Enforcement of the “Red Flag” Rules Delayed
Enforcement of federal agency rules that requiring financial institutions and creditors that have covered accounts to develop and implement identity theft prevention programs by November 1, 2008 has been delayed until May 1, 2009. The Federal Trade Commission announced the delay on October 22nd. (http://www.ftc.gov/opa/2008/10/redflags.shtm)

The “Red Flag” rules apply to regulated financial institutions including national and state banks, federal savings and loan associations, mutual savings bank and state and federally-chartered credit unions and to a broad category of “creditors.” A creditor is any entity that regularly extends, renews or continues credit and that maintains covered transaction accounts including, for example, utility companies, automobile dealers and telecommunications companies and any business that regularly extends credit to its customers. Covered accounts are accounts used primarily for personal, family or household purposes and involve multiple payments or transactions.

The rules requires businesses subject to the regulations to develop and implement programs appropriate for their business to identify and detect warning signs, or red flags, of possible identity theft, to eliminate or reduce opportunities for identity theft and require that such programs be reviewed and updated from time to time.

Additional information regarding implementation of the Red Flag Rules is available from the Federal Trade Commission at http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm.

Employees in Kansas are entitled to time away from work to vote without any penalty or deduction from their salary or wages. The 2008 general election will be in less than two weeks and a brief review of Kansas law may be useful.

K.S.A. 25-418 provides that people entitled to vote in an election also are entitled to be absent from their employment for a period “not to exceed two consecutive hours between the time of opening and closing of polls. Qualifications for voting include being of legal age and being registered to vote in accordance with Kansas law.

If polling places open before an employee’s normal work hours or remain open after the end of normal working hours, the time before or after work hours is included in the statutory two hour period. For example, if polls open at 7 a.m. and normal work hours commence at 8 a.m., the two-hour period provided by statute may be from 7 a.m. to 9 a.m.

Employers may specify a particular time of the day when employees may be absent from work on election day, but the specified time may not include a regularly scheduled lunch period. Employers may not deduct any amount from an employee’s wages or salary for the time the employee is absent to vote.

Intentionally obstructing an employee’s exercise of statutory voting privileges or imposing a penalty upon an employee for exercising such voting privileges constitutes Obstruction of Voting Privilege, a Class A misdemeanor punishable by confinement for up to one year and/or a fine of up to $2,500.

In mid-September, the United States Senate approved the Americans with Disability Amendments Act of 2008 (the “ADAAA”). The House of Representative earlier passed a similar version of the legislation and it is expected to approve the version passed by the Senate. The White House has indicated that the President will approve the ADAAA and, if he does, it will become effective January 1, 2009.

The Americans with Disability Act generally prohibits discrimination against qualified individuals with a “disability” which is defined as a physical or mental impairment that substantially limits one or more of the individual’s major life activities. Several United State Supreme Court decisions in recent years have interpreted ADA provisions narrowly making it more difficult to establish a qualifying disability. In one case, the Court held that courts should take into consideration treatments and measure that could minimize the consequences of a disability in determining whether an individual is a qualified individual with a disability. In the Supreme Court’s view if treatment could reduce the adverse effects of a particular condition, an individual would not be considered to be disabled under the Act. In other cases, the Court and narrowly construed the kinds of activities that would be considered “major life activities” that would warrant the ADA’s protection.

The ADAAA is intended to effectively overrule such Supreme Court decisions and to extend the Act’s reach. The ADAAA requires that the courts construe the term “disability” broadly and makes it clear that mitigating treatments including medication, medical equipment, prosthetics, hearing aids and assistive technology are not to be taken into consideration in deciding whether an individual has a disability. The ADAAA also will require the EEOC to issue new regulations to govern when a particular condition may be considered as substantially limiting a major life activity. It appears that a condition may be sufficient to constitute a disability if it is a “materially restricts” a major life activity rather than constituting a “severe” or “significant” restriction as required by earlier Supreme Court decisions. Taken together, the changes included in the ADAAA should expand the numbers of individuals who may benefit from the Act’s protection.

Employers should familiarize themselves with the changes included in the ADAAA. The new law will make it more difficult for employers to deny claims of qualifying disability. Employers should be prepared for more requests for reasonable accommodations by employees who may be considered to be qualified individuals with a disability under the Ac’s liberalized provisions. Again, the ADAAA is expected to become effective January 1, 2009

On July 22, 2008 the Equal Employment Opportunity Commission (“EEOC”) released a new compliance manual section dealing with workplace religious discrimination under Title VII of the Civil Rights Act of 1964. The compliance manual does not alter the underlying EEOC regulations but reflects the staff members’ views and interpretation of relevant judicial decisions. It is intended to serve as a guide for EEOC field investigators as well as employers and others.

The definition of religion under Title VII is broad. Religious beliefs and practices are defined to include “all aspects of religious observance and practice as well as belief.” Religion includes not only traditional, organized religions such as Christianity, Judaism, Islam, Hinduism, and Buddhism, but also “religious beliefs that are new, uncommon, not part of a formal church or sect, only subscribed to by a small number of people, or that seem illogical or unreasonable to others.” A belief is religious for purposes of Title VII if it is religious in a person’s own scheme of things or is a “sincere or meaningful belief” that occupies a central position in a person’s life and beliefs and need not be religious in any traditional sense. The protections of Title VII also extend to those who profess no religious beliefs.

