Category: Labor & Employment

Is Bullying Harassment?

California is oft thought of as a trailblazer in the arena of sexual harassment law. Because California’s Fair Employment and Housing Act mirrors Title VII, practitioners and employers in other states often look to California cases and laws regarding sexual harassment for guidance.

One area that has created a stir nationwide is California’s latest addition to its statute regarding mandatory sexual harassment training for supervisors. The state now mandates training on the subject of “abusive conduct,” otherwise known as bullying, in addition to training on sexual harassment avoidance. While “abusive conduct” is not illegal in and of itself, this addition to the law’s training requirements has created speculation as to whether legislation may be coming down the pike deeming bullying illegal.

Add to this discussion a new California appellate court decision, Levi v. The Regents of the University of California. In that case, the plaintiff was a neuro-ophthalmologist who claimed that the department chair sexually harassed  her by standing above her and banging his fists on his desk while threatening to fire her and by yelling at her on various occasions.  She also presented evidence of the department chair engaging in similar hostile and intimidating conduct against various co-workers.  The court, however,  refused to accept the plaintiff’s invitation to characterize “bullying” as harassment, and held that because there was no evidence that this conduct was because of the plaintiff’s gender, there was no harassment under the law.

Of course, bullying in the workplace is something that employers should seek to eliminate and prevent for a variety of reasons, such as fostering an inclusive work environment, keeping morale levels high, and ensuring that everyone works to their potential. However, the Levi case makes it clear that the kind of conduct we think of as bullying is not currently illegal harassment in most jurisdictions. Nevertheless, California’s recent sexual harassment regulations make it clear that companies must provide training regarding abusive conduct and avoiding bullying behavior.  The question remains – what does the future hold, and will the California legislature decide to codify its anti-bullying stance?

This post was written by Krista M. Cabrera of Foley & Lardner LLP © 2017
For more Labor & Employment legal analysis go to The National Law Review

It’s Time for Tax-Exempt Entities to Restate Their 403(b) Plans

Under a new IRS program, tax-exempt entities who sponsor 403(b) retirement plans can adopt pre-approved documents that include determination letters that confirm the tax-qualified status of their plans. Plan sponsors need to adopt pre-approved plans before March 31, 2020, in order to qualify for the program.

Under a 403(b) plan, eligible employees can elect to make pre-tax contributions towards the cost of their own retirement benefits. The accumulated savings is most often used to purchase an annuity when the participant retires. Until now, a plan sponsor could not receive a determination from the IRS that its 403(b) plan satisfied all applicable tax requirements.

However, on January 13, 2017, the IRS announced the opening of a “remedial amendment period” under which plan sponsors can adopt pre-approved plan documents retroactively to the later of January 1, 2010, or the date that the plan was first adopted. Various entities such as insurance companies, financial service providers and companies that sell standardized retirement plan documents have already received approval of their forms of 403(b) plan documents. Most plan documents can be customized to reflect the terms of an existing 403(b) plan. The IRS will not review or provide determination letters for individually designed 403(b) plan documents.

By adopting a pre-approved document that has a determination letter, a 403(b) plan sponsor can protect against an assertion (for example, in the course of an IRS audit) that its plan document is not tax-qualified and that the plan sponsor and participants are not eligible to receive the tax benefits afforded under the Code. Therefore, it is highly recommended that sponsors of 403(b) plans adopt an IRS-approved plan document before March 31, 2020. Although the deadline for adoption is almost three years away, plan sponsors should begin discussions with their legal counsel regarding the conversion of their current documents to a pre-approved plan.

*Katharine’s license application in the State of Wisconsin is pending.

This post was written by Katharine G. Shaw and Bruce B. Deadman of  Davis & Kuelthau, s.c.
For more legal analysis, go to The National Law Review

Why the Billable Hour Is Here to Stay

While you may grind away on files day in and day out through six-minute intervals, tracking the time can prove distracting and burdensome. The billable hour remains the standard method for billing with lawyers, and this has been the standard for decades. Despite the longevity of the billable hour, plenty of lawyers believe they can find a better way to bill their clients.

The Argument Against the Billable Hour

Lawyers from a variety of fields have raised arguments against billing by the hour. One of those arguments is how you only have so many hours in the day that you can work. In addition, an hourly billing setup fails to acknowledge how different legal services will have differing value. Some have made the claim hourly billing encourages inefficiency and incompetence because the longer it takes a lawyer to finish the job, the more they get paid. This shows a conflict of interest because a lawyer might feel tempted to spend the maximum hours on a file.

