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Avoiding Workplace Pitfalls - Domestic and Foreign Employee Compliance - Best Practices


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Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance. Employment Law Breakfast Series
Sponsored by Cowles & Thompson, PC & The International Business Council of the Frisco Chamber

Employment lawsuits and government audits and investigations are at a record high. In 2013 the government settled the largest immigration fine in history with a Plano, TX based company in the amount of $34 million for charges of visa and I-9 non-compliance. Avoid the penalties, damages, and negative publicity for those who have been caught unaware. Regardless of size or industry, your company must be able to prove its observance of federal and state employment laws and regulations concerning both domestic and foreign workers. The Frisco Chamber of Commerce International Business Council and Cowles & Thompson, PC presented three educational events to help your organization meet regulatory challenges for your domestic and foreign employee workforce.

This is the third event - Best Practices for Business - held on August 6, 2014 at the Frisco Chamber of Commerce, Frisco, Texas.

Published in: Law
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Avoiding Workplace Pitfalls - Domestic and Foreign Employee Compliance - Best Practices

  1. 1. Avoiding Workplace Pitfalls Domestic and Foreign Employee Compliance Session III – Best Practices for Businesses
  2. 2. Agenda 1 2 3 Immigration Compliance Best Practices How to Prevent and Defend Government Investigations The FLSA, Worker Misclassification & North Texas Businesses
  3. 3. Immigration Compliance Best Practices Ann Massey Badmus Angela M. Lopez Katrina M. Moore Cowles & Thompson, P.C
  4. 4. Immigration Compliance Plan Written Procedures and Policies
  5. 5. Written Procedures & Policies I-9 procedures for hiring and re- verification Anti-discrimination policies Retention of I-9 forms E-Verify procedures, if applicable Investigations
  6. 6. Immigration Compliance Plan Training and Supervision • Group training • Individual training • Sample training • Ongoing and periodic
  7. 7. Immigration Compliance Plan Secure and Consolidated Recordkeeping • Retention • Electronic storage • Separation from personnel records • Consolidation
  8. 8. Immigration Compliance Plan • Establish a protocol to respond to no-match letters and other agency notifications • Be consistent and do not discriminate • Allow employees to make a good faith effort to resolve the discrepancy Social Security No Match
  9. 9. Immigration Compliance Plan Independent Contractor Compliance – Clear communication that contractor is responsible for I-9 compliance – Require proof of I-9 policies and procedures – Get commitment to send only work authorized employees to your worksites – Include indemnification clauses – Reserve right to cancel if contractor has violated I-9 rules – Notify contractor you will investigate credit reports of unauthorized workers
  10. 10. Immigration Compliance Plan Anti-Discrimination Best Practices – Consistency – do not treat workers differently because of immigration status – No “citizen only” policy – Do not demand specific documents, e.g. “green card” – Do not re-verify “green card” when the card expires – Do not demand more documents than needed to complete I-9 – Do contact an immigration attorney if uncertain
  11. 11. Immigration Compliance Plan Violations reporting and investigations • Non-discriminatory and consistent • Credible, detailed reports • Follow company policy regarding terminations and other related policies • Enforce, enforce, enforce!
  12. 12. I-9 Self Audits Prepare for government audit Identify errors Identify training issues Demonstrates good faith compliance
  13. 13. I-9 Self Audits Internal – experienced HR Attorney audit Third-party auditors
  14. 14. Post-Audit Implementation Conduct training Ensure corrections are made Review audit report and implement procedural changes Maintain ongoing project attitude
  15. 15. ICE Enforcement Action
  16. 16. Responding to ICE Enforcement Actions Choose a point person Ask to see documents authorizing the search of premises or employees (warrant) Make copy of the warrant, notice of inspection (NOI), subpoena, etc
  17. 17. Responding to ICE Enforcement Actions Ask about purpose and scope of inspection Accompany agents on the search Comply with the warrant but do not volunteer information not covered by warrant
  18. 18. Responding to ICE Enforcement Actions If I-9 inspection, don’t waive right to 3-day notice (ask for extension) Separate I-9 forms from personnel files Offsite review – make copies of all documents submitted Onsite review – seat office in conference room or somewhere separate from work areas
  19. 19. Responding to ICE Enforcement Actions Call an experienced attorney immediately upon receipt of the NOI or initiation of enforcement action and do not allow agents to talk with employees before calling an attorney.
  20. 20. Immigration Counsel Develop written compliance plans and audit safeguards Conduct compliance audits Develop contractor compliance and termination policies
  21. 21. Immigration Counsel Conduct training and reviews Advise on immigration-related hiring or firing issues Represent company during enforcement actions
  22. 22. The FLSA, Worker Misclassification & North Texas Businesses Mark Hill Shareholder, Cowles & Thompson, P.C.
