PACE - Law Presentation: Employment Law 101
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PACE - Law Presentation: Employment Law 101 PACE - Law Presentation: Employment Law 101 Presentation Transcript

  • Employment Law 101: Recognizing The Top Mistakes Made by Mid-Sized Employers Presented at PACE Conference Chandler, Arizona October 8, 2013 Jennifer Phillips Manuel H. Cairo 602-382-6565 jphillips@swlaw.com 602-382-6534 mcairo@swlaw.com
  • Overview and Scope of Presentation • • Worksite Enforcement Federal law focus – Because each state has their own employment laws ◦ ◦ ◦ ◦ ◦ FLSA – Fair Labor Standards Act NLRA – National Labor Relations Act Title VII – Civil Rights Act of 1964 ADAAA – Americans with Disabilities Act as amended FMLA – Family and Medical Leave Act ©2013 Snell & Wilmer L.L.P. 2
  • Background The Immigration Reform and Control Act of 1986 (―IRCA‖) requires employers to satisfy three separate and distinct legal obligations: 1. 2. 3. A person or other entity must not knowingly hire, recruit or refer for a fee, for employment an alien who is unauthorized to work in the United States and must not continue to knowingly employ an alien that is unauthorized or has become unauthorized to work in the United States. See 8 U.S.C. § 1324a. The employer must verify whether or not the new hire is authorized to work in the United States, and whether or not the person hired is a citizen or alien. See 8 U.S.C. § 1324a(b). Refrain from discriminating against individuals on the basis of actual or perceived national origin, citizenship, or immigration status. ©2010 ©2013 Snell & Wilmer L.L.P Snell & Wilmer L.L.P. 3
  • Common Mistake: “I can handle the inspection process myself.” • Notice of Inspection Purpose ◦ • To identify any violations that might lead to criminal prosecution of an employer or civil liability Three Day Rule ◦ 8 C.F.R. § 274a.2(b)(2(ii) © ©2013 Snell & Wilmer L.L.P 2010 Snell & Wilmer L.L.P. 4
  • Common Mistake: “I can handle the inspection process myself.” ©2010 ©2013 Snell & Wilmer L.L.P Snell & Wilmer L.L.P. 5
  • Common Mistake: “I can handle the inspection process myself.” ―The issuance of the Notice of Inspection on any employer is the first step in the process that may lead to the issuance of a Notice of Intent to Fine, a Warning Notice, or finding employer is in compliance.‖ ©2010 ©2013 Snell & Wilmer L.L.P Snell & Wilmer L.L.P. 6
  • Common Mistake: “I can handle the inspection process myself.” • Content ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Forms I-9 for current and past employees Roster of all current and terminated employees with hire and termination dates Quarterly wage and hour reports/payroll data Quarterly tax statements Business Information: - Employer Identification Number - Taxpayer Identification Number - Owner’s Information - Articles of Incorporation, if any - Business Licenses Correspondence from Social Security Administration E-Verify Information Electronic System Information ©2 ©2013 Snell & Wilmer L.L.P 010 Snell & Wilmer 7
  • Common Mistake: Not understanding the potential role of notices. • Notice of Suspect Documents: Advises employer that based on a review of the Forms I-9 and documentation submitted by the employee, ICE has determined that the employee is unauthorized with respect to employment and advises the employer of the possible criminal and civil penalties for continuing to employ the individual. ◦ ◦ Confirmation of Notice of Inspection Results Change to Notice of Inspection Results ©2013 Snell & Wilmer L.L.P 8
  • Common Mistake: Not understanding the potential role of notices. • Notice of Discrepancies: Advises the employer that based on a review of the Forms I-9 and documentation submitted by the employee, ICE has been unable to determine their work eligibility in the U.S. A notice explaining the employee’s rights and responsibilities is forwarded with this letter, which the employer is requested to serve on each affected employee. ©2013 Snell & Wilmer L.L.P 9
  • Common Mistake: Not understanding violations. • Verification Violations Substantive ◦ Defined as ―knowing hire,‖ ―continuing to employ,‖ failure to prepare and present, and those serious paperwork violations that could have led to the hiring of an unauthorized alien. - - Warning Notice Notice of Intent to Fine ©20 ©2013 Snell & Wilmer L.L.P 10 Snell & Wilmer 10