Does the Billable Hour Remain the Standard?

Gradually, lawyers have started to charge through alternative methods. Some of those methods include:

  • Flat fees

  • Results-based fees

  • Contingency fees

  • Fees by stages

In today’s world, a client asks more value for his dollar, and plenty of lawyers are happy to accommodate. Still, the billable hour reigns supreme even despite talk of a massive shift. The billable hour hasn’t taken hold as of yet. However, it has been growing. In fact, a recent study found how the alternative fee arrangements were up five percent from several years ago to 22 percent since.

Revolutionizing the Law Industry

Plenty of firms have seen this and started to shift their own law practice out of the curiosity of what a billable-hour free firm might look like. Since the early 1990s, lawyers have predicted the eventual end of the billable hour, but it has never truly ended. Until a more alternate billing comes, it’s unlikely that the billable hour will ever fully go away. In fact, some law firms will always prefer it, and unless the clients demand a change, the billable hour serves both lawyers and clients in a way where an alternative arrangement might prove to be more difficult.

Education of the Client

Bill Rice, a partner at Bennett Jones, says that his national firm offers the alternate billing proposal. Many times clients will ask for the alternate billing, but in the end, they wind up choosing the hourly billing because they don’t know how to judge if the alternate arrangement will be fair. Rice says, “While we’ve moved forward with breaking the billable hour, we still haven’t reached the appropriate level of comfort with alternate billing.” Essentially, clients are unable to find a better way to judge the value or to maintain control over it.

This is where research comes in play. If you decide to want to take an alternative route, education is key. By explaining the process, average cost, and the highest potential cost, your client can decide which avenue he or she may want to take.

Where Alternative Billing Does Best

In some cases, the billable hour continues to be the best fit for the attorney and/or law firm. This includes the markups and discounts and how much time a lawyer puts into the case. Sometimes blended rates come into play due to work getting divided amongst the firm. In these circumstances, you will experience a blend of hourly rates.

Where fixed-fee billing (say that five times fast) works best, might be when an event an activity is scheduled. Some of the possible examples include:

  • Patenting

  • Immigration visa

Fixed-rate billing also allows an attorney to exit a case with less worry. Sometimes with the billable hour, there’s that worry of a possible lawsuits malpractice. When you lay everything on the table, the client knows what he’s getting himself into. As a result, you have a more satisfied group of clients because they feel they got the value out of what they paid for.

The Problem of Efficiency: The Billable Hour

You could spend up to an hour trying to fix a leaky faucet and getting nowhere in the process, even though the problem is fairly simple. The same could be said about the billable hour. You want to provide attorneys with some incentive on why they should work hard to finish the case fast. It’s true that some of the other billing methods might not necessarily be cheaper than the billable hour, but it gives clients a fixed budget to work with and peace of mind knowing it won’t go higher.

The billable hour isn’t likely to go anywhere in the future. New methods of billing will, however, probably come up as lawyers get more creative on how to bill their clients for their legal services. The world today focuses more on value-driven legal services. For that reason, it seems like a good incentive to provide lawyers with a reason to up the quality of their services while giving clients predictable budgets they can count on to stay the same.

This post was written by Jaliz Maldonado  of PracticePanther © Copyright 2017
For more legal analysis go to The National Law Review

Athletes and Employees Speak Out: Do Your Employment Practices Drop the Ball in Addressing Diversity, Controversial Speech, or Tensions at Work?

With the 2017-18 National Football League (NFL) regular season and National Basketball Association (NBA) pre-season underway, many spectators are excited to don their favorite players’ jerseys and cheer on their teams. Yet in recent years, many fans also find themselves equally entrenched in controversial debates that have little to do with who wins or loses the game.

Rather, these dialogues relate to the frequent media coverage over the alleged “blacklisting” of former San Francisco 49ers quarterback Colin Kaepernick after he took a knee during the national anthem last season to protest police brutality against minorities, related demonstrations held in front of the NFL’s corporate offices, and actions of solidarity on football fields across the country by athletes like Marshawn Lynch and members of the Cleveland Browns virally trending with the hashtag #ImWithKap. Most recently ESPN sports host, Jemele Hill, drew the attention of the White House and placed her own employment in the cross-hairs by stating in a series of tweets that President “Donald Trump is a white supremacist who has largely surrounded himself w/ other white supremacists” and is “unqualified and unfit to president.” and in In response, the White House press secretary called Hill’s statements a “fireable offense.”

