Labor & Employment Archives - Page 75 of 155

The First 100 Days: The Trump Administration’s Impact on Labor and Employment Law Thus Far

Twenty-four executive orders, 13 signed Congressional Review Act resolutions, and one failed healthcare bill … political pundits and policy experts are no doubt tallying up these and other actions as we quickly approach April 29, 2017, which will mark the first 100 days of the Trump administration. While there has been some important activity in the labor and employment policy areas during these 100 days, many in the business community are still wondering what the Trump administration’s positions will be with respect to current labor and employment policy matters.

Indeed, while Trump has acted quickly and decisively in rolling back burdensome employment regulations like the “ blacklisting” and “Volks” rules, the same cannot be said about the speed with which he has appointed personnel to run important agencies like the National Labor Relations Board (NLRB or Board) and the U.S. Department of Labor (DOL). President Trump may even pass the 100-day marker without having a Secretary of Labor in place. Moreover, President Trump inherited two vacancies at the NLRB and had the ability to fill those seats immediately and begin the process of undoing eight years of mischief at the Board. Not only have these Board seats not been filled, but the president hasn’t even offered up nominees yet.

The failure to appoint individuals to these important posts has undoubtedly been a missed opportunity for President Trump. It also leaves employers wondering about the president’s commitment to undoing the heap of burdensome labor and employment regulations that have accumulated over the past eight years. How will the DOL handle the previous administration’s appeals of federal court injunctions of the overtime and persuader rules? How will the DOL’s fiduciary and silica rules be enforced, if at all? Will the NLRB’s amorphous joint employer standard continue? What impact will President Trump’s recent “Buy American and Hire American” executive order have on employers that rely on highly-skilled H-1B visa holders to meet their staffing needs? These are all questions that employers are asking.

Congress is back in session after a two-week hiatus from April 10–21, 2017. Their next extended break is not until August of 2017. At the 100-day marker, the employer community is hopeful that this will give both the administration and Congress ample time to begin making positive progress on a new labor and employment policy agenda.

ARTICLE BY James J. Plunkett of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Failure To Pay Minimum Wage Can Jeopardize Employment-Based Visa Petitions

Rudyard Kipling famously noted, “East is East, and West is West, and never the twain shall meet.” Many employers may feel that this quote aptly describes the relationship between immigration law and wage & hour law — certainly, it is not often that these two areas are discussed in the same article, let alone the same sentence. However, a recent U.S. Citizenship & Immigration Services (USCIS) policy memorandum illustrates a circumstance in which the government will take wage & hour considerations into account when addressing a visa petition.

The April 12, 2017 policy memorandum binds all USCIS personnel to follow the reasoning of the agency’s earlier Administrative Appeals Office (AAO) decision. In that AAO decision, the agency establishes policy guidance which clarifies that USCIS cannot approve an employment-based visa petition that is based on an illegal or otherwise invalid employment agreement. Specifically, before approving an employment-based visa petition, it must be established that the employment visa beneficiary will not be paid less than the state or federal hourly minimum wage. (Whichever has the highest minimum wage is the minimum to follow.)

The AAO decision involved a U.S. semiconductor manufacturing company’s petition, in which it sought to temporarily employ a “Failure Analysis Engineer” in Oregon under the L-1B nonimmigrant specialized knowledge classification for intracompany transferee employees. USCIS California Service Center had denied this petition, concluding that the evidence did not show that the beneficiary had specialized knowledge or would be employed in a capacity requiring specialized knowledge. However, the AAO decision identified an overreaching issue that it determined had to be dealt with prior to addressing the issue of specialized knowledge. Namely, the U.S. employer intended to pay the beneficiary less than the minimum hourly wage. The AAO decision made clear the agency’s position that under no circumstances is a U.S. employer allowed to pay an employment visa beneficiary below the highest applicable minimum state or federal hourly wage.

