equal employment opportunity) clause in the contract;

·  UPMC is not a subcontractor because the contract between the OPM and the Health Plan was not for the provision of medical services; and

·  The hospitals never agreed to become government subcontractors.

Arguments Rejected
The D.C. District Court rejected each of these arguments. The court stated that although the Health Plan’s agreement with OPM explicitly excluded “providers of direct medical services” from its definition of “subcontractors,” the court found that parties had no power to limit the scope of the Executive Order or their own federal contractor status by contractually agreeing to a more limited definition of “subcontractor.”
The hospitals also argued they did not fall under the Secretary of Labor’s definition of “subcontractor” because they provided “personal” medical services directly to patients, which is categorically different than the “nonpersonal” services referenced in the Secretary’s definition of a covered subcontract. The court disagreed and upheld the ARB’s finding that the Secretary’s definition refers to the relationship between the government and the employees of the subcontractor - not the interaction between the subcontractor and those benefiting from its services.
Moreover, the court held that a company’s status as a covered subcontractor is a matter of law, not a matter of notice. According to the court, the Health Plan’s failure to include the required EEO language in the contract did not excuse the hospitals from complying with federal law because the clause was incorporated into the subcontracts by “operation of law.”
What Should Employers Do Now?
In light of this decision, OFCCP likely will continue to aggressively assert jurisdiction over companies it deems subcontractors, even in the absence of contracts that reference the affirmative action regulations. Therefore, it is critical that employers, especially those in the health care industry, inventory and review customer agreements to determine whether the goods or services being provided might make them federal subcontractors, subject to the affirmative action obligations.
Source: Jackson Lewis LLP; AAIMEA

OSHA: Unions May Represent Nonunion Workplaces During Inspections

4/24/2013 / By Roy Maurer
The U.S. Occupational Safety and Health Administration (OSHA) released an interpretation letter April 5, 2013, clarifying that nonunion employees can select anyone, including nonemployee union representatives, to accompany OSHA officials during safety inspections of their employer’s worksite.
OSHA Deputy Assistant Secretary Richard Fairfax stated in the letter that OSHA allows workers at establishments without collective bargaining agreements to designate who will act on their behalf during inspections.
The letter, dated Feb. 21, 2013, was in response to a request from Steve Sallman, a health and safety specialist with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union.
Sallman had asked whether workers at a nonunionized workplace could authorize a person affiliated with a union to act as their representative under the Occupational Safety and Health Act. This would include “representing the employee(s) as a personal representative” and “accompanying the employee on an OSHA inspection” in a nonunionized workplace.
Fairfax responded affirmatively that employees in a workplace without a collective bargaining agreement may designate a union-affiliated individual to act as their personal representative. In this capacity, nonemployee personal representatives may file complaints on behalf of an employee, request workplace inspections, participate in informal conferences, contest the abatement period in OSHA citations and participate in contest proceedings.
As for nonemployees accompanying OSHA officials during inspections, the actual OSHA standard states: “The representative(s) authorized by employees shall be an employee(s) of the employer. However, if in the judgment of the Compliance Safety and Health Officer, good cause has been shown why accompaniment by a third party who is not an employee of the employer (such as an industrial hygienist or a safety engineer) is reasonably necessary to the conduct of an effective and thorough physical inspection of the workplace, such third party may accompany the Compliance Safety and Health Officer during the inspection.”
Even though the standard makes no reference to union representatives, Fairfax interpreted this to mean that a person affiliated with a union without a collective bargaining agreement can act as a walkaround representative on behalf of employees provided that the employees authorized the individual to do so and the OSHA inspecting officer approved the arrangement.
Critics of labor overreach fear that the interpretation may encourage unions to use OSHA complaints and inspections as an organizing tool to gain access to an employer’s facility and exposure to its employees.
About 94 percent of the private sector is not unionized, said Michael J. Lotito, SPHR, a shareholder at Littler Mendelson, based in San Francisco.
Lotito said that organizations’ focus on safety with proactive training and education programs should help minimize employees’ resorting to third parties when inspections take place. Establishing safety committees is another good idea, he said. “Give the employees as many internal avenues for a voice as possible.”
Roy Maurer is an online editor/manager for SHRM.