As athletes and other public figures use their careers to bring awareness to social movements and other world events such as the Charlottesville tragedy, the implications of social movements on employee relations remains a hot topic that poses challenging issues for employers related to diversity, inclusion, and free speech. Here are a few of those related topics and some practical suggestions of ways employers can address these issues in the workplace:

Does the First Amendment Apply to Athletes or Employees Generally?

People often mention their First Amendment guarantees without understanding that this right is not without certain limitations, especially in the employment context. Specifically, while this protection covers federal, state, and local government employees, courts have held that First Amendment protections do not generally extend to the employees of private-sector employers.

Does Social Media Change Things?

As evidenced by legendary athletes Dale Earnhardt Jr.’s and Kareem Abdul-Jabbar’s Twitter posts in response to the Charlottesville tragedy, many athletes and employees use social media to vocalize their positions on social issues. The National Labor Relations Board (NLRB) has taken on cases where employers have fired or taken disciplinary actions against employees who have engaged in certain protected speech via various social media platforms. On the agency’s website, the NLRB states: “The National Labor Relations Act protects the rights of employees to act together to address conditions at work…. [t]his protection extends to certain work-related conversations conducted on social media”.

This raises the question: Can an employee be disciplined for making racially- or politically- charged speech via social media?

The standard that the NLRB considers is whether the employee is engaging in “protected concerted activity” involving the terms and conditions of employment. Courts have used a multi-factor assessment to determine whether discipline or discharge violates Section 8(a)(1) of the NLRA, which evaluates whether:

  1. the activity in which the employee was engaged was “concerted” within the meaning of Section 7 of the NLRA;
  2. the employer knew of the concerted nature of the employee’s activity;
  3. the concerted activity was protected by the NLRA; and
  4. the discipline or discharge was motivated by the employee’s protected, concerted activity.

If the employer alleges that an employee engaged in misconduct during otherwise protected activity, the NLRB generally considers four factors in determining whether speech is protected:

  1. the place of the discussion;
  2. the subject matter of the discussion;
  3. the nature of the employee’s outburst; and
  4. whether the outburst was, in any way, provoked by an employer’s unfair labor practice

In many instances, purely individual speech about a social or political topic that in no way involves an employee’s work conditions will not be protected by the NLRA. Because of the fact-specific nature of the inquiry, a determination must be made on a case-by-case basis.

So What Now?

Even employers not covered under the First Amendment and NLRA’s protections are finding themselves examining some weighty questions. For example:

  • Although there may be legally sanctioned limitations to free speech in the workplace, does the modern day work culture require employers to facilitate an employment experience that goes beyond what the law requires?
  • Are employers tasked with creating a workplace that is inclusive but also allows people to express unique (and sometimes controversial) viewpoints on social or political issues?
  • If so, how does this work and does it ultimately help the business to thrive long term?

Last year the NBA and the NBA’s Players Association (NBAPA) appeared to have answered this question in the affirmative and implemented this approach with its players. Despite having player agreements with language that can, in some cases, regulate players’ conduct, NBA athletes have expressed their positions on social issues both on and off the court.  For example, during pre-game warm ups LeBron James wore a t-shirt stating “I Can’t Breathe,” bringing awareness to the death of Eric Garner. Similarly, Carmelo Anthony and Dwyane Wade made a social action appeal during the 2016 ESPY awards.

Many players have been so outspoken that last year NBA Commissioner Adam Silver and NBPA Executive Director Michele Roberts penned a letter noting that both organizations were addressing the best ways they could move forward in “developing substantive ways . . . to come together and take meaningful action.” The letter noted that, in recent weeks, many teams had reached out to the organizations to figure out how they could “create positive change” and garner support with team efforts.

Employers may want to take note of the ways that the NBA and the NBAPA are attempting to address this topic. Additionally, employers may also want to review the following considerations.