  • Common Mistake: Not understanding violations. • Verification Violations Technical/Procedural ◦ ◦ Notice of Technical or Procedural Failures Ten Business Days To Correct - Notice of Inspection Results Notice of Intent to Fine © ©2013 Snell & Wilmer L.L.P 2010 Snell & Wilmer 11
  • Consequences: Warning Notice • May be issued in circumstances where substantive violations were identified but there is the expectation of future compliance by the employer. © ©2013 Snell & Wilmer L.L.P 2010 Snell & Wilmer 12
  • Consequences: Warning Notice • Inappropriate when: ◦ ◦ ◦ ◦ ◦ ◦ ―knowing hire‖ and/or ―continuing to employer‖ violations Failure to prepare and present Unauthorized aliens hired as a result of substantive paperwork violations Fraud Prior ICE history Failure to correct technical violations ©2010 ©2013 Snell & Wilmer L.L.P Snell & Wilmer 13
  • Consequences: Notice of Intent to Fine • • Recommendation of fine based on statutory requirements and internal guidance memoranda Structure: ◦ I-763 Notice of Intent to Fine ◦ I-761 Application for Notice of Intent to Fine ◦ Memorandum to Case File for Determination of Civil Money Penalty ◦ Charging Documents ◦ Evidence Summary List ◦ Exhibits ©20 ©2013 Snell & Wilmer L.L.P 10 Snell & Wilmer 14
  • Consequences: Substantive/Uncorrected Technical Violations Standard Fine Amount Substantive Verification Violations 0%-9% 1st Offense $110 - $1100 2nd Offense $110-$1100 3rd Offense+ $110-$1100 $110 $550 $1,100 10% - 19% $275 $650 $1,100 20% - 29% $440 $750 $1,100 30%-39% $605 $850 $1,100 40%-49% $770 $950 $1,100 50% or more $935 $1,100 $1,100 ©2010 Sn ©2013 Snell & Wilmer L.L.P ell & Wilmer L.L.P. 15
  • Consequences: Knowing Hire/Continue to Employ Standard Fine Amount Knowing Hire and Continuing to Employ Violations First Tier $375 - $3,200 Second Tier $3,200 - $6,500 $375 $3,200 10% - 19% $845 $3,750 $6,250 20% - 29% $1315 $4,300 $8,200 30% - 39% $1785 $4,850 $10,150 40%-49% $2255 $5,400 $12,100 50% or more $2,725 $5,950 $14,050 0%-9% Third Tier $4,300-$16,000 $4,300 © ©2013 Snell & Wilmer L.L.P 2010 Snell & Wilmer L.L.P. 16
  • Consequences: Factors and Enhancement © ©2013 Snell & Wilmer L.L.P 2010 Snell & Wilmer L.L.P. 17
  • Consequences: Settlement and Appeals • • • • Final Order Settlement Agreements Office of the Chief Administrative Hearing Officer Federal Circuit Court of Appeals ©2013 Snell & Wilmer L.L.P 18
  • Common Mistake: Misclassifying Employees as “Independent Contractors” • Fair Labor Standards Act (―FLSA‖) ◦ Federal law governing ―wage and hour‖ issues – minimum wage, overtime, equal pay, and record-keeping requirements ◦ Enterprise Coverage vs. Individual Coverage - Enterprise Coverage: Employees who work for certain businesses or organizations ("enterprises") are covered by the FLSA. These enterprises, which must have at least two employees, are: • • - Individual Coverage: Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between States ("interstate commerce"). The FLSA covers individual workers who are "engaged in commerce or in the production of goods for commerce." • ◦ (1) those that have an annual dollar volume of sales or business done of at least $500k (2) hospitals, businesses providing medical or nursing care for residents, schools, and government agencies I.e.: Workers who produce goods (worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state, regularly make telephone calls to persons located in other States, handle records of interstate transactions, travel to other States on their jobs, and do janitorial work in buildings where goods are produced for shipment outside the State. Wage and Hour Division of the U.S. Department of Labor (―DOL‖) is the federal agency which investigates and prosecutes alleged FLSA violations ©2012 Snell & Wilmer L.L.P. 19