Obama Administration Simplifies, Significantly Shorten Application for Health Insurance

April 30, 2013

The Centers for Medicare & Medicaid Services (CMS) today announced that the application for health coverage has been simplified and significantly shortened. The application for individuals without health insurance has been reduced from twenty-one to three pages, and the application for families is reduce by two-thirds. The consumer friendly forms are much shorter than industry standards for health insurance applications today.

In addition, for the first time consumers will be able to fill out one simple application and see their entire range of health insurance options, including plans in the Health Insurance Marketplace, Medicaid, the Children's Health Insurance Program (CHIP) and tax credits that will help pay for premiums.

The applications released today, which can be submitted starting on October 1, can be found here:

http://cciio.cms.gov/resources/other/index.html#hie

"Consumers will have a simple, easy-to-understand way to apply for health coverage later this year," said CMS Acting Administrator Marilyn Tavenner. "The application for individuals is now three

The online version of the application will be a dynamic experience that shortens the application process based on individuals' responses. The paper application was simplified and tailored to meet personal situations based on important feedback from consumer groups.

Consumers can apply online, by phone or paper when open enrollment begins October 1, 2013. There will be clear information provided about how to complete the application, and how to access help applying and enrolling in coverage.

This consumer-focused approach will facilitate the enrollment of millions of Americans into affordable, high quality coverage while minimizing the administrative burden on states, individuals and health plans.

For more information about the Health Insurance Marketplace, visit: www.HealthCare.gov

pages, making it easier to use and significantly shorter than industry standards. This is another step complete as we get ready for a consumer-friendly marketplace that will be open for business later this year."

-Larry Grudzien, Attorney-At-Law

Proposed Legislation

SHRM Testifies on Compensatory Time at U.S. House Hearing

4/12/2013

On Thursday, April 11, SHRM member Juanita Phillips of Huntsville, Ala., testified before the U.S. House Subcommittee on Workforce Protections in support of H.R. 1406, the Working Families Flexibility Act of 2013. In her prepared statement, Phillips shared that the proposed bill would promote workplace flexibility by allowing compensatory (comp) time in the private sector.

“The concept of giving employees the choice to select paid time off in lieu of cash wages is nothing new -- it has been an option widely available to federal employees for 35 years,” said Phillips. “By all accounts, it has worked well.” Phillips (pictured at left with the bill's sponsor, Alabama Representative Martha Roby). is director of human resources at Intuitive Research and Technology Corporation and a member of both the North Alabama SHRM chapter and the Alabama State Council. She is also an Advocacy Captain within SHRM’s A-Team program.

The Fair Labor Standards Act (FLSA) of 1938 requires that hours of work by non-exempt employees beyond 40 hours in a seven-day period be compensated at a rate of 1 ½ times the employee’s regular rate of pay. In 1978, Congress passed the Federal Employees Flexible and Compressed Work Schedules Act, which changed the FLSA to allow compensatory time for federal employees. In 1985, comp time was extended to include state and local agencies and their employees. H.R. 1406 would simply extend this important benefit to the private sector.

The Working Families Flexibility Act would amend the FLSA to allow private-sector employers to provide compensatory time to employees. Employees would have the choice of taking overtime in cash payments, as they do today, or in the form of paid time off from work. Just as with overtime payments, paid time off would accrue at a rate of 1 ½ hours for each hour of overtime worked. Employees would be able to accrue up to 160 hours of comp time per year, although an employer could choose to “cash out” the comp time after 80 hours after providing the employee with 30 days of notice. An employer would also be required to cash out any unused comp time at year’s end at the regular time and a half rate.