  23. 23. Legal Landscape  100s of claims are filed in North Texas State and Federal Courts everyday.  Employment claims against local businesses are an increasing part of the legal landscape in Collin, Dallas and surrounding counties.
  24. 24. Most Common Business Claims Fiduciary cases Contract cases EMPLOYMENT cases
  25. 25. Employment Cases Non-Compete Confidentiality & Trade Secret Discrimination FLSA
  26. 26. What is the FLSA?
  27. 27. Fair Labor Standards Act (FLSA) The FLSA establishes minimum wage, overtime pay, tip pooling, record keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.
  28. 28. Key FLSA Components “Collective Action” treatment Liquidated Damages Willful Violations Recovery of Attorney’s Fees
  29. 29. FLSA Claims Filed Within The Last Month
  30. 30. Recent FLSA Claims Laundromat - Attendant ● Min. Wage, OT Payroll co. - Consultant ● Misclassification, OT Medical co. – Customer Serv. Coordinator ● OT, Time Sheet manipulation Cleaning serv. – Maid/Cleaners ● Min. Wage, OT, Travel time
  31. 31. Worker Classification
  32. 32. Independent Contractor or Employee This may surprise some, but having a worker sign an Independent Contractor agreement does not make that worker an independent contractor. …At least not by itself.
  33. 33. Worker Classification Analysis The Supreme Court has said that there is no definition that solves all problems relating to the employer- employee relationship under the FLSA. The goal of the analysis is to determine the underlying “economic reality” of the situation and whether the individual is economically dependent on the supposed employer.
  34. 34. Several Factors to Consider A Framework has been established to determine whether a worker is an employee or an independent contractor. Several factors to consider – no one factor controls. The Supreme Court has said determination of the relationship cannot be based on isolated factors or upon a single characteristic, but depends upon the circumstances of the whole activity.
  35. 35. Independent Contractor Framework (1) the extent to which the worker's services are an integral part of the employer's business; (2) the permanency of the relationship; (3) the amount of the worker's investment in facilities and equipment; (4) the nature and degree of control by the principal; (5) the worker's opportunities for profit and loss; and (6) the level of skill required in performing the job and the amount of initiative, judgment or foresight required for success.
  36. 36. Misclassification is a Focus The U.S. Department of Labor (DOL) is also making employer compliance with the FLSA a focus, and misclassification of employees as independent contractors is at the center of its scrutiny. A recent study by the University of Texas found that almost half of all construction workers were misclassified as independent contractors.
  37. 37. What can the Business Owner do?
  38. 38. How to Prevent and Defend Government Investigations Brian Farrington Shareholder, Cowles & Thompson, P.C
  39. 39. Preparing for a Wage Hour Investigation 1. Identify all salaried exempt employees. (Distinguish from salaried nonexempt.) 2.Make sure you know what exemption you are claiming for each. 3. Some are obvious—CEO, etc. Focus on the ones which are not.
  40. 40. Preparing for a Wage Hour Investigation Make sure you have job descriptions in place for all, and that they are accurate. Do periodic audits of jobs—interview incumbents, make sure duties are what you think they are, and are accurately represented in the job description.
  41. 41. Preparing for a Wage Hour Investigation When new job is created, or job functions change significantly, revisit the job soon thereafter—e.g., 90 days, 6 months. Make sure job duties are what you envisioned they would be.
  42. 42. Preparing for a Wage Hour Investigation Make sure you pay salaried exempt employees according to the regulations. Have a policy in place which allows exempt employees who think they have been improperly docked to complain, and fix any problems which arise.
  43. 43. Records of Hours Worked Make sure you have a system in place to record accurately the hours worked by all nonexempt employees. No such system works without proactive monitoring by first-level supervisors. Audit periodically—interview employees to be sure they are recording all hours worked.
  44. 44. Records of Hours Worked Focus on: Employees coming in early/staying late and working off the clock. Employees working through lunch. Employees not paid for compensable travel. Preparatory and concluding activities paid.
  45. 45. Minimum Wage Make sure all employees are paid federal/state/local minimum wage, whichever is the highest. For employees paid on a contingent basis (piece rate, commission, etc.), make sure there is an automatic feature which identifies any week in which employee didn’t make MW, and preferably automatically supplements their pay.
  46. 46. Minimum Wage Make sure recapture is explained in policies. If you intend to recapture such advances, make sure it’s clear and have employees sign an authorization to this effect.
  47. 47. Minimum Wage Make sure that any deductions for employer’s benefit don’t reduce employees below MW. Also, make sure to have employee consents for any deductions other than legal deductions.
  48. 48. Tipped Employees Make sure you only claim tip credit for eligible employees—employees with direct customer serving contact. Watch state laws—many states don’t allow tip credit at all, or allow less than the feds.