Through this AAO decision, USCIS employment visa adjudicators have been instructed to prevent a conflict with the Fair Labor Standards Act by ensuring that any prospective employment agreement between a U.S. employer and a foreign national worker allows for compensation that cannot be less than the higher government-required hourly wage, whether it be the state or federal minimum — only if that highest minimum hourly wage is met can USCIS approve a U.S. employer’s employment visa petition. As we have frequently discussed in these updates, there are many reasons that it is critical for employers to comply with wage and hour requirements. Employers now have another reason to ensure compliance with the FLSA and state minimum wage laws: the risk of jeopardizing employee visa status.

ARTICLE BY Roy J. Barquet of Foley & Lardner LLP

President Trump Signs New Executive Order: “Buy American and Hire American”

On April 18, 2017, President Donald Trump signed an Executive Order (EO) titled “Buy American and Hire American.” The stated purpose of this EO is to protect the American economy by having the U.S. government and agencies focus on purchasing goods made in America, and to also protect American workers. The first part of the EO includes text that focuses on conducting studies and putting forth plans for federal agencies to immediately maximize the use and procurement of materials and products made in the United States—or “Buy American.”

The second part of the EO includes text that focuses on “Hire American,” that is, reviewing current U.S. immigration laws, specifically as they relate to nonimmigrant visa categories. A summary of the second part of the EO is below:

Ensuring the Integrity of the Immigration System in Order to “Hire American”:

The Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security are tasked with proposing new rules and issuing new guidance with the intent of protecting U.S. workers and eliminating fraud or abuse.
In addition, the text of the EO directs that reforms should be focused on ensuring that H-1B status is only granted to those who are the “most-skilled” or the “highest-paid.”

This EO comes only a few weeks after various U.S. federal agencies tasked with administering immigration law issued guidance and decisions with the intent of preventing fraud and abuse in the immigration system, specifically the H-1B program. The United States Citizenship and Immigration Service, the Department of Justice, and the Department of Labor all released statements and/or policy with regard to the H-1B program. To see a summary regarding these statements and/or policies, please visit our previous post.

ARTICLE BY Kristen W. Ng of Greenberg Traurig, LLP

USCIS Announces FY 2018 H-1B Cap Lottery Completed and Total Filed Numbers

United States Citizenship and Immigration Services (USCIS) announced on April 17, 2017, that it had completed its annual H-1B lottery and had selected a sufficient number of H-1B petitions to meet the 65,000 petition bachelor’s degree cap and the 20,000 petition U.S. master’s degree cap. In total, USCIS received 199,000 petitions this year during the filing period that ran from April 3, 2017, until April 7, 2017. On April 11, 2017, the agency completed its random computerized lottery to select the cap petitions. The 20,000 U.S. master’s cap petitions were randomly selected first. All unselected U.S. master’s petitions plus the bachelor’s petitions were then pooled and subjected to the general lottery where 65,000 petitions were selected.

The 199,000 total H-1B petitions filed this year represents 37,000 fewer petitions than were received during last year’s filing period.

USCIS will now begin its process of formally receipting all the selected H-1B petitions, and will reject and return all unelected petitions including filing fees.

Please note that, as of April 3, 2017, USCIS temporarily suspended premium processing on all H-1B petitions, both cap and non-cap cases. Thus, all cases selected under the lottery will be processed under the regular processing timeline.

ARTICLE BY Andrew G. Drozdowski & Amy R. Dalal of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Department of State Releases May 2017 Visa Bulletin

Expect some retrogression in EB-1 and EB-2 cutoff dates in the coming months.

The US Department of State has released its May 2017 Visa Bulletin setting out per-country priority date cutoffs that regulate immigrant visa availability and the flow of status adjustments and consular immigrant visa application filings and approvals.

What Does the May 2017 Visa Bulletin Say?

The May 2017 Visa Bulletin includes both a Dates for Filing Visa Applications chart and an Application Final Action Dates chart. The former indicates when intending immigrants may file their applications for adjustments of status or immigrant visas, and the latter indicates when adjustment of status applications or immigrant visa applications may be approved and permanent residence granted.

