Governor Deval Patrick recently signed the Massachusetts Economic Development Bill into law. The law, which is retroactively effective to August 1, includes some well-known provisions that authorize a new state sales tax holiday and grant tax breaks for certain businesses.

The bill, however, also contains several lesser-known provisions, including one that heavily affects employers. Buried more than 100 pages into the Economic Development Bill is a modification of the state Personnel Records Statute that now requires employers to notify an employee when negative information is entered into his or her personnel record.

Under the existing Massachusetts Personnel Records Statute, “personnel records” are defined broadly, including any record that has or may affect the employee’s qualifications for employment, promotion, transfer, additional compensation, or disciplinary action. That means the new law requires notification, within 10 days, any time an employer places information in an employee’s personnel record that has been or will be used to negatively affect the employee’s qualification for employment, promotion, transfer, additional compensation, or disciplinary action. Also, employees will now be entitled to inspect their personnel records each time such notification is provided.

In the past, employers simply had to honor an employee’s written request to examine or receive a personnel file copy within five business days and allow the employee to request changes to documents in the file. If the employer didn’t agree with the changes, the employee was entitled to write a rebuttal, which then became part of the file. This new requirement of advance notice creates an additional burden of uncertain scope.

While good personnel practices should already require that an employee be notified when the employer issues a formal warning or similar document, it’s unclear whether the new law’s requirements also extend to smaller items such as a supervisor’s notes or observations.

Until more information is available, employers will need to balance the risks of violation against the increased workload of stringent compliance, as violations of the personnel file statute carry fines between $500 and $2,500.

Susan G. Fentin is a partner with Skoler, Abbott & Presser, P.C., in Springfield, MA and the associate editor of Massachusetts Employment Law Letter, which will provide more information about this development in a future issue.

Skoler Abbott will be holding a Breakfast Briefing on this topic on Friday, September 12, at the Marriott Hotel in Springfield. For more information on attending this briefing, contact Susan Gay at (413) 737-4753.

Last April, the Ninth U.S. Circuit Court of Appeals gave the green light to a nationwide sex discrimination class action against Wal-Mart Stores, Inc., the nation’s largest employer. Unwilling to permit the suit to proceed without a further challenge, Wal-Mart has now petitioned the U.S. Supreme Court to revisit the class certification issue. The Ninth Circuit’s decision had defined a class of up to 1.5 million women who worked at any Wal-Mart in the last 12 years, making the lawsuit the largest potential class action ever pursued under Title VII of the Civil Rights Act of 1964.

Wal-Mart’s petition argues that the case raises important questions under Title VII and affects operations at some 3,400 separately managed stores. Permitting the massive suit to proceed on a class basis risks violating the rights not only of Wal-Mart but also potentially of many class members. The company also urges the Court to consider whether class treatment is the appropriate mechanism for an action that focuses primarily on monetary damages and highly individual claims and defenses.

The attorney representing the plaintiff class has labeled Wal-Mart’s petition to the Supreme Court as “unwarranted and premature.” He asserted that the class certification approved by the Ninth Circuit was based on evidence that raised an inference of companywide sex discrimination in pay and promotional opportunities.

The case began when six women who had worked at 13 Wal-Mart stores filed a lawsuit on behalf of all women employed at Wal-Mart stores at any time since December 26, 1998. The crux of their claim was that Wal-Mart policies resulted in discrimination against women in every store nationwide, regardless of whether they worked in hourly or salaried jobs. They asserted that women at Wal-Mart are paid less than men in comparable positions, despite having higher performance ratings and greater seniority, and that women receive fewer — and wait longer for — promotions to in-store management positions than men.

Now the Supreme Court must weigh in on whether to get involved at this stage of the dispute. With billions potentially on the line, Wal-Mart has a lot riding on that decision.

Nancy Williams is a partner with Perkins Coie LLP and an editor of Washington Employment Law Letter.

Effective January 1, 2011, Illinois employers will have yet another restriction on their ability to make employment decisions. A new law will prohibit many employers from basing hiring, promotion, and other employment decisions on an employee or job applicant’s credit history.

The Employee Credit Privacy Act (HB 4658), which was signed into law by Governor Pat Quinn yesterday, also forbids employers from inquiring about or obtaining a copy of an applicant or employee’s credit history or credit report. Illinois joins Washington, Hawaii, Oregon, and Louisiana in prohibiting the use of credit histories in employment decisions.