  • Common Mistake: Misclassifying Employees as “Exempt” • FLSA - Exempt vs. Nonexempt Workers ◦ ◦ ◦ ◦ ◦ ◦ ◦ Commissioned sales employees of retail or service establishments are exempt from overtime if more than half of the employee's earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked. Computer professionals: Section 13(a)(17) of the FLSA provides that certain computer professionals paid at least $27.63 per hour are exempt from the overtime provisions of the FLSA. Drivers, driver's helpers, loaders and mechanics are exempt from the overtime pay provisions of the FLSA if employed by a motor carrier, and if the employee's duties affect the safety of operation of the vehicles in transportation of passengers or property in interstate or foreign commerce. Farmworkers employed on small farms are exempt from both the minimum wage and overtime pay provisions of the FLSA. Salesmen, partsmen and mechanics employed by automobile dealerships are exempt from the overtime pay provisions of the FLSA. Seasonal and recreational establishments: Employees employed by certain seasonal and recreational establishments are exempt from both the minimum wage and overtime pay provisions of the FLSA. Executive, administrative, professional and outside sales employees: (as defined in DOL regulations) who are paid on a salary basis are exempt from both the minimum wage and overtime provisions of the FLSA. ©2013 Snell & Wilmer L.L.P. 20
  • Common Mistake: Misclassifying Employees as “Independent Contractors” • ―Employee‖ vs. ―Independent Contractor‖ ◦ FLSA applies to ―any individual employed by an employer‖ but not to independent contractors because they are not considered ―employees‖ under the FLSA ◦ Employers cannot simply claim workers are exempt from the FLSA requirements (such as paying overtime) by calling workers independent contractors--misclassifying workers as independent contractors leads to costly and expensive investigations by agencies such as the DOL - The FY 2013 budget includes resources to continue to detect and deter the misclassification of workers as independent contractors by including $14 million to combat misclassification, including $10 million for grants to States to identify misclassification and recover unpaid taxes and $4 million for investigators at the Wage and Hour Division. http://www.dol.gov/dol/budget/2013/bib.htm ©2013 Snell & Wilmer L.L.P. 21
  • Common Mistake: Misclassifying Employees as “Independent Contractors” • ―Employee‖ vs. ―Independent Contractor‖ ◦ The Common-Law Test (There are multiple state and federal tests to determine IC status, but most of the considerations are similar) - The most important factor in determining independent contractor status involves the independent contractor’s right to control the manner and means of accomplishing the desired result, even if the contractor did not exercise that right with respect to all details. - Factors examined within that right to control include:     Whether company had the right to discharge at-will without cause Whether person performing services is engaged in a distinct occupational business Whether the work is usually performed under close direction or by a specialist without supervision The skills required in the particular occupation ©2012 Snell & Wilmer L.L.P. 22
  • Common Mistake: Misclassifying Employees as “Independent Contractors” • ―Employee‖ vs. ―Independent Contractor‖ ◦ The Common-Law Test (cont.) - Factors examined within that right to control include:  Whether the company or the worker supplied the instruments tools and place for performing the work  The length of time for which the services are to be performed  The method of payment, whether by time or by job  Whether the work is part of the company’s regular business  Whether the parties believe they are creating the relationship of employer/employee ©2012 Snell & Wilmer L.L.P. 23
  • Common Mistake: Misclassifying Employees as “Independent Contractors” • ―Employee‖ vs. ―Independent Contractor‖ ◦ Cromwell v. Driftwood Electrical Contractors, Inc., 15 Wage & Hour Cas. 2d (BNA) 718 (5th Cir. 2009) ◦ - - - Court held that two cable splicers were ―employees‖ and not ―independent contractors‖ for purposes of the FLSA overtime requirements even though the two workers controlled how they performed their work, lacked close supervision, provided their own equipment and tools, took responsibility for their own insurance and employment taxes, and exercised a high level of skill. Those factors were outweighed by the permanency and extent of the working relationship (they worked full-time and exclusively for employer for 11 months), and by the workers’ limited opportunities for profit or loss (they had no control over their own schedule or pay) The court used the ―Economic Reality Test,‖ and stated: • ―…as a matter of economic reality, [the employees] were economically dependent upon [their employer], and were not in business for themselves.‖ ©2012 Snell & Wilmer L.L.P. 24