If US Citizenship and Immigration Services (USCIS) determines that there are more immigrant visas available for a fiscal year than there are known applicants for such visas, it will state on its website that applicants may use the Dates for Filing Visa Applications chart. Otherwise, applicants should use the Application Final Action Dates chart to determine when they may file their adjustment of status applications.

It is not yet clear which chart USCIS will select for May 2017 filings. To be eligible to file an employment-based (EB) adjustment application in May 2017, a foreign national must have a priority date that is earlier than the date listed below for his or her preference category and country (changes from last month’s Visa Bulletin are shown in yellow).

Application Final Action Dates

EB	All Charge- ability Areas Except Those Listed	China (mainland born)	El Salvador, Guatemala, and Honduras	India	Mexico	Philippines
1^st	C	C	C	C	C	C
2nd	C	08FEB13 (was 15JAN13)	C	22JUN08	C	C
3^rd	15MAR17 (was 15FEB17)	01OCT14 (was 15AUG14)	15MAR17(was 15FEB17)	25MAR05 (was 24MAR05)	15MAR17(was 15FEB17)	01JAN13(was 15SEP12)
Other Workers	15MAR17 (was 15FEB17)	08MAR06 (was 01MAR06)	15MAR17 (was 15FEB17)	25MAR05 (was 24MAR05 )	15MAR17 (was 15FEB17)	01JAN13 (was 15SEP12)

Dates for Filing Visa Applications

EB	All Charge- ability Areas Except Those Listed	China (mainland born)	India	Mexico	Philippines
1st	C	C	C	C	C
2nd	C	01OCT13 (was 01MAR13)	01FEB09 (was 22APR09)	C	C
3rd	C	01SEP15 (was 01MAY14)	22APR06 (was 01JUL05)	C	01JUL14 (was 01SEP13)
Other Workers	C	01JUN08 (was 01AUG09)	22APR06 (was 01JUL05)	C	001JUL14 (was 01SEP13)

On the Application Final Action Dates chart, the cutoff dates for EB-1 will remain “current” for all chargeable countries, including India and China.

The EB-2 cutoff dates for the worldwide allotment as well as for El Salvador, Guatemala, Honduras, Mexico, and the Philippines will also remain “current.” Cutoff dates will advance by one month for EB-2 India and by three weeks for EB-2 China.

The EB-3 cutoff dates for the worldwide allotment as well as for El Salvador, Guatemala, Honduras, and Mexico will advance by one month to March 15, 2017. The cutoff date for EB-3 China will advance by six weeks to October 1, 2014 and the cutoff date for EB-3 India will advance by one day to March 25, 2005. The cutoff date for EB-3 Philippines will advance by three and a half months to January 1, 2013.

The EB-5 China cutoff date will advance by ten days to June 1, 2014.

On the Dates for Filing chart, the cutoff dates for EB-1 will remain “current” for all chargeable countries, including India and China.

The EB-2 cutoff dates for the worldwide allotment as well as for El Salvador, Guatemala, Honduras, Mexico, and the Philippines will also remain “current.” Cutoff dates for EB-2 China will advance by seven months to October 1, 2013. Cutoff dates for EB-2 India will retrogress by three months and three weeks, to February 1, 2009.

Cutoff dates for EB-3 China will advance by 16 months to September 1, 2015, but for “other workers” the cutoff dates will retrogress by 14 months, to June 1, 2008. Cutoff dates for EB-3 India will advance by nine months and three weeks, to April 22, 2006. Finally, cutoff dates for EB-3 Philippines will advance by ten months, to July 1, 2014.

The State Department projected that a Final Action date will be established in the EB-1 category for China and India in the near future. Visa numbers would advance slowly for the remainder of this fiscal year. Additionally, the EB-2 category for the worldwide allotment, El Salvador, Guatemala, Honduras, Mexico, and the Philippines is expected to retrogress no later than July. It is anticipated that this category will also become current at the start of the FY 2018 in October.

Read the May 2017 Visa Bulletin.