Be Aware of Blacklisting Laws

Many states have blacklisting laws that, generally, prohibit employers from limiting former employees’ opportunities. The following are a handful of state laws regulating blacklisting:

  • North Carolina law prohibits employers from preventing or attempting to prevent any “discharged employee from obtaining employment with any other person, company, or corporation” whether by verbal or written action.
  • The California Labor Code also prohibits any person from preventing or attempting “to prevent the former employee from obtaining employment” by misrepresentation and punishes any manager or employee who knowingly “fails to take all reasonable steps to prevent” such action.
  • Indiana law makes it illegal for an employer to prevent a “discharged employee from obtaining employment with any other person” or employer.
  • Florida law makes it illegal for two or more people to “agree, conspire, combine or confederate together for the purpose of preventing any person from procuring work . . .  or to cause the discharge of any person.” The law also prohibits verbal, written, or printed communication that “threaten[s] any injury to life, property or business of any person for the purpose of procuring the discharge of any worker . . . or to prevent any person from procuring work”.
  • New York Labor Law says it is an unfair labor practice “[t]o prepare, maintain, distribute or circulate any blacklist of individuals for the purpose of preventing any of such individuals from obtaining or retaining employment because of the exercise by such individuals of any of the rights guaranteed by section seven hundred three,” which discusses the right to join a labor organization or to bargain collectively.
  • Arizona law explicitly defines the term “blacklist” as “any understanding or agreement whereby the names of any person or persons, list of names, descriptions or other means of identification shall be spoken, written, printed or implied for the purpose of being communicated or transmitted between two or more employers of labor, or their bosses, foremen, superintendents, managers, officers or other agents, whereby the laborer is prevented or prohibited from engaging in a useful occupation. Any understanding or agreement between employers, or their bosses, foremen, superintendents, managers, officers or other agents, whether written or verbal, comes within the meaning of this section and it makes no difference whether the employers, or their bosses, foremen, superintendents, managers, officers or other agents, act individually or for some company, corporation, syndicate, partnership or society and it makes no difference whether they are employed or acting as agents for the same or different companies, corporations, syndicates, partnerships or societies.”

Be Proactive

Do not wait for your company to become the next trending hashtag on social media as a result of a workplace controversy! Instead, be prepared and take proactive measures in the event employees take a stand on controversial issues. Some options are to proactively address and be sensitive to diversity issues, and to recognize and understand the benefits of workforce diversity both as a source of varied ideas and a competitive advantage. Employers may also want to consider hiring a Chief Diversity and Inclusion Officer or diversity and inclusion team responsible for addressing equity issues.

Be Current

Consider reviewing your employee handbooks, in addition to contracts you might have with individual employees (or athletes) and third parties to ensure your company’s policies regarding diversity and inclusion, nondiscrimination and harassment, and professional development are up to date. Employers may also want to consider evaluating successes and areas for growth in the following areas:

Finally, employers may want to examine records to determine whether all employees, especially management employees, have participated in appropriate diversity and inclusion trainings, particularly on implicit or unconscious bias.

Be Careful

Employer-created bans on any socially- or politically-related speech rarely if ever actually work and may create exposure to liability under the First Amendment, the NLRA, or state-specific laws. Rather than imposing an outright ban on certain conduct, employers may want to slow down and engage in careful thought at the outset prior to taking any action on behalf of the organization. Employers may also find it beneficial to acknowledge that what happens in the world impacts the workplace. Accordingly, employers may want to develop affinity or employee resource groups, and/or maintain a diversity committee that facilitates well-thought-out inclusion initiatives. With many issues at play from reducing the risk of unlawful discrimination charges to preventing social media reputational harm, planning ahead may help to avoid potential risks.

This post was written by Karla Turner Anderson & Dawn T. Collins of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved. © 2017
For more Labor & Employment legal analysis go to The National Law Review

Federal Laws Do Not Preempt Connecticut Law Providing Employment Protections to Medical Marijuana Users

Connecticut employees using medical marijuana for certain debilitating medical conditions as allowed under Connecticut law for “qualified users” are protected under state law from being fired or refused employment based solely on their marijuana use. Employers who violate those protections risk being sued for discrimination, according to a recent federal district court decision.

Background

In Noffsinger v. SSC Niantic Operation Company (3:16-cv-01938; D. Conn. Aug. 8, 2017), the federal district court ruled that “qualified users” are protected from criminal prosecution and are not subject to penalty, sanction or being denied any right or privilege under federal laws, such as the Controlled Substances Act (CSA), the Americans with Disabilities Act (ADA) and the Food, Drug and Cosmetic Act (FDCA), because the federal laws do not preempt Connecticut’s Palliative Use of Marijuana Act (PUMA).

PUMA prohibits employers from refusing to hire, fire, penalize, or threaten applicants or employees solely on the basis of being “qualified users” of medical marijuana. PUMA exempts patients, their caregivers and prescribing doctors from state penalties against those who use or distribute marijuana, and it explicitly prohibits discrimination by employers, schools and landlords.