  • Common Mistake: Misclassifying Employees as “Independent Contractors” • Consequences of Misclassification: ◦ ◦ ◦ • Liability for unpaid wages, minimum wage, overtime, failure to keep accurate records, meal and rest breaks plus penalties & interest Unpaid tax liability, workers’ compensation liability plus penalties and interest Not just from DOL, but also IRS, state Industrial Commissions, ICE, etc. Suggestions: ◦ ◦ ◦ Always ask what is the motivation for classifying someone as an independent contractor? Is it based on the reality of the situation? Or is it based on an interest in avoiding taxes, workers’ compensation expenses, or other wage withholdings? (not ok) Always remember, “independent contractor” status is defined by law and not by the parties’ agreement ©2012 Snell & Wilmer L.L.P. 25
  • Common Mistake: “My company is not unionized, so the NLRA doesn’t apply me.” • National Labor Relations Act (―NLRA‖) ◦ Federal law which guarantees basic rights of private sector employees to organize into trade unions, engage in collective bargaining for better terms and conditions at work, and take collective action including strike if necessary ◦ National Labor Relations Board (―NLRB‖) is the federal agency which investigates and prosecutes alleged violations of the NLRA o Vast self-expansion of the NLRB’s roles and duties in the past decade, leading to much political controversy and aggressive enforcement by the NLRB (Noel Canning and the President’s invalid recess appointments of 3 members of the 5 member Board; August 13, 2013 federal court ruling that Acting General Counsel not properly appointed, etc.) ©2013 Snell & Wilmer L.L.P. 26
  • Common Mistake: “My company is not unionized, so the NLRA doesn’t apply me.” • NLRA – Section 7 and ―Protected Concerted Activity‖ ◦ Section 7 of the NLRA gives all employees (union and nonunion) the right to engage in protected concerted activities. Employer may not discipline or discharge an employee for his/her protected concerted activities. ◦ Employers may not interfere with, restrain, or coerce employees in engaging in protected concerted activities or in the exercise of rights relating to organizing, forming, joining or assisting a labor organization for collectivebargaining purposes. ◦ NLRB’s Most Recent Target – Company Social Media Policies • A policy barring employees from disclosing ―confidential guest, team member or company information‖ on social networking sites like Facebook or YouTube is unlawful because it can ―reasonably be interpreted as prohibiting employees from discussing and disclosing information regarding their own conditions of employment, as well as the conditions of employment of employees other than themselves— activities that are clearly protected by Section 7.‖ ©2013 Snell & Wilmer L.L.P. 27
  • Common Mistake: “My company is not unionized, so the NLRA doesn’t apply me.” • Employer Tips – (Union and Nonunion) ◦ Threats – Supervisors cannot threaten individuals participating in union activities with reprisals such as reducing their benefits, or termination of employment. Company also cannot commit the threatened acts. ◦ Interrogation – Supervisors cannot question employees about whether they signed a union card, whether they support the union effort, how they would vote in a union election, how they feel about union representation. ◦ Promises – Supervisors cannot promise wage or benefit increases, promotions, or future benefits for opposing the union. Company also cannot grant any such benefits. ◦ Surveillance/Spying - Supervisors cannot watch union activities in order to determine who is attending meetings or supporting the union. This applies on- and off-work time and on- and off-work premises ©2013 Snell & Wilmer L.L.P. 28
  • Common Mistake: “My company is not unionized, so the NLRA doesn’t apply me.” • Employer Tips – (Union and Nonunion) ◦ Protected Concerted Activity – Protected under Section 7, and is BROADLY construed, and applies to union and nonunion employers alike - Confidentiality Policies - An employer prohibiting disclosure of confidential and proprietary information should be ready to narrowly define ―confidential‖ and ―proprietary‖. Using examples helps prevent overbroad definitions. - Litigation Holds - An employer should be careful when considering how and whether to restrict employees’ comments on legal matters, litigation, or disputes because it could restrict employees