Employers will still be permitted to conduct background checks on employees so long as the check doesn’t include a credit history or report. There are limited exceptions to the law: Covered employers may still use credit history for employment decisions for positions that involve unsupervised access to more than $2,500, signatory power over business assets of more than $100, or access to personal, financial, confidential, trade secret, or state/national security information.

Although the new Illinois law doesn’t apply to banks, insurance companies, law enforcement, and many public-sector jobs, it will apply to a broad swath of private employers in Illinois. Supporters of the new provision say the measure will stop employers from denying a job or promotion based on information that doesn’t relate to a person’s ability to perform a job, while opponents contend the law is yet another batch of red tape that will impede job creation in the state.

Read more about the new law in the September issue of Illinois Employment Law Letter.

Companies that are adding jobs cited a variety of reasons, including the need to supplement current threadbare staffing (15%) and an uptick in their particular industry (also 15%). “Just need a few more people,” one HR pro wrote. “Growth in our community supported the additional hiring,” said another.

All isn’t hunky-dory, however, even when hiring is occurring. Surprisingly, some 30% of the respondents reported being unable to find qualified applicants for their open jobs. One hospital, for example, has a financial services manager position that has been open for more than eight months. Pay is in the $80,000 range with full benefits, but few have applied because they say no one wants to relocate.

Others, though, are enjoying the lingering surplus of candidates: “We have seen a large number of well-qualified applicants and can choose from the best.”

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including hiring

Many Challenges for HR
The smaller percentage of companies that expect to reduce staffing place the blame on a variety of factors — from outsourcing to industry slowdowns to revenue shortfalls. Not surprisingly, many point to the simple fact that customers remain tight with their cash, which is creating an air of continued caution for hiring managers as the end of 2010 approaches. While 24% of respondents anticipate beginning to hire again in the third quarter of 2010, 20% don’t know when they will start hiring.

“We are filling positions now because we can no longer use temporary employees (per our collective bargaining agreements),” one survey respondent wrote. “However, our 2011/2012 budget is uncertain, and we may be forced to cut position in January 2011.”

When asked to pinpoint their biggest hiring challenge in the next six months, many said it would be finding the right balance between staffing and the work that needs to be done. Survey participants also voiced concern about maintaining employee morale and loyalty when workers haven’t had raises for at least one year — sometimes two or more years.

The salary lid creates challenges of its own. As one respondent explained it, “If we hire, [the challenge will be] trying to get the best qualified new hire at a salary level comparative to current employees who have had to endure no raises for two years and a salary reduction.”

Audit your hiring policies and practices with the Employment Practices Self-Audit Workbook

Other Survey Highlights
Companies with older workers confirmed what the national media have been suggesting: Many employees approaching retirement age are holding onto their jobs longer than usual — mostly because they can’t afford to retire. Some are waiting and hoping that their 401(k) funds will recover. For others, the big push is to hold onto their health insurance coverage.

“Yes, many employees are asking about their health care options if they retire early,” one HR pro wrote. “Since our group is small, our insurance company will not offer early retirement insurance. Many of our employees are delaying retirement until they can transition from COBRA to Medicare without paying the high cost of an interim conversion policy.”

When hiring does resume, HR pros overwhelmingly reported that they will be hiring full-time employees instead of part-time employees or temps. And they hope — and expect — that their current good employees will stick around. More than half of the respondents expressed confidence that their staffs will remain loyal and work hard even after the economy picks back up.

But that doesn’t mean hiring problems and warning signs are being ignored. Here are other big challenges that survey respondents foresee for at least the next six months:

• “Dealing with applicants who are significantly overqualified for the positions we need to staff.”
• “Keeping everyone else going when someone leaves and is not replaced.”
• “Selecting candidates for entry-level jobs who are likely to stay with us if/when local job prospects improve.”
• “Weeding through candidates.”
• “Coaching managers to make the best hiring decisions.”
• “Committing the time to train the new employees once they are hired.”

Read the entire results of our 2010 hiring outlook survey

“Over past years, in a limited number of cases, OSHA has alleged a separate violation and proposed a separate penalty for each instance of non-compliance with OSHA recordkeeping regulations, safety and health standards and with the general duty clause,” reported Jim Stanley, a former Deputy Assistant Secretary of Labor for OSHA.