Title VII prohibits discrimination in hiring, promotion and other employment-related matters on the basis of a person’s religion or religious beliefs and requires employers to accommodate employees sincerely held beliefs. It also requires employers to avoid disparate treatment of employees based on religion and religious beliefs. Because religious beliefs often have cultural and ethnic associations, claims of discrimination on the basis of religion also may involve claims of discrimination based on race or national origins.

The EEOC’s preface to the compliance manual indicates that the manual was prepared to address an increasing number of questions about religion in the workplace. It reports that the number of religious discrimination complaints filed with the EEOC has more than doubled from 1992 to 2007 but notes that the number of complaints based on religious discrimination is relatively small compared with complaints based on other forms of discrimination. The focus on religious discrimination in the workplace is attributed to a growing greater religious pluralism in the United States.

Employers who sponsor High Deductible Health Plans and employees who have Health Savings Accounts under such plans need to be aware of changes in the rules affecting such plans. The changes were announced recently by the IRS in Revenue Procedure 2008-29 and are effective for calendar year 2009.

High Deductible Health Plans and Health Savings Accounts established under Section 223 of the Internal Revenue Code are subject to periodic inflation adjustments. For calendar year 2009 a High Deductible Health Plan is defined as a health plan with an annual deductible of at least $1,150 for individual coverage and $2,300 for family coverage. In addition, the aggregate annual out-of-pocket expenditures consisting of deductible and co-payments and other amounts other than plan premiums, are not to exceed $5,800 for individual coverage and $11,500 for family coverage.

The annual plan contribution limits which may be deducted by employee participants are increased for calendar year 2009 to $3,000 for individual coverage and to $5,950 for family coverage.

After years of debate, Congress passed and the President has signed the Genetic Information Nondiscrimination Act of 2008 (“GINA”). The Act is intended to provide comprehensive national standards regarding the use of genetic data and to encourage individuals to take advantage of new genetic testing procedures, technologies and therapies resulting from genetic research without concern that such information may be misused.

GINA prohibits discrimination in employment and health insurance coverage based on genetic information relating to individuals and members of their families. The Act amends a number of existing federal laws including Title VII of the Civil Rights Act, the Employee Retirement Security Act, the Health Insurance Portability and Accountability Act and the Public Health Service Act. The Act’s provisions relating to medical insurance coverage become effective May 21, 2009; the provisions relating to employment discrimination will take effect November 21, 2009.

The Act prohibits employers from requesting, requiring or purchasing genetic information, subject to certain exceptions. It also requires employers to treat employees’ genetic information as confidential medical information, to maintain such information separately from other employee records and to protect against unauthorized disclosures of such information. Employers may not use genetic information to discriminate in hiring, promotion or other employment actions.

Remedies available for violations of GINA include compensatory and punitive damages as well as attorney’s fees. Federal agencies responsible for enforcing the Act’s employment discrimination provisions, including the EEC, are expected to issue interpretative regulations and guidance over the next 18 months to provide more information regarding the Act’s application.

On Tuesday, May 27, 2008, the United States Supreme Court issued opinions in two cases holding that employees are protected from retaliation when they complain about workplace discrimination. The two decisions involved interpretation of different federal statutes, neither of which explicitly prohibit retaliatory actions in employment.

Gomez-Perez v. Potter involved claims asserted under the Age Discrimination in Employment Act. The second case, CBOCS West v. Humphries upheld claims asserted under 42 U.S.C. §1981, a statue enacted after the Civil War granting “all persons” the same right “as is enjoyed by white citizens” to make and enforce contracts, including contracts of employment.. The Gomez decision is important primarily to employees of the federal government. The other decision, however, applies to private-sector as well as governmental employment.

The number of complaints alleging workplace retaliation filed with the EEOC are reported to have nearly doubled in recent years, perhaps because it often is easier for employees to prove acts of retaliation than to establish the factual basis to prove discrimination in the first instance.

Links to the Supreme Court’s opinions:
CBOCS West, Inc. v. Humphries
http://www.supremecourtus.gov/opinions/07pdf/06 1431.pdf

Gómez-Pérez v. Potter
http://www.supremecourtus.gov/opinions/07pdf/06 1321.pdf

Businesses and local governments in Kansas now are required to report breaches of their electronic networks under certain circumstances.

The Protection of Consumer Information Act was enacted by the Kansas legislature in 2006 and became effective July 1, 2007. The act requires businesses and local governments to conduct an investigation of any network security breach to determine if personal information has been or will be misused.

If it is determined that misuse of personal information has occurred or is reasonably likely to occur, notice of the security breach must be given to the persons affected as soon as practical. Notice may be delayed if giving notice would impede a law enforcement investigation.

“Personal information” is defined in the act as “a consumer's first name or first initial and last name linked to any one or more of the following data elements that relate to the consumer, when the data elements are neither encrypted nor redacted: (1) Social security number; (2) driver's license number or state identification card number; or (3) financial account number, or credit or debit card number, alone or in combination with any required security code, access code or password that would permit access to a consumer's financial account.”

The act doesn’t specifically require that law enforcement agencies be notified of a security breach and it’s unclear whether law enforcement agencies must approve required notices before notice is given to those whose personal information may have been compromised.