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.TRANSCRIPT
Avoiding Workplace PitfallsDomestic and Foreign Employee Compliance
Session III – Best Practices for Businesses
Agenda
1
2
3
Immigration Compliance Best Practices
How to Prevent and Defend Government Investigations
The FLSA, Worker Misclassification & North Texas Businesses
Immigration Compliance Best Practices
Ann Massey BadmusAngela M. Lopez
Katrina M. MooreCowles & Thompson, P.C
Immigration Compliance Plan
Written Procedures and Policies
Written Procedures & Policies
I-9 procedures for hiring and re-verification
Anti-discrimination policies
Retention of I-9 forms
E-Verify procedures, if
applicableInvestigations
Immigration Compliance Plan
Training and Supervision
• Group training• Individual training• Sample training• Ongoing and periodic
Immigration Compliance Plan
Secure and Consolidated Recordkeeping
• Retention• Electronic storage• Separation from
personnel records• Consolidation
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
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
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
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!
I-9 Self Audits
Prepare for government audit
Identify errors
Identify training issues
Demonstrates good faith compliance
I-9 Self Audits
Internal – experienced HR
Attorney audit
Third-party auditors
Post-Audit Implementation
Conduct training
Ensure corrections are made
Review audit report and implement procedural changes
Maintain ongoing project attitude
ICE Enforcement Action
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
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
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
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.
Immigration Counsel
Develop written compliance plans and
audit safeguards
Conduct compliance audits
Develop contractor compliance and
termination policies
Immigration Counsel
Conduct training and reviews
Advise on immigration-related hiring or firing issues
Represent company during enforcement
actions
The FLSA, Worker Misclassification & North Texas Businesses
Mark HillShareholder, Cowles & Thompson, P.C.
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.
Most Common Business Claims
Fiduciary cases Contract cases EMPLOYMENT cases
Employment Cases
Non-Compete
Confidentiality & Trade Secret
Discrimination
FLSA
What is the FLSA?
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.
Key FLSA Components
“Collective Action”
treatment
Liquidated Damages
Willful Violations
Recovery of Attorney’s
Fees
FLSA Claims FiledWithin The Last Month
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
Worker Classification
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.
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.
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.
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.
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.
What can the Business Owner do?
How to Prevent and Defend Government Investigations
Brian FarringtonShareholder, Cowles & Thompson, P.C
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Tipped Employees
Make no deductions for the employer’s benefit—uniforms, shortages, breakage, walkouts, etc.—from the wages of tipped employees.
Tip Pools
Make all necessary disclosures.Make sure tipped employees who contribute are
left with MWMake 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.
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.
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.
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.
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.
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)
Investigations
Best practice—give them your lawyer’s contact info, and let the lawyer handle it.
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.
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.
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.
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!
EEOC—General
Accurate essential function job descriptions should be in place for all jobs, updated as needed and audited periodically.
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.
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.
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.
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.
Responding to Charges of Discrimination
Employers have a right to be present for any interview of supervisors.
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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.