“The resulting large aggregate penalties are part of a strategy which OSHA believes improves the efficiency and effectiveness of the agency and conserves its limited resources by making an example of the employers who are cited. In non-egregious cases, OSHA issues one violation for all instances of the same hazard, and as a result the proposed penalties are much smaller than egregious penalties.”

Read more on Jim Stanley’s Workplace Safety blog

Kagan will become the 112th Supreme Court justice and will join Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor as the third woman on the current Supreme Court. In the history of the Court, she will be the fourth female justice.

Before her nomination to the Court, Kagan served as solicitor general of the United States under the Obama administration. She was also a professor at the University of Chicago Law School and Harvard Law School and later became the first female dean of Harvard Law School.

It’s hard to predict how Kagan will deal with employment and labor cases before the Court because she has never been a judge and therefore doesn’t have a history of rulings for speculators to examine. However, she will be replacing Justice John Paul Stevens on the Court. And since Justice Stevens was considered one of the “liberal” and “employee-friendly” justices, it has been speculated that the confirmation of Kagan likely won’t shift the overall balance of the Court.

Keep up with the latest news on employment law decisions from the U.S. Supreme Court and other state and federal courts in your State Employment Law Letter.

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The regulations are designed to implement the preventive health services requirements under the massive health care reform legislation (the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act) that became law in March. These regulations are the latest part of a series of rules the administration has issued to implement various provisions of health care reform.

In a news release, the departments noted that the new regulations would help give Americans easier access to preventive care. The preventive care services addressed by the regulations include:

• routine vaccinations;
• blood pressure, diabetes, and cholesterol screenings;
• cancer screenings (such as breast and colon cancer screenings);
• prenatal care;
• regular wellness visits for babies and children; and
• counseling from health care providers on issues such as quitting smoking, losing weight, eating better, treating depression, and reducing the use of alcohol.

The regulations were published in the Federal Register on July 19 and are effective September 17, 2010. Comments on the regulations are also due on or before September 17.

Learn more about how health care reform and what your organization needs to do now in the audio conference Employers’ Health Care Reform Update: 2010 Deadlines, Demands, and Duties.

The PFA (S. 182; H.R. 11) was initially introduced in 2008 as a companion to the Lilly Ledbetter Fair Pay Act. The bill, which passed in the U.S. House of Representatives in January 2009, has since been on hold in the Senate. The PFA would amend the Equal Pay Act of 1963 (EPA) in numerous ways, including:

• providing for compensatory and punitive damages for violations of the EPA;
• reversing the requirement that employees opt in to class-action EPA lawsuits (instead of permitting them to opt out of the suit); and
• prohibiting retaliation against employees who inquire about, discuss, or disclose wage information.

The PFA also would narrow the employer affirmative defense, which currently allows an employer to defend against a claim by showing that a pay differential was caused by “any factor other than sex.” Under the PFA, employers would be required to prove that wage disparities are based on a “bona fide factor other than sex,” such as education or experience.

Critics of the bill have expressed particular concern over the PFA’s provisions allowing prevailing plaintiffs to recover compensatory and punitive damages. Arguments against the bill also note that the lack of damage caps in the bill could leave small businesses open to potentially crippling penalties. Further, the bill’s opponents question whether the bill could have the unintended consequence of actually lessening pay for performance by forcing employers to operate their businesses more defensively and in anticipation of litigation.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including discrimination

Trumka outlined the AFL-CIO’s proposed five-point approach, which he noted is the first position to receive unanimous support from every member union of the AFL-CIO. The five points are (1) a mechanism to let current undocumented workers gain legal status, (2) an independent commission to monitor labor shortages, preventing immigration from being a way to drive down wages for the rest of the American people, (3) reasonable border enforcement, (4) strict employer compliance, which includes issuance of some form of tamperproof identification, and (5) putting an eventual end to guest-worker programs.

Secretary Solis also voiced support for identifying the 11 million undocumented immigrants currently in the United States and allowing them to become naturalized upon fulfillment of certain requirements (such as payment of back taxes and having no record of criminal activity). She further highlighted the importance of removing the “magnet” that draws undocumented workers into the United States by requiring strict employer compliance with existing immigration laws and controls.

Get the information you need to properly weigh the pros and cons of the E-Verify system in the audio conference, New E-Verify and ICE Enforcement Challenges: Best Practices from Immigration Insiders.