ARTICLE BYA. James Vázquez-Azpiri of Morgan, Lewis & Bockius LLP

What Employers Need to Know About Arizona’s New Paid Sick Time Requirements

In November 2016, Arizonans passed Proposition 206. This proposition, entitled the “Fair Wages and Healthy Families Act,” not only increased the state’s minimum wage, but also created new requirements regarding paid sick time in Arizona. This article details the changes regarding paid sick time and the steps employers should be taking before July 1, 2017.

Overview of the Paid Sick Time Requirements

Before the passage of Proposition 206, Arizona did not require employers to provide paid sick time to employees. However, Proposition 206 establishes new requirements regarding (1) paid sick time accrual, (2) permissible uses of paid sick time, (3) how to handle unused paid sick time, and (4) notice to employees regarding paid sick time. These requirements apply to private employers and political subdivisions of the state and become effective July 1, 2017.

Accrual. Under Proposition 206, employers must provide employees with paid sick time. Employees must accrue at least one hour of paid sick time per 30 hours worked. Employers with 15 or more employees must allow employees to accrue, and use, up to 40 hours of paid sick time per year. Employers with less than 15 employees must allow employees to accrue, and use, up to 24 hours of paid sick time per year.

Permissible Uses. Employers must allow employees to use paid sick time for the following purposes:

mental or physical illness;
care for a family member who has a mental or physical illness;
a public health emergency; and
to address issues related to domestic violence.

Employees do not need to provide prior notice to the employer if the leave is “not foreseeable” unless the employer has implemented a written policy setting forth how notice should be provided. If the leave is foreseeable, then employees must “make a good faith effort” to provide notice. If possible, employees must make a “reasonable effort” to avoid “unduly disrupting the operation of the employer” when scheduling paid sick time. Employers may not require an employee to find a replacement as a condition of using paid sick time, retaliate against an employee for use of paid sick time, or count paid sick time absences against an employee.

Unused Paid Sick Time. Proposition 206 provides employers two options regarding unused paid sick time. First, employers may allow unused paid sick time to carry over. If an employer allows paid sick time to carry over, employees are still only entitled to use the amount of time required by the statute unless the employer sets a higher limit. Second, if an employer does not allow for paid sick time to be carried over, then the employer must pay employees for unused paid sick time at the end of the year and provide the employee with an amount of paid sick time that is available for the employee’s immediate use at the beginning of the subsequent year. Employers are not required to pay out the unused paid sick time of employees who have been terminated, have resigned, or have retired, unless the employer has a policy or practice of doing so.

Notice to Employees. Proposition 206 requires employers to provide certain notices to employees. Among other things, employers must provide a summary of each employee’s paid sick time on or with each regular paycheck. The summary must include (1) the amount of earned paid sick time available for the employee, (2) the amount of earned paid sick time taken by the employee to date that year, and (3) the amount of pay the employee has received as earned paid sick time.

Next Steps for Employers

Employers should immediately take steps to ensure compliance with Arizona’s new law. To comply with this law, employers should consider taking the following steps.

Revise Policies. Employers should review current policies to determine whether they are adequate. Many existing policies, including “use it or lose it” policies or policies that do not permit accrual of paid sick time until an employee has been employed for a specified period of time, will not comply with the new law. If current policies are inadequate, employers and/or their legal counsel should revise existing policies or draft new policies to be implemented by July 1.
Provide Notice. Employers should become familiar with the notice requirements. Among other requirements, the Industrial Commission will require a new posting to accompany other required workplace posters.
Payroll and Recordkeeping Requirements. Employers should coordinate with their payroll companies or internal payroll personnel about how paid sick time will be tracked and reported, and be prepared for the additional recordkeeping requirements imposed by the law.

ARTICLE BY Andrea G. Lovell & Ellen Joy Glass of Ryley Carlock & Applewhite, A Professional Corporation

Puerto Rico Legislation May Require Changes to Retirement Plans

Puerto Rico enacted new legislation in February that will require changes to tax-qualified retirement plans covering Puerto Rico employees, including both Puerto Rico-only and dual-qualified (US and Puerto Rico) retirement plans. Act No. 9-2017 revises a number of Puerto Rico qualified retirement plan rules including contribution limits, rules related to nondiscrimination testing and employer deductions for retirement plan contributions. Questions remain about how and when to implement these changes, but the 2017 Act became effective immediate upon enactment, so plan sponsors should be prepared for the possibility of mid-year 2017 changes to their retirement plans.