In Noffsinger, Plaintiff was employed as a recreational therapist at Touchpoints, a long term care and rehabilitation provider, and she was recruited for a position as a director of recreational therapy at Bride Brook, a nursing facility. After a phone interview, she was offered the position at Bride Brook and accepted the offer, and she was told to give notice to Touchpoints, which she did to begin working at Bride Brook within a week. Plaintiff scheduled a meeting to complete paperwork and routine pre-employment drug screening for Bride Brook, and at the meeting, she disclosed her being qualified to use marijuana for PTSD under PUMA. The job offer was later rescinded because she tested positive for cannabis; in the meantime, Plaintiff’s position at Touchpoints was filled, so she could not remain employed there.

Litigation

Plaintiff sued for violation of PUMA’s anti-discrimination provisions, common law wrongful rescission of a job offer in violation of public policy and negligent infliction of emotional distress. Defendant filed a Rule 12(b)(6) pre-answer motion to dismiss based on preemption under CSA, ADA, and FDCA. The federal court denied the motion and ruled that PUMA did not conflict with the CSA, ADA or FDCA, because those federal laws are not intended to preempt or supersede state employment discrimination laws. The court concluded that CSA does not make it illegal to employ a marijuana user, and it does not regulate employment practices; the ADA does not regulate non-workplace activity or illegal use of drugs outside the workplace or drug use that does not affect job performance; and the FDCA does not regulate employment and does not apply to PUMA’s prohibitions.

The court’s decision is notable in that it is the first federal decision to determine that the CSA does not preempt a state medical marijuana law’s anti-discrimination provision, and reaches a different result than the District of New Mexico, which concluded that requiring accommodation of medical marijuana use conflicts with the CSA because it would mandate the very conduct the CSA proscribes. The Noffsinger decision supplements a growing number of state court decisions that have upheld employment protections for medical marijuana users contained in other state statutes. These decisions stand in stark contrast to prior state court decisions California, Colorado, Montana, Oregon, and Washington that held that decriminalization laws – i.e., statutes that do not contain express employment protections – do not confer a legal right to smoke marijuana and do not protect medical marijuana users from adverse employment actions based on positive drug tests.

Key Takeaways

Employers may continue to prohibit use of marijuana at the workplace; and qualified users who come to work under the influence, impaired and unable to perform essential job functions are subject to adverse employment decisions. Employers in Connecticut, however, may risk being sued for discrimination for enforcing a drug testing policy against lawful medical marijuana users.  In those cases, employers may have to accommodate off-duty marijuana use, and may take disciplinary action only if the employee is impaired by marijuana at work or while on duty.

It remains unclear how employers can determine whether an employee is under the influence of marijuana at work. Unlike with alcohol, current drug tests do not indicate whether and to what extent an employee is impaired by marijuana. Reliance on observations from employees may be problematic, as witnesses may have differing views as to the level of impairment, and, in any event, observation alone does not indicate the source of impairment. Employers following this “impairment standard” are advised to obtain as many data points as possible before making an adverse employment decision.

All employers – and particularly federal contractors required to comply with the Drug-Free Workplace Act and those who employ a zero-tolerance policy – should review their drug-testing policy to ensure that it: (a) sets clear expectations of employees; (b) provides justifications for the need for drug-testing; and (c) expressly allows for adverse action (including termination or refusal to hire) as a consequence of a positive drug test.

Additionally, employers enforcing zero-tolerance policies should be prepared for future challenges in those states prohibiting discrimination against and/or requiring accommodation of medical marijuana users. Eight other states besides Connecticut have passed similar medical marijuana laws that have express anti-discrimination protections for adverse employment actions: Arizona, Delaware, Illinois, Maine, Nevada, New York, Minnesota and Rhode Island. Those states may require the adjustment or relaxation of a hiring policy to accommodate a medical marijuana user. Additionally, courts in Massachusetts and Rhode Island have permitted employment discrimination lawsuits filed by medical marijuana users to proceed.

Finally, employers should be mindful of their drug policies’ applicability not only to current employees, but also to applicants.

This post was written by David S. Poppick & Nathaniel M. Glasser of Epstein Becker & Green, P.C.  ©2017. All rights reserved.
For more Health Care Law legal analysis go to The National Law Review

Court Approves $342,500 Settlement On Behalf of 82 Tipped Food Service Workers

In Surdu v. Madison Global, LLC, the Court approved a $342,500 settlement on behalf of approximately 82 current and former employees of Nello Restaurant, who had worked as servers, bussers, runners and bartenders. See No. 15-CIV-6567 (HBP) (S.D.N.Y. Sept. 1, 2017). The plaintiffs alleged violations of the FLSA and NYLL arising from allegedly unpaid minimum wages, misappropriated gratuities, uniform purchase and maintenance costs, and inaccurate wage statements.

