Tag: Labor Law

Employment Law – What’s in Store for 2011?

Melvin J. Muskovitz of Dykema Gossett, PLLC is a featured guest blogger this week at the National Law Review. Three pending Supreme Court decisions are discussed along with their potential impact for employers:  

Many employers faced challenges in 2010 related to the economy.  These challenges often involved personnel issues, including workforce reductions.  With unemployment still a serious problem heading into 2011, terminated employees are less likely to  find new employment opportunities and may be more inclined to claim they were terminated for illegal reasons.  This  article looks at three decisions the Supreme Court will be addressing this year that involve wrongful discharge claims.  Regardless of the outcome, these cases underscore the importance of  carefully considering all adverse employment decisions.

Additionally, this article will briefly address the new regulations and a step employers can take to protect themselves against violations of the Genetic Information Nondiscrimination Act  (GINA).

Supreme Court Decisions on the Horizon

Oral complaints – are they protected under the FLSA’s anti-retaliation provision?

The Fair Labor Standards Act (FLSA), which provides minimum wage and overtime protections to employees, also provides protection from retaliation against employees who file a complaint  alleging FLSA violations.  In Kasten v. Saint-Gobain Performance Plastics Corp, the Supreme Court will decide if an oral complaint satisfies the FLSA provision that protects employees  against retaliation because the employee “has filed any complaint.”   Kevin Kasten worked for Saint-Goban Performance Plastics and was required to use a time card to swipe in and out of an on-site time clock.  Kasten was disciplined on four separate occasions for violations of the time card policy.  Discipline for the infractions was progressive and eventually resulted in  his termination.  Kasten alleges that before the third infraction and thereafter, he verbally complained to his supervisor and Human Resource personnel that the location of the time clock was illegal.  He claims that he was terminated in retaliation for his verbal complaints that the location of the time clock violated the FLSA.

The lower courts are split on the issue of whether an oral complaint satisfies the “has filed any complaint” threshold.  The Supreme Court will resolve this discrepancy between the various federal circuits.

Retaliation against a third party – is it protected?

Title VII, which prohibits discrimination based upon protectedcharacteristics (sex, race, etc.), also prohibits retaliation against an employee who “has made a charge,  testified, assisted, or participated in any manner in an investigation, proceeding, or hearing.”  In Thompson v North American Stainless, the Supreme Court will decide if a third party to the charge is also protected from retaliation. Eric Thompson worked for North American Stainless as a metallurgical engineer.  He was engaged to a co-worker.  The co-worker/fiancée filed a complaint with the EEOC alleging that she was discriminated against because of her  gender.  Three weeks after the EEOC notified North American of the complaint, Thompson was terminated.  He alleges that he was terminated in retaliation for his fiancée’s EEOC charge.

The 6th  Circuit Court of Appeals (which includes Michigan) ruled for the employer, stating that the anti-retaliation provision is  “limited to persons who have personally engaged in protected activity.”  The Supreme Court will decide whether to uphold that decision or whether to extend anti-retaliation protections to third parties who did not personally engage in protected activities.

Influence over decision maker – when does it become illegal?

The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects employees from discrimination based upon their military service.  In Staub v Proctor Hospital,  the Supreme Court will decide under what circumstances an employer may be held liable based upon the discriminatory bias of someone who influenced the ultimate decision maker, but who did not make the employment decision at issue.

Vincent Staub worked for Proctor Hospital as an angiopraphy technologist.  He was also an army reservist and therefore was unavailable for work one weekend a month and for two weeks during the summer.  One of his supervisors, the second in command in Staub’s department and the person responsible for preparing the work schedules, frequently expressed anti-military bias and  was openly displeased about having to accommodate Staub’s schedule.  Staub was disciplined by  the supervisor for reasons unrelated to his military service and he was ultimately terminated  based upon that discipline.  While the decision to terminate Staub was made by Human  Resources, Staub alleged that the decision was actually the result of the supervisor’s anti-military  bias.