The increased diversity and complexity of the American workforce is driving the need for more flexible workplace solutions, like H.R. 1406. SHRM supports the bill and is leading the employer coalition championing the legislation because it would provide employers with an additional workplace flexibility tool to help employees meet their work-life needs.

On Wednesday, April 17,the full House Education and the Workforce Committee is scheduledto consider and vote on the Working Families Flexibility Act. House Majority Leader Eric Cantor (R-VA) has indicated the House of Representatives will consider H.R. 1406 in April. A SHRM Member Advocacy Alert will be launched soon to encourage HR professionals to contact their House members in support of H.R. 1406.

-SHRM

President Obama Nominates Three to the NLRB

4/11/2013 / By Bill Leonard
President Barack Obama nominated two Republicans and a Democrat to serve on the National Labor Relations Board (NLRB). If confirmed, the three nominations, announced April 9, 2013, would bring the NLRB up to a full contingent of five members.
The president chose Republicans Harry Johnson, a lawyer with Arent Fox LLP in Los Angeles, and Philip Miscimarra, a partner in the labor and employment group of Morgan Lewis & Bockius LLP in Chicago, to serve on the board. He renominated NLRB Chairman Mark Gaston Pearce. Pearce’s current term on the board is set to expire in mid-August.
The nominations of Johnson and Miscimarra were seen by some as a peace offering to GOP leaders in Congress, who have vigorously opposed the president’s picks to serve on the politically volatile labor board. According to sources familiar with the situation, the White House hopes that the Senate will quickly confirm the three nominees as a bipartisan gesture.
For the past few years the NLRB has been a political lightning rod on Capitol Hill, and the House of Representatives passed several measures in 2011 and 2012 that specifically attempted to limit the board’s authority. The Senate, however, did not approve any of the measures.
Controversy has swirled around the board since Obama took office in 2009 and placed labor activist and union attorney Craig Becker on the board in April 2010 via a recess appointment. Becker’s appointment infuriated conservative leaders in Congress, and the president’s subsequent nominations to the board have been hotly contested and blocked in the Senate.
In early 2012, the president again used recess appointments to place Democrats Sharon Block and Richard Griffin and Republican Terence Flynn on the board. Flynn resigned three months later after an ethics flap.
A federal court declared in January 2013 that Block’s and Griffin’s appointments were invalid. The court agreed with arguments that the Senate was not in recess when President Obama placed them on the board. The White House immediately appealed the decision to the U.S. Supreme Court. During the appeals process, Block and Griffin have remained on the board.
Sources familiar with the issue say that with the new nominations the president hopes to end the political stalemate, which has hampered the labor board’s ability to conduct business and to make rulings required by the National Labor Relations Act (NLRA).
According to the NLRA, up to five members can serve on the board, and of those, only three can be members of the same political party as the president. Republican leaders in the Senate downplayed the bipartisan angle and emphasized that the president was merely fulfilling his legal obligations.
“As tradition and law requires, the president has properly nominated two Republicans to serve on the National Labor Relations Board. It is now the Senate’s role to exercise advice and consent on the nominees,” said Sen. Lamar Alexander, R-Tenn., ranking GOP member of the Senate Health Education Labor and Pensions (HELP) Committee, in a written statement. “As the Senate considers the nominees, the two individuals who were unconstitutionally appointed should leave, because the decisions in which they continue to participate are invalid.”
Democrats on the HELP Committee praised the president’s choices and vowed to push the confirmations of all the nominees forward.
“I am pleased that President Obama has put forth a bipartisan slate of nominees to fill positions on the National Labor Relations Board,” said Sen. Tom Harkin, D-Iowa, in a written statement. “It is of paramount importance to have a fully functioning NLRB to adjudicate disputes in a timely fashion. As chairman of the HELP Committee, I pledge to give fair and timely consideration to the president’s package of nominees, and I hope that my colleagues on the other side of the aisle will do the same.”
Bill Leonard is a senior writer for SHRM

Proposed Federal Fair Minimum Wage Act