After conditionally certifying a Rule 23 class for purposes of settlement, the Court addressed the “Grinnell” factors to assess whether the settlement was substantively fair, reasonable and adequate. Thus, the Court considered: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

The Court found each of these factors satisfied. Of note, the Court found that it was reasonable for the class members to receive approximately 50% of their claimed misappropriated tips after service awards, attorneys’ fees, and costs were deduced from the gross settlement amount. The Court also found service awards in the amount $8,500 for each Named Plaintiff and attorneys’ fees in the amount of $114,166.66 to be reasonable.

This post was written by Brian D. Murphy of Sheppard Mullin Richter & Hampton LLP, Copyright © 2017
For more Labor & Employment legal analysis go to The National Law Review

Breaking Federal Developments in Labor and Employment September 2017

Salary Test for Exempt Status Invalidated

Under the prior administration the DOL had issued amendments to certain exemptions from the overtime requirements of the Fair Labor Standards Act (“FLSA”), which would have dramatically increased the number of employees eligible for overtime pay to over 4 million workers within the first year of implementation. The amendments were to be effective on December 1, 2016, however their implementation was stayed by a federal judge last November, as reported in our November 2016 Client Alert.

The new regulations were to essentially double the salary threshold for employees who would be exempt from overtime payments, assuming they met one of the three exemptions, from $455 per week or $23,660 per year, to $913 per week or $47,476 per year. Under these regulations, even if employees performed duties that would otherwise indicate they were exempt from overtime, if they made less than $47,476 per year, their employers would have to pay them overtime regardless of their duties. Just last week, a federal judge in Texas invalidated the new regulations, and specifically found that, while a salary test was permissible, the minimum threshold of over 47K per year was too high, and in fact obviated the need for any other duties based analysis, which has always been at the heart of the executive, administrative, or professional exemptions.

Employer Tip

For the time being, employers can feel comfortable relying on the duties test to determine eligibility for overtime, however, the DOL has indicated that it is still looking at the minimum salary threshold, and employers should expect that threshold to increase from the current number of $23,660. Employers would be well advised to take a look at their currently classified exempt employees making between 24-35K per year to determine whether such employees truly meet the duties test, and whether such employees are being paid at appropriate levels.

EEO-1 Salary Reporting Requirements Blocked

The new EEO-1 forms with reporting information for 2017 were to have included salary information in addition to the usual reporting requirements. The EEOC was presumably intending to use such information to target companies for Equal Pay investigations and complaints. Reporting is still due using the EEO-1 forms in March 2018, but the OMB has just announced that the forms are not going to require the reporting of salary information by gender and other protected characteristics, so employers have a reprieve with respect to federal reporting requirements.

Employer Tip

Employers should be mindful that the state and federal equal pay laws are still applicable, and it is always a good idea to do a self-audit of comparative pay data based on gender, race, and other protected characteristics in order to ensure compliance with such laws. Please also refer back to our April 2017 Client Alert with respect to NY pay equity laws and the salary history ban that goes into effect next month for NY employers.

New I-9 Form in Effect September 18, 2017

Employers should be aware that a new I-9 form is going into effect on September 18th. The link to the new form can be found here.

This post was written by David I. Rosen of Sills Cummis & Gross P.C. © Copyright 2017

What the Demise of DACA Means for Employers

Absent congressional action, the Trump administration’s decision to wind down the DACA program will end the work authorization of DACA beneficiaries.

In a decision announced earlier today by Attorney General Jeff Sessions, the Trump administration rescinded the memorandum that created the Deferred Action for Childhood Arrivals (DACA) program. Concurrently, the Department of Homeland Security (DHS) announced that US Citizenship and Immigration Services (USCIS) will begin a six-month winding-down of the DACA program, which was created in 2012 and through which approximately 800,000 beneficiaries have qualified for employment authorization in the United States.

According to today’s announcements, effective immediately USCIS will no longer accept new or initial applications for DACA benefits, which includes renewable two-year work permits. Applications already received and awaiting adjudication will be reviewed on a case-by-case basis. Individuals who have work permits that will expire prior to March 5, 2018 may file for a two-year extension of their current work authorizations, provided that they do so by October 5, 2017. Individuals with work permits set to expire after March 5, 2018 will not be permitted to extend their employment authorizations and will lose employment eligibility when their current permits expire. Accordingly, all DACA beneficiaries will be without employment authorization by March 5, 2020.