A jury found in favor of Staub, a decision that was overturned by the 7th  Circuit Court of  Appeals.  The Supreme Court has agreed to decide under what conditions an employer can be held liable for the bias of a person who influenced or caused an adverse employment action – but  who did not actually make the decision.  A ruling in favor of the employee could have far  reaching implications for employers as the rationale would likely apply to other statutes that  prohibit discrimination.

Genetic Information Nondiscrimination Act (GINA) Regulations

On November 9, 2010, the Department of Labor issued the final regulations that interpret and  implement GINA.  The regulations take effect on January 10, 2011.  GINA, which went into  effect on November 21, 2009 and applies to employers with 15 or more employees,  prohibits the  use of genetic information in making employment decisions, restricts acquisition of genetic information by employers, and strictly limits the disclosure of genetic information.  Genetic nformation includes (1) an individual’s genetic tests,  (2) genetic tests of family members, (3)  family medical history, (4) genetic services and/or (5) genetic information of a fetus carried by  an individual or a family member.  While the use and disclosure of genetic information is under  the control of the employer, situations may  arise where an employer inadvertently acquires genetic information about an employee.  For example, an FMLA health certification from a  healthcare provider may inadvertently provide the employer with genetic information about the  employee.  The final regulations acknowledge this dilemma and provide a “safe harbor” for employers who inadvertently acquire such information.    In order for the acquisition of genetic information to be considered inadvertent, the employer must direct the individual or healthcare provider from whom it is requesting medical information not to provide genetic information.  The final  regulations provide a sample notice that an employer can use to satisfy the requirement. The final regulations can be found at  http://www.gpo.gov/fdsys/pkg/FR-2010-11-09/pdf/2010-28011.pdf and the sample notice can be found at section 1635.8(b)(1)(i)(B).

Bottom Line

Employees suffering adverse employment consequences are finding creative ways of expanding  their protections.  Employers should exercise due diligence in all employment decisions

© 2011 Dykema Gossett PLLC.

Sunshine (State) Surprise – Florida's New E-Verify Requirement

From recent featured guest blogger at the National Law Review, Dawn M. Lurie and Kevin Lashus of Greenberg Traurig provide some needed details on Florida’s new E-Verify Requirement: 

Governor Rick Scott wasted no time in making the state of Florida the 14th the nation to have a mandatory E-Verify requirement. Only minutes after being sworn in, the governor signed his second executive order of the day—the first created the Office of Fiscal Accountability and Regulatory Reform to review regulations in the Sunshine State. Scott had touted ideas about mandating E-Verify during his heated primary fight with former Attorney General Bill McCollum but the magnitude of the actual order caught many by surprise.

Executive Order No. 11-02 requires:

1) All agencies under the direction of the governor to verify the employment eligibility of ALL current and prospective agency employees through the U.S. Department of Homeland Security’s E-Verify system;

2) All agencies under the direction of the governor to include, as a condition of all state contracts, an express requirement that contractors utilize the U.S. Department of Homeland Security’s E-Verify system to verify the employment eligibility of:

a) all persons employed during the contract term by the contractor to perform employment duties within Florida; and b) all persons (including subcontractors) assigned by the contractor to perform work pursuant to the contract with the state agency.

b) all persons (including subcontractors) assigned by the contractor to perform work pursuant to the contract with the state agency.

3) Agencies not under the direction of the governor are encouraged to verify the employment eligibility of their current and prospective employees utilizing the E-Verify system, and to require contractors to utilize the E-Verify system to verify the employment eligibility of their employees and subcontractors.

