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HR and Tax Newsletter - February 2002

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Employee Benefits

Enron. Although the Enron 401(k) litigation is in its early stages the case serves as a reminder that not only companies but individuals (including directors and mid-level employees) can face potential liability if a 401(k) plan goes bad. In particular, individuals should be very cautious about signing documents as plan administrator.

Employment Law

Wage/Hour-Overtime. Employers are being hit with lawsuits and Department of Labor investigations based on the misclassification of workers. Workers are either erroneously treated as independent contractors or erroneously treated as salaried workers exempt from overtime. These lawsuits and investigations can be expensive because they can involve numerous employees and long periods of time. Note: Employers cannot retaliate against workers for asserting their rights under the wage/hour laws. The Eleventh Circuit recently held that these employees can be restored to their jobs pending resolution of their wage/hour claim.

Disability Insurance. In a potentially far-reaching decision the Eleventh Circuit held that disability payout periods for mental disabilities must be the same as for other disabilities. Because many disability insurance policies provide for shorter disability payout periods for mental disabilities than other disabilities, this decision, if it stands, could result in the modification of thousands of disability plans. The decision is currently being reconsidered by the Eleventh Circuit.

Americans with Disabilities Act. The Supreme Court has decided that a disability claim based on an inability to perform manual tasks must be based on an impairment that prevents or severely restricts an individual from performing everyday activities that are very important to most persons as opposed to an inability to perform job-related tasks. Thus, a worker with carpal tunnel syndrome might not be able to perform a substantial portion of his or her job duties because of an inability to lift weights above shoulder level. However, the worker would not be disabled because the ability to do that task would not be a key everyday activity for most people.