Download - PACE - Law Presentation: Employment Law 101

Employment Law 101:

Recognizing The Top Mistakes Made by

Mid-Sized Employers

Presented at PACE Conference

Chandler, Arizona

October 8, 2013

Jennifer Phillips602-382-6565

[email protected]

Manuel H. Cairo602-382-6534

[email protected]

2©2013 Snell & Wilmer L.L.P.

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

3©2010 ©2013 Snell & Wilmer L.L.P Snell & Wilmer

L.L.P.

Background

The Immigration Reform and Control Act of 1986 (―IRCA‖) requires employers to satisfy three separate and distinct legal obligations:

1. 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.

2. 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).

3. Refrain from discriminating against individuals on the basis of actual or perceived national origin, citizenship, or immigration status.

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)

4© ©2013 Snell & Wilmer L.L.P 2010 Snell & Wilmer

L.L.P.


L.L.P.





―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.‖


L.L.P.



• 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

7©2 ©2013 Snell & Wilmer L.L.P 010 Snell & Wilmer

L.L.P.

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

8©2013 Snell & Wilmer L.L.P

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.


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


L.L.P.

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


L.L.P.

Consequences: Warning Notice


L.L.P.

• May be issued in circumstances

where substantive violations were

identified but there is the expectation

of future compliance by the employer.

Consequences: Warning Notice


L.L.P.

• 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

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


L.L.P.

15©2010 Sn ©2013 Snell & Wilmer L.L.P ell & Wilmer

L.L.P.

Consequences:

Substantive/Uncorrected Technical Violations

Standard Fine Amount

Substantive Verification

Violations

1st Offense

$110 - $1100

2nd Offense

$110-$1100

3rd Offense+

$110-$1100

0%-9% $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


L.L.P.

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

Third Tier

$4,300-$16,000

0%-9% $375 $3,200$4,300

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


L.L.P.

Consequences:

Factors and Enhancement


Consequences:

Settlement and Appeals

• Final Order

• Settlement Agreements

• Office of the Chief Administrative

Hearing Officer

• Federal Circuit Court of Appeals


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:• (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

- 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."

• 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

• 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.



Employees as “Exempt”




• ―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





◦ 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





◦ 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





◦ 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.‖




• 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

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.)



• 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 collective-

bargaining 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.‖



• 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




• 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.‖


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.


• 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




• 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 co-

workers and non-employees!




• Americans with Disabilities Act (―ADA‖)◦ 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

• 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: ◦ 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‖


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 job-

protected 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.




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 Both ADA

Leave 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.







• 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.


• 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?






• 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.

Q&A


Download - PACE - Law Presentation: Employment Law 101

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