In February, Puerto Rico enacted new legislation that will require changes to tax-qualified retirement plans covering Puerto Rico employees, including both Puerto Rico-only and dual-qualified (US and Puerto Rico) retirement plans. Act No. 9-2017 (the 2017 Act) revises a number of Puerto Rico qualified retirement plan rules including contribution limits, rules related to nondiscrimination testing and employer deductions for retirement plan contributions. Questions remain about how and when to implement these changes, but the 2017 Act became effective immediate upon enactment, so plan sponsors should be prepared for the possibility of mid-year 2017 changes to their retirement plans.

Retirement Plan Changes

Following are some of the significant amendments the 2017 Act makes to the requirements applicable to tax-qualified retirement plans under the Puerto Rico Internal Revenue Code of 2011 (the PR Code):

Contribution Limits for Defined Contribution Plans. The PR Code previously provided for an annual contribution limit tied to Section 415 of the US Internal Revenue Code of 1986, as amended (the US Code), which limits a participant’s annual allocations, including both employee and employer contributions, to the lesser of the annual limit for the year published by the IRS under U.S. Code section 415(c) ($54,000 for 2017) or 100 percent of the participant’s annual compensation. The 2017 Act replaces this limit with a new formula limiting total annual allocations (other than rollover contributions) on behalf of a participant to the lesser of $75,000 (which does not appear to have a cost of living adjustment), or 25 percent of Net Income (“Net Income” is not defined, so it is not clear what types of income are included).
Definition of Highly Compensated Employees. Prior to the 2017 Act, the PR Code’s definition of highly compensated employees included officers, shareholders holding more than 5 percent of the voting shares or total value of all classes of employer stock as well as employees with compensation from the employer in excess of $110,000 (or, for dual-qualified plans, the dollar amount under US Code Section 414(q)(1)(b)). The 2017 Act (1) removes officers from the definition of highly compensated employee, (2) expands the 5 percent ownership rule to include ownership of the capital or interest in the gains of an employer that is not a corporation, and (3) revises the compensation threshold to $150,000 (which does not appear to be subject to a cost of living adjustment). The new definition of highly compensated employees applies to both Puerto Rico-only and dual-qualified retirement plans, which means that dual-qualified plans are no longer permitted to use the applicable dollar threshold under US Code Section 414.
Small Employer ADP Safe Harbor. The 2017 Act implements a new type of average deferral percentage (ADP) safe harbor, which exempts eligible plans from the requirement to satisfy the usual ADP nondiscrimination rules. Certain employers whose businesses generate less than $10 million per year in gross income, and who sponsor defined contribution retirement plans with fewer than 100 participants, may be exempt from ADP nondiscrimination testing if the plan sponsor provides all eligible participating employees with a contribution equal to at least 3 percent of their compensation. It is not clear how “businesses” or “gross income” are defined for purposes of evaluating eligibility for the safe harbor; more guidance is needed before plan sponsors should implement this safe harbor arrangement.
Employer Deductions for Retirement Plan Contributions: Prior to the 2017 Act, the PR Code provided that the maximum deduction for employer contributions to a defined contribution plan could not exceed 25 percent of the compensation paid or accrued to all employees under the plan during the applicable tax year (similar to the rules under US Code Section 404(a)). The 2017 Act retains this 25 percent limit, but also provides that, notwithstanding such limit, all contributions that do not exceed the amended annual contribution limit (described above) are deductible.

The 2017 Act also adds a new chapter to the Puerto Rico Trust Act titled “Retirement Plan Trusts,” which clarifies the rules regarding beneficiaries under retirement plans. Plans qualified in Puerto Rico that are subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA), must provide that the beneficiary of a married participant is the participant’s spouse, and the participant can only designate a non-spouse beneficiary with spousal consent (which is similar to the rules applicable to US qualified retirement plans). In addition, the 2017 Act clarifies that all assets belonging to a retirement plan trust will be exempt from the estate and inheritance provisions of the Puerto Rico Civil Code, and their disposition will be determined under the terms of the documents governing the retirement plan trust. This is a helpful clarification for plan sponsors who previously were concerned about reconciling the ERISA rules with the Puerto Rico Civil Code rules.