from discussing the protected subject of potential claims against the employer. - Reporting Coworker Misconduct - An employer requiring employees to report certain activities or communications of others could be problematic, but an employer’s policy instructing employees to be cautious or even develop a healthy suspicion of persons trying to ―trick‖ them into disclosing confidential information can be acceptable. - Social Media Policies [Again] - An employer should ensure that any prohibition on ―offensive, demeaning, abusive or inappropriate remarks‖ should be narrowly tailored and consider providing examples. The general prohibition could be overbroad because the prohibited remarks could cover ―a broad spectrum of communications that would include protected criticisms of the Employer’s labor policies or treatment of employees.‖ ©2013 Snell & Wilmer L.L.P. 29
  • Common Mistake: Allowing a Sexually Charged Atmosphere or Other Hostile Work Environment • Title VII of the Civil Rights Act of 1964 ◦ Federal law which prohibits discrimination by covered employers on the basis of race, color, religion, sex or national origin - Many other classes of protected individuals, pursuant to other federal laws (i.e. ADAAA, PDA) and state and local ordinances (i.e. Phoenix and Tucson City Ordinances) • Disability • Pregnancy • Sexual Orientation • Gender Identity ◦ Applies to: an employer ―who has fifteen (15) or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year‖ ◦ The Equal Employment Opportunity Commission (―EEOC‖) is the federal agency which investigates and prosecutes alleged violations of Title VII ◦ Work sharing agreements with state and other federal agencies. ©2013 Snell & Wilmer L.L.P. 30
  • Common Mistake: Allowing a Sexually Charged Atmosphere or Other Hostile Work Environment • Title VII of the Civil Rights Act of 1964 ◦ Duty to Prevent Harassment - - Must have an effective harassment policy Must be committed to following that policy Anti-harassment training is important – part of employers’ defense Investigate all reports of harassment, major or minor Document in writing the investigation and findings Follow up with the alleged victim, even if the investigation yields inconclusive findings or findings of no harassment at all Make sure that follow up meeting with alleged victim is attended by more than one supervisor/manager ©2013 Snell & Wilmer L.L.P. 31
  • Common Mistake: Allowing a Sexually Charged Atmosphere or Other Hostile Work Environment • Title VII of the Civil Rights Act of 1964 ◦ Duty to Prevent Harassment - What happens off-site counts! • • • - Holiday parties Relationships between supervisors and subordinates Travel The Company can be liable for harassment not only by supervisors, but also coworkers and non-employees! ©2013 Snell & Wilmer L.L.P. 32
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave • Americans with Disabilities Act (―ADA‖) ◦ ◦ • Americans with Disabilities Act Amendments Act (―ADAAA‖) ◦ ◦ • Amendments to the ADA (enacted in 2008) made significant changes to the definition of the term ―disability‖ by rejecting the holdings of several Supreme Court decisions and portions of EEOC’s ADA regulations The effect of these changes is to make it easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the ADA. Applies to: ◦ • Federal law (enacted in 1990) which prohibits discrimination, including employment discrimination against individuals with disabilities. ―Disability‖ is defined as ―a physical or mental impairment that substantially limits a major life activity.‖ Discrimination may include, among other things, limiting or classifying a job applicant or employee in an adverse way, denying employment opportunities to people who truly qualify, or not making reasonable accommodations to the known physical or mental limitations of disabled employees, not advancing employees with disabilities in the business, and/or not providing needed accommodations in training materials or policies Same employers as Title VII—―a person engaged in an industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year . . . .‖ Collectively referred to as: ◦ ―ADA as amended‖ or ―ADAAA‖ ©2013 Snell & Wilmer L.L.P. 33