E-Verify is web-based, voluntary program that compares an employee’s Form I-9 information with the Social Security Administration and Department of Homeland Security databases. E-Verify is considered a best practice by the government in terms of immigration compliance, has recently been upgraded to include a photo-matching component for U.S. passports, and will soon debut a driver’s license pilot program. In September of 2009, Congress required that all federal contractors and their subs use E-Verify for new employees (new hires) and all existing employees assigned to a federal contract. This was the only instance where E-Verify was authorized to use to verify a current workforce—until now. Scott’s Executive Order requiring re-verification of current and prospective employees transcends what is legally allowed under current federal law, and is therefore likely to face an immediate court challenge. Prospective employees? Lawyers over at the Office of Special Counsel for Immigration-Related Unfair Employment Practices (the part of the Department of Justice that enforces the antidiscrimination provisions of the Immigration and Nationality Act) are likely reeling from the breadth of the Order. And, the Verification Division at USCIS—the agency responsible for running the E-Verify program—may also be scramblingto determine whether to help Floridian employers implement compliance practices under these terms. As proposed, this represents a third typeof E-Verify for them to administer: normal, FAR-impacted and Florida. It is unclear who will be responsible to pay for development of the application on these terms. How might it work? Does this harken back to the Arizona question again—can the state trump the federal government on immigration requirements?

Ironically, Rhode Island Governor Lincoln Chafee rescinded Rhode Island Executive Order 08-01 that required the state, as well as contractors and vendors doing business with Rhode Island, to register and use E-Verify for all new hires. Chafee called the use of E-Verify a “divisive issue.”

Regardless of the future, Florida’s state agencies now need to be aware of the E-Verify process and should—like all other employers participating in E-Verify—undergo a comprehensive I-9 training, conducted by competent counsel, so that each of the designated E-Verify specialists may become experienced in the intricacies of employment eligibility verification. The verification process has become increasingly complex. Florida’s governor just complicated E-Verify even more. Any missteps by employees charged with verification compliance could be deadly. Employers must recognize that even the most well-intentioned individuals could attract both civil and criminal liability, not only upon themselves, but also upon their employers for failing to follow the verification process accurately and completely.

©2011 Greenberg Traurig, LLP. All rights reserved.

The Crackdown on Employment of Illegal Immigrants Spreads to California

Featured Guest Bloggers this week at the National Law Review are from Greenberg Traurig LLP.  Mahsa Aliaskari and Matthew B. Hayes have written one of the most  comprehensive articles we’ve  come accross reagrding E-Verify – especially as it applies in California.  

Murrieta and Temecula Join Growing List of Southern California Cities Requiring Employers to Use E-Verify

In 2007, Arizona became the first state to pass legislation requiring employers to use the voluntary E-Verify1 program to confirm the employment eligibility of new hires. Since then, Arizona has been the focal point for publicity and legal challenges on attempts by states and localities to crack down on the employment of illegal immigrants. However, Arizona is not the only place where we are seeing state and local action.

Behind the scenes, several Southern California cities have quietly followed Arizona’s lead enacting similar laws mandating use of E-Verify. On July 13, 2010, Temecula joined the growing list of Southern California cities requiring employers to use E-Verify as a condition for maintaining a business license, and on December 20, 2010, Murrieta’s city council moved forward with its plans to institute a similar ordinance. While the State of California has not jumped on the bandwagon, many of its localities are taking action and increasing the burden on companies doing business not only across state lines but across city and county lines.

Given the expansion of immigration laws at the state and local level, it is imperative that employers keep abreast of developments in this area and ensure that their hiring practices are legally compliant in each of the locations they employ workers.

The Trend Toward Making Use of E-Verify Mandatory

The growing trend of states and localities enacting their own legislation to police immigration related-activity has its roots in frustration over the federal government’s inability to effectively address illegal immigration and enact comprehensive immigration reform. While the frustration may be justified, the federal government did not make use of E-Verify mandatory for many reasons. A January of 2010 report2 conducted by Westat researchers found that E-Verify is not immune from identity theft. According to the report 4.1% of those passing E-Verify are not truly authorized workers. More specifically, 54% of unauthorized workers who were run through E-Verify were inaccurately identified as workauthorized. The findings appear to support claims of various groups that have criticized EVerify as being particularly vulnerable to identity theft and fraud. In addition, while improving, there continues to be false positives — while the rate is low there are still U.S. citizens and workauthorized foreign nationals who are denied employment through E-Verify.