Next Steps for Plan Sponsors

The 2017 Act states that its intent is to increase the flexibility of retirement plans and make their establishment and administration less onerous on plan sponsors. For now, however, the 2017 Act raises a number of questions and adds potential complications for plan sponsors to administer their plans. Specifically:

It is not clear how and when the new rules will apply. Since the 2017 Act became effective when it was signed on February 8, 2017, do plan sponsors need to ensure they comply with the new contribution limits in 2017? If so, how do plan sponsors determine what constitutes an employee’s “Net Income”? In addition, do plan sponsors need to amend their plans in 2017 to reflect the revised definitions of highly compensated employees and new annual contribution limits? More guidance is needed to understand how the contribution limit will be measured and how the nondiscrimination rules incorporating the new highly compensated employee definition will apply.
Will eligible plan sponsors want to use the new ADP safe harbor? Unlike the US Code, the PR Code did not previously provide a safe harbor exempting eligible plans from ADP nondiscrimination rules. More guidance is needed to determine how “businesses” or “gross income” are defined for purposes of evaluating eligibility for the safe harbor.

We expect to see guidance and further clarification on these issues from the Puerto Rico Treasury Department. For now, plan sponsors should wait for additional guidance. However, since the 2017 Act is effective immediately, plan sponsors should be prepared to consider action in 2017, both with respect to plan administration and the adoption of plan amendments. Further, since the changes to be implemented make significant changes to the rules impacting Puerto Rico employees, plan sponsors should expect that the amendments will be qualification amendments, which will likely require plan sponsors to seek updated qualification letters from the Puerto Rico Treasury.

ARTICLE BY Nancy S. Gerrie, Jeffrey M. Holdvogt & Maggie McTigue of McDermott Will & Emery

Encrypted Messaging Apps Create New Data Privacy Headaches for Employers

Businesses have largely benefitted from the proliferation of mobile devices and text messaging apps that facilitate quick, round-the-clock communications. However, such technologies also make it increasingly difficult to monitor and control the unauthorized distribution of confidential data. On March 30, UK regulators fined a former managing director of Jeffries Group for divulging confidential client information. The banker, Christopher Niehaus, shared confidential information with two friends using WhatsApp, a popular text messaging app. The exposed information included the identity of a Jeffries Group client, the details of a deal involving the client, and the bank’s fee for the transaction. Perhaps the most surprising aspect of this story is that the leak was discovered at all. Because data sent on WhatsApp are encrypted and Mr. Niehaus used his personal mobile phone to send the messages, Jeffries Group only viewed the communications—and subsequently informed regulators—after Mr. Niehaus turned his device over to the bank in connection with an unrelated investigation.

Many employers use tools to monitor data sent to and from company-owned devices and e-mail accounts. However, companies cannot read messages delivered on programs offering end-to-end encryption, like WhatsApp or Apple’s iMessage, even if the information is sent on a company-owned device or network. Therefore, policies and tools intended to protect confidential information can be circumvented by employees using common texting apps. These technologies, which are typically free and easy to obtain, are causing headaches for employers across the country. For instance, recent media reports suggested that employees at the Environmental Protection Agency used Signal, an encrypted texting app, to surreptitiously strategize to undermine the current administration. According to other reports, White House press secretary Sean Spicer suspected his aides of using encrypted texting apps to leak information to the media.

Companies utilizing “bring your own device” practices face even greater risks. Even though end-to-end encryption may safeguard data from hackers, confidential information is often exposed when a device is lost or stolen. In fact, more data breaches are caused by lost devices and employee errors than third-party attacks. Employers can crack down on unauthorized communications by taking steps like disabling the installation of third-party texting apps on mobile devices. However, such measures may be extremely unpopular with employees who use their phones and tablets for both work-related and personal communications.