Background

Former US President Barack Obama announced the creation of DACA in June 2012 to remove the threat of deportation for and to provide temporary employment authorization to individuals who were brought to the United States as children and who either entered unlawfully or overstayed their periods of admission. Eligibility for DACA benefits was available to any individual who at the time could show that he or she

  • was under the age of 31 as of June 15, 2012;

  • came to the United States before reaching his/her 16th birthday;

  • had continuously resided in the United States from June 15, 2007 through the present time;

  • was physically present in the United States on June 15, 2012 and at the time of making his/her request for consideration of deferred action with USCIS;

  • had no lawful status on June 15, 2012;

  • was currently in school, had graduated, or had obtained a certificate of completion from high school, had obtained a General Educational Development (GED) certificate, or was an honorably discharged veteran of the Coast Guard or Armed Forces of the United States; and

  • had not been convicted of a felony, a significant misdemeanor, or three or more other misdemeanors, and did not otherwise pose a threat to national security or public safety.

At the time, the Obama administration described the implementation of DACA as a response to congressional failure to pass the Dream Act, which would have provided a path to residency and citizenship for eligible individuals. Proponents of the DACA policy described it as a legitimate exercise of executive branch prosecutorial discretion. Critics described DACA as an unconstitutional overreach of executive authority. The decision by the Trump administration to rescind and wind down DACA now shifts attention back to Congress, where debate concerning so-called “Dreamers” is already part of a larger discussion involving overall immigration limits, the border wall, E-Verify, and other immigration-related issues. Whether Congress will create and pass legislation that provides for continued employment eligibility for DACA beneficiaries is uncertain, as is the question of whether President Donald Trump would sign any such legislation.

What Employers Need to Know

Individuals who have employment authorization based on DACA benefits remain employment authorized until the expiration of their employment authorization documents (EAD). Employers who properly completed Form I-9, Employment Eligibility Verification, at the time of hire will have on file for any DACA beneficiaries the Form I-9 wherein Section 1 indicates that the employee has temporary employment eligibility that expires on the indicated date. As with any other employee who indicates that s/he is a foreign national with temporary employment eligibility, the employer is under an obligation to reverify that individual’s employment authorization by completing Section 3 of Form I-9 in accordance with the guidance in the USCIS Handbook for Employers M-274. Individuals who are unable to provide evidence of their continued employment eligibility may no longer be employed.

Employers are not required to take any other preemptive action with respect to employees who are DACA beneficiaries as their employment authorization continues through the validity date of their EADs. However, for purposes of planning and contingencies, employers may wish to determine who among their workforce is currently employed pursuant to DACA benefits by reviewing Forms I-9 already on file and photocopies already on file of any EAD that was presented and photocopied at the time of Form I-9 completion. An individual whose work authorization is based on DACA benefits will have an EAD that reflects employment eligibility based on Category C33. As a general rule, employers should not take additional measures to affirmatively identify DACA beneficiaries in their workforce, and should consult employment or immigration counsel to address any questions or concerns in this regard.

In addition, DACA beneficiaries who previously received Advance Parole documents that permitted international travel should consult with counsel prior to using a facially valid Advance Parole document for travel. US Customs and Border Protection (CBP) retains the authority to determine the admissibility of any person presenting at the border. Further, USCIS may terminate or revoke Advance Parole at any time.

This post was written by Eric S. Bord of Morgan, Lewis & Bockius LLP. All Rights Reserved  Copyright © 2017

Monopoly Money or the Real Deal? Exploring the Possibility of Paying Employees in Bitcoin

Bitcoin, the most popular form of digital or crypto-currency, is gaining traction as an investment vehicle and a way to pay for goods and services. More than 100,000 merchants worldwide now accept Bitcoin, allowing consumers to book a hotel stay, take a taxi, or buy a car.  The buzz around crypto-currency continues to grow as Bitcoin options will likely soon be traded on the futures exchange and regulators consider how to monitor Bitcoin transactions.

So what about paying employees in Bitcoin? Here are some things to consider before diving into the digital currency market.

What is Crypto-currency?

Virtual or digital currency is a digital representation of value that has no paper or coin equivalent. Crypto-currency such as Bitcoin uses encryption to control its creation.  Virtual currency is electronically created and stored and does not have the backing of a commodity, bank, or government authority. Additionally, virtual currency does not have the status of legal tender.  This means that a creditor can refuse virtual currency as payment for a debt.