  49. 49. Tipped Employees Make sure all necessary disclosures are made—see 29 CFR 531. Have employees sign forms describing how they are paid, indicating that they understand, and put copies in personnel files.
  50. 50. Tipped Employees Make sure employees are reporting enough tips to bring them up to MW. If not, make up the difference, preferably automatically. If employees can’t make at least MW, need to have another job.
  51. 51. Tipped Employees If you use service charges, make sure they are announced to the customers, and are included in gross receipts. Records should clearly reflect this, even if all are distributed so it’s “in and out.” Also, remember that service charge distributions are wages, not tips, and increase the regular rate for overtime purposes.
  52. 52. Tipped Employees Make no deductions for the employer’s benefit—uniforms, shortages, breakage, walkouts, etc.—from the wages of tipped employees.
  53. 53. Tip Pools Make all necessary disclosures. Make sure tipped employees who contribute are left with MW Make sure recipients get enough to make MW, or supplement them. Make sure only serving employees receive anything from tip pool—not managers, not back of house.
  54. 54. Overtime Make sure OT is paid on w/w basis, not longer periods. Don’t pay OT on paid time off unless you really want to.
  55. 55. Overtime Make sure all compensation except statutory exceptions are included in Regular Rate. Pay particular attention to bonuses, shift differentials, on-call pay. Also, remember that commissions, bonuses, etc. earned over periods longer than a workweek must be allocated back over the entire period they are intended to recognize.
  56. 56. Overtime Make sure expense reimbursements are exact or reasonably approximate. If use fluctuating workweek, or daily rate, make sure these payments are the employees’ only form of compensation.
  57. 57. Child Labor No one under 14. 14 – 15: make sure they aren’t working in hazardous or prohibited occupations, and make sure they don’t exceed hours/time standards 16 -17: make sure they don’t work in Hazardous Occupations.
  58. 58. Investigations NEVER ALLOW UNANNOUNCED WALK-IN INVESTIGATIONS! Politely refuse to provide any information at all. Make an appointment for investigator to return. Make sure all your satellite offices know this. (exception: investigator has a warrant)
  59. 59. Investigations Best practice—give them your lawyer’s contact info, and let the lawyer handle it.
  60. 60. Investigations When investigator arrives, only provide what you’re asked. DON’T VOLUNTEER. Copies of records: don’t have to provide photocopies or electronic copies, but makes sense in most cases.
  61. 61. Investigations Interviews: generally allow investigator to interview on premises. Don’t coach employees, but for exempt employees, make sure they understand and can explain all their duties and responsibilities. Pre-interviews are helpful. May sit in on interview of supervisors when discussing employer policies, not individual’s exempt status.
  62. 62. Investigations Final conference: don’t agree to anything you are uncomfortable with without checking with your lawyer. DON’T SIGN THE BACK WAGE SUMMARY! Unless you agree. If you can’t resolve with investigator, ask for a second level conference If you are assessed CMP’s, appeal timely. You can then negotiate.
  63. 63. EEOC—General Audit policies—have all the ones you need: EEO, harassment, etc. Have a discrimination/harassment complaint procedure in place. Thoroughly and timely investigate all internal complaints, no matter how unlikely. Inform complainant of results, positive or negative. NO retaliation!
  64. 64. EEOC—General Accurate essential function job descriptions should be in place for all jobs, updated as needed and audited periodically.
  65. 65. EEOC—General EEO, anti-harassment training should be provided: -all supervisors -all interviewers -all HR personnel -all employees, to some extent Record who took the training, when, and have copies of content on file.
  66. 66. Responding to Charges of Discrimination Issue a “document hold” ensuring no relevant documents are destroyed. Make sure charge is timely—CP’s generally must complain within 300 days of date of alleged discrimination. Decide if you want to mediate—usually do so if you are vulnerable.
  67. 67. Responding to Charges of Discrimination Position statements: -make sure all assertions in charge are accurate. If not, say so. -Explain your reasons for adverse action. -Provide documentation -Address comparators—point out the helpful ones, distinguish the bad ones.
  68. 68. Responding to Charges of Discrimination “Same actor” inference—if the same person(s) who fired the CP hired him/her, point this out. Provide relevant policies, and show how you followed, or why you didn’t. Respond to any questions in the Questionnaire or Request for Information, but briefly and succinctly.
  69. 69. Responding to Charges of Discrimination Employers have a right to be present for any interview of supervisors.
  70. 70. 901 Main Street Suite 3900 Dallas, Texas 75202 214-672-2000 How to connect with us
  71. 71. What to Do Next? Facts of each case are different. The general information provided here should not be relied and is not legal advice. Consult with an experienced attorney to get the right advice for your specific circumstances.