Given the growing popularity of encrypted texting apps, employers need to accept that they are not able to monitor each and every one of their employees’ electronic communications. Businesses should not over rely on data monitoring tools to secure sensitive information. Instead, it is more important than ever to enact and enforce up-to-date confidentiality policies. Employees may not understand that workplace confidentiality policies extend to communications on personal devices. Employees should be reminded to treat text messages like public in-person conversations and refrain from discussing confidential information on text message apps—even when conversing with clients or business associates. Employees should also be informed of the extensive damage a data breach can cause. Additionally, while employees may prefer using encrypted texting apps like WhatsApp and iMessage, businesses should consider offering internal messaging programs and encouraging their use for all work-related communications. Now more than ever, training employees to maintain confidentiality and make smart decisions is the most effective method of preventing leaks.

Tip Credit Does Not Apply to Delivery Drivers Declares Connecticut Supreme Court

In a decision released on April 4, 2017, the Connecticut Supreme Court found that employers cannot take advantage of a “tip credit” for delivery drivers in order to meet the state minimum wage.

The case, Amaral Brothers, Inc. v. Department of Labor, addressed the issue of whether delivery drivers (in this case, drivers for a pizza chain) fall within the scope of employees who are eligible for a “tip credit.” Under Conn. Gen. Stat. § 31-60(b), a tip credit may be taken for “persons, other than bartenders, who are employed in the hotel and restaurant industry . . . who customarily and regularly receive gratuities.”

A tip credit allows businesses—namely, hotels and restaurants—to pay “service employees” salaries below the state minimum wage. This is because employees in some positions, on account of their service to customers, normally receive gratuities in addition to their base wages, making up any difference between their salaries and the minimum wage rate. Specifically, a “service employee” has been defined as “any employee whose duties relate solely to the serving of food and/or beverages to patrons seated at tables or booths, and to the performance of duties incidental to such service, and who customarily receive gratuities.”

The Connecticut Department of Labor (CT DOL), the agency responsible for enforcing the minimum wage requirement, determined that delivery drivers were not tip-credit eligible, primarily because it found their “service” was limited to passing food to customers at their door. The CT DOL rejected the plaintiff’s argument that a driver transporting pizza to a customer’s home in a car is comparable to a waiter carrying food to a customer at a table.

Upon appeal by the pizza restauranteur, the Connecticut Supreme Court affirmed that delivery drivers do not fall within the scope of the tip credit. The court held that it was “reasonable for the department to conclude that the legislature did not intend that employees such as delivery drivers, who have the potential to earn gratuities during only a small portion of their workday, would be subject to a reduction in their minimum wage with respect to time spent traveling to a customer’s home and other duties for which they do not earn gratuities.”

With this ruling by the Supreme Court affirming the position of the CT DOL, it can be expected that the agency will pay close attention to how delivery drivers are paid in Connecticut. Accordingly, those in the restaurant and hotel industries should take time to review how their delivery drivers are paid. In addition, if waitstaff are also utilized as delivery drivers, it is best practice to break out the time spent on each of those duties if the tip credit is being utilized, so as to have adequate records if challenged.

ARTICLE BY Ashley Totorica of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

USCIS Issues Guidance on H-1B Petition Adjudication, Announces ‘Targeted’ Site Visits

USCIS issued a policy memorandum to increase scrutiny of H-1B petitions for computer-related positions and an announcement regarding increased H-1B employer site visits—what will these changes mean for foreign worker visa programs?