Convertible virtual currency is a class of virtual currency that can be substituted for real currency. As of this week, 1 Bitcoin could be converted into to approximately $4,594.69 USD.

How Do I Get and Use Bitcoin?

Bitcoin is available online and may be purchased with cash, credit card, or wire transfer. A Bitcoin user would set up an online “wallet” that manages his or her transactions.  Each user has a unique address that is identified by a series of letters and numbers and each transaction in Bitcoin is also identified by a series of letters and numbers that can be viewed on a public ledger blockchain.info and shared with other devices on the Bitcoin network.

Due to the encryption of the transactions, the users have a certain level of anonymity, but the transactions are public. One of the advantages of Bitcoin is that there are no intermediaries, which gives user’s control to send payments from one party directly to another without a financial institution making fees lower.

To prevent paying twice with the same Bitcoin, each user has its own private key and a public key. Once a transfer is initiated, the transfer is submitted to the network encoded by the public key.  The acceptance occurs when the person accepts the amount on his or her private key.  The sender signs the transaction with the private key.  This log of transactions is continually downloaded by users on the network removing the need for a third-party clearinghouse to monitor the transactions.

Theoretically, paying an employee in Bitcoins would go through the same process. However, to comply with payroll deductions and filings, employers most commonly engage a payroll service experienced in Bitcoin that handles payroll deductions and filings.

What are the withholding implications of using Bitcoins as wages?

Just like wages paid in non-virtual currency, Bitcoin compensation would be considered W-2 wages for employees. Bitcoin is also subject to federal income tax withholding, FICA, FUTA, and the self-employment tax based on the fair market value of the Bitcoin on the date it was received. 

Do Bitcoin payments meet an employer’s minimum wage and overtime requirements?

Regulations under the Fair Labor Standards Act (FLSA) require that wage payments be in “cash or a negotiable instrument payable at par,” meaning that Bitcoin payments may not satisfy an employer’s minimum wage and overtime requirements under the FSLA. An employer could pay in a hybrid of U.S. currency and Bitcoin to meet the federal requirements and pay anything above that amount in Bitcoin.  Several state wage and hour laws also require that wages be paid in U.S. currency so it is important to check both federal and state laws before paying employees in crypto-currency.

What about exempt employees?

Most exempt employees have minimum salary requirements under federal law. The minimum salary requirement under the FLSA salary basis test must be paid in U.S. currency or a negotiable instrument.  Like the minimum wage and overtime requirements, once that threshold is met, employers may pay employees the rest of the amount in Bitcoin.

Other concerns?

For nonexempt employees, there is some gray area as to how to value Bitcoins for the regular rate calculation for overtime purposes. The timing of the valuation may have a significant economic impact due to Bitcoin’s somewhat volatile nature.  Bitcoin valuation may also be a problem when calculating the regular and back pay if an employee is misclassified as exempt.  There may also be other issues tied to Bitcoin’s volatility, the administrative cost of converting wages to Bitcoin and security of Bitcoin wallets.  Before diving into the digital currency world, it is recommended that an employer consult with legal counsel to avoid any potential pitfalls.

This post was written by Taylor E. Whitten  of  Foley & Lardner LLP © 2017
For more Labor & Employment legal analysis go to The National Law Review

Illinois Passes Religious Garb Law Clarifying Religious Protections Under Illinois Human Rights Law

On August 11, 2017, Illinois Governor Bruce Rauner signed into law Public Act 100-100, known as the “Religious Garb Law.”  The law amends the Illinois Human Rights Act (“IHRA”) by clarifying the scope of protection for sincerely held religious beliefs.

Specifically, the amendment makes clear that it is a violation of the IHRA for an employer to impose a requirement that would cause an employee to “violate or forgo a sincerely held practice of his or her religion including, but not limited to, the wearing of any attire, clothing, or facial hair in accordance with the requirements of his or her religion.”  However, the law indicates that “[n]othing in this Section prohibits an employer from enacting a dress code or grooming policy that may include restrictions on attire, clothing, or facial hair to maintain workplace safety or food sanitation.”  Moreover, employers may still prohibit attire, clothing and facial hair if failing to do so would result in an undue hardship to the employer’s business.

In essence, this amendment clarifies the scope of religious protections that exist under the IHRA.  Notably, the EEOC has taken the position that Title VII protects religious garb.

This post was written by Steven J Pearlman and Alex C Weinstein of  Proskauer Rose LLP.© 2017