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave • Family and Medical Leave Act (―FMLA‖) ◦ Federal law requiring covered employers to provide employees 12 weeks of jobprotected and unpaid leave for qualified medical and family reasons. ◦ Qualified medical and family reasons include: personal or family illness, family military leave, pregnancy, adoption, or the foster care placement of a child ◦ In order to be eligible for FMLA leave, an employee must have been at the business at least 12 months, and worked at least 1,250 hours over the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles. ©2013 Snell & Wilmer L.L.P. 34
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave What is the ―overlap?‖ • Answer: • When an employee needs time off work because of a medical or disability-related issue, remember that they may have leave rights under both the ADAAA and FMLA • For example, an injury that requires hospitalization or incapacitates an employee for more than three days and requires continuing treatment by a healthcare provider generally qualifies as a serious health condition under the FMLA • If the injury causes a permanent mental or physical impairment that substantially limits a major life activity, that same employee could be entitled to additional leave as a reasonable accommodation under the ADAAA FMLA Leave Both ADA Leave ©2013 Snell & Wilmer L.L.P. 35
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave • Permanent disability hypothetical ◦ ◦ ◦ ◦ ◦ On January 9, 2013, Bill hurt his back when he reached down and moved a 5 gallon bucket of scrap metal approximately 30 feet. Bill returns to his employer with a note from his doctor explaining that Bill has a herniated disk in his lower back and needs surgery to repair it. Bill’s leave is counted as FMLA leave. Bill’s recuperation takes longer than the doctor had anticipated. Eight (8) weeks after the surgery, Bill returns to the Company’s HR director with a doctor’s note which states that Bill needs an additional three (3) weeks off of work to recuperate and for physical therapy. ©2013 Snell & Wilmer L.L.P. 36
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave • Permanent disability hypothetical ◦ ◦ ◦ It is now April 2, 2013, one day less than 12 weeks since Bill first reported off of work due to his back injury. Bill’s boss has been periodically sending the HR director email notes questioning Bill’s status, and has begun to question openly whether Bill might be malingering. The HR director assures him that Bill has used up all of his available FMLA leave, and tells the supervisor that if Bill fails to show up the next day ready to go back to work, he would be fired. ©2013 Snell & Wilmer L.L.P. 37
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave • Permanent disability hypothetical ◦ ◦ ◦ ◦ ◦ Just before the start of the day shift the next morning Bill arrives at work with another note from his doctor. This time the note says that Bill’s recovery is moving along ―according to plan,‖ and that Bill should be ready to return to work ―with some lifting restrictions‖ in two weeks. The note also states that Bill will likely have a 10% permanent disability per the ―AMA Guides.‖ (Think: ADAAA) The HR Director, dreading the thought of having to face Bill’s boss again, tells Bill that because he does not have a medical release to return to work that day, his employment is terminated effective immediately. Bill, a 15-year employee, can’t believe what he’s hearing and tells the HR Director she’ll be hearing from his lawyer. Should the Company be concerned about Bill’s threat? ©2013 Snell & Wilmer L.L.P. 38
  • Common Mistake: Failing to recognize the overlap between ADAAA Leave and FMLA Leave • Permanent disability hypothetical ◦ Answer: YES - - - Because the doctor has established that Bill’s back injury is permanent, Bill might now be considered disabled under the ADAAA. The ADA as amended requires employers to make reasonable accommodations to allow qualified disabled individuals to do their jobs, as long as these accommodations do not pose an undue hardship for the employer. The HR director has to make two determinations when faced with Bill’s request for two additional weeks off (in addition to what he already got in FMLA leave): • • (1) She must decide whether to treat Bill as disabled under the ADAAA. (2) If Bill is considered disabled, the HR Director must determine whether the accommodation Bill has requested is ―reasonable‖ and does not pose an ―undue hardship‖ to the employer. ©2013 Snell & Wilmer L.L.P. 39
  • Q&A ©2013 Snell & Wilmer L.L.P. 40