In a policy memorandum dated March 31, United States Citizenship and Immigration Services (USCIS) announced that it is formally rescinding the 2000 Immigration and Naturalization Guidance Memo on H-1B Computer Related Positions issued to Nebraska Service Center employees adjudicating H-1B petitions. USCIS considers the 2000 memo to adopt an “obsolete” view of the types of computer-related occupations that qualify as specialty occupations for H-1B purposes (based on the memo’s inaccurate reading of the Occupational Outlook Handbook) and also to not “properly” apply the regulatory criteria that govern qualification for H-1B status. Specifically, the policy memorandum calls attention to the fact that the rescinded memo, while observing that “most” computer programmers hold bachelor’s degrees, did not note in which “specific specialties” such degrees were held. The rescinded memo is also criticized for not mentioning that only “some” computer programmers hold degrees in computer science or information systems, and for inaccurately presenting the fact that some jobs held by computer programmers require only two-year or associate’s degrees. The memo is further criticized for not clarifying that entry-level computer programmers will generally not qualify for H-1B status. Thus, the policy memorandum concludes that an H-1B petitioner cannot rely on the Occupational Outlook Handbook to establish that a computer programmer position is a specialty occupation and that “other evidence” must be provided to establish the specialty occupation.

Several immigration lawyer groups have raised concerns that this new policy memorandum may constitute a first step by the Department of Homeland Security (DHS) to carry out the previously announced intentions of the presidential administration to make foreign worker visa eligibility more restrictive. The new memorandum, by withdrawing a little-known memo, may well make it more difficult for H-1B petitions filed for persons working in computer-related positions to be approved. Its practical effect is that companies in the IT industry seeking H-1B status for their employees will likely have to prove that the positions at issue are not entry-level computer programming positions and that the employees’ degrees and education are specifically related to such positions. Extensive Requests for Evidence (RFEs) seeking such proof are expected to become commonplace, as are denials for failure to offer such proof. As an indication of the scrutiny and limited focus that H-1B petitions for persons working in computer-related positions are now receiving, apparently a number of RFEs questioning the relevance of a degree in electrical engineering to a computer engineer position have been issued recently.

Since the policy memorandum took effect immediately, all H-1B petitions subject to the 2018 fiscal cap will be adjudicated under its provisions, even though no advance notice of its publication was provided.

USCIS Announces ‘More Targeted’ H-1B Site Visits

In a separate announcement issued April 4, USCIS stated that, effective immediately, it will embark upon a “more targeted” campaign of site visits to the worksites where H-1B beneficiaries are employed. Such site visits have been conducted by officers of the USCIS Office of Fraud Detection and National Security since 2009. Under the new initiative, H-1B site visits will focus on three categories of employers:

H-1B dependent employers (generally, employers with 51 or more employees with at least 15% of their workforce composed of H-1B beneficiaries)

Employers filing petitions for employees who will be assigned to work at the worksites of different companies

Employers whose business information cannot be verified through commercially available data (including, primarily, the Validation Instrument for Business Enterprises (VIBE) tool, which is based on a Dun & Bradstreet database

In addition, the announcement notes that “random” site visits will continue to occur.

The practical effect of this announcement may be that site visits to the workplaces of employers that do not fall into one of these categories will diminish, while site visits to employers that do fall into one of these categories will spike sharply and possibly be all but certain. All employers of H-1B beneficiaries are encouraged to adequately prepare for such site visits by ensuring that

information contained in H-1B petitions is at all times accurate and up to date, and

thorough site visit protocols that govern in detail how such visits will be handled are in place.

The announcement notes that the targeted site visit program is intended to identify employers engaging in fraud and abuse of the H-1B category, not to punish individual H-1B employees. To serve this purpose, USCIS has established an email address, reportH1Babuse@uscis.dhs.gov, that will allow both American and H-1B workers to notify the agency, presumably anonymously, of instances of such fraud and abuse.

What Do These Changes Mean?

On January 24, 2017, a draft executive order titled “Executive Order on Protecting American Jobs and Workers by Strengthening the Integrity of Foreign Worker Visa Programs” was publicly circulated. This draft executive order essentially mandates a top-to-bottom review of all foreign worker visa programs to make certain that such programs are not administered in a way that creates a disadvantage to US workers. Although the order has not been finalized to date, it would appear that the presidential administration has started the process of reviewing certain visa classifications, and it is likely that DHS will issue further guidance on other visa classifications in the near future.

ARTICLE BY A. James Vázquez-Azpiri of Morgan, Lewis & Bockius LLP

Category: Labor & Employment

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