What is more alarming though is the opportunity for intentional or unintentional abuse and misuse of E-Verify by employers who violate program rules. There have been reports of employers restricting work assignments, delaying job training, reducing pay or simply not hiring non-U.S. citizens based on database errors. In March of 2010, USCIS posted a fact sheet outlining its agreement and plans to share information with the Office of Special Council3 (OSC) at the Department of Justice. The fact sheet notes that the purpose of the Memorandum of Agreement (MOA) “is to establish a streamlined process for referring E-Verify matters falling within the other’s jurisdiction. OSC will receive referrals of potential discrimination that come to USCIS; in turn, USCIS will receive from OSC referrals of potential employer misuse of E-Verify that does not fall within DOJ’s enforcement arena.” Potential misuse of the program is cause for concern for all employers and a discrimination suit waiting in the shadows for employers who are not well versed in the proper use of the program. These problems and pitfalls should serve as a warning to states and localities considering and instituting E-Verify mandates.

Regardless of the federal government’s reasons for not mandating the use of the program, many states and localities continue to march forward with their own E-Verify requirements. Employers failing to comply with these E-Verify laws can face substantial penalties, including monetary fines, preclusion from contracting with federal, state and local governments, and suspension or revocation of their business licenses.

While Arizona has been at the forefront of this trend since enacting the Legal Arizona Workers Act, which went into effect on January 1, 2008,4 Arizona simply paved the way for others. Several other states have since passed or adopted similar legislation. For instance, in 2008 Mississippi passed legislation requiring that all private employers participate in E-Verify, with a phase-in period beginning in 2008 and full participation by 2011. On March 31, 2010, Utah adopted the Private Employer Verification Act that requires employers with 15 or more employees to use E-Verify or another verification system approved by the Department of Homeland Security to confirm the employment eligibility of hew hires. The South Carolina Illegal Immigration Reform Act, passed in 2008, requires all employers to use E-Verify to confirm the eligibility of new hires, or in the alternative, hire only workers who possess or qualify to obtain a South Carolina driver’s license or identification card. The South Carolina law goes even further by authorizing the state to scrutinize a businesses’ hiring records and cite or fine employers found to have unauthorized workers on their payrolls.

California Localities Join in With Their Own E-Verify Mandates

Currently, California does not have any statewide laws mandating the use of E-Verify. However, in the last few years, several cities in Southern California passed local ordinances requiring the use of E-Verify for some or all businesses. These cities and their respective E-Verify requirements include:

  • Mission Viejo: Effective July 1, 2007, the city and employers with city contracts must verify the eligibility of new employees through E-Verify.
  • Palmdale: Effective July 1, 2008, to be eligible for contracts with the city exceeding $50,000, a contractor must be enrolled in E-Verify.
  • Lancaster: Effective December 31, 2009, all employers in the city must use E-Verify to confirm eligibility of new hires. Failure to comply with this requirement can result in business license suspension.
  • Temecula: Effective January 1, 2011, all employers in the city must use E-Verify to confirm the eligibility of new hires as a condition of receiving or maintaining a business license.
  • Murrieta: The City Council is expected to approve an ordinance mandating that all locally operated enterprises use E-Verify. Code enforcement officers would have authority to confirm compliance with EVerify. Enforcement tools will include fines and license revocation.

Constitutional Challenge to State and Local Laws Requiring Use of E-Verify

The constitutionality of state and local governments requiring employers to use E-Verify to confirm employment eligibility is presently unresolved. On December 8, 2010, the United States Supreme Court heard arguments on Chamber of Commerce v. Candelaria, No. 09-115. The Supreme Court’s decision is expected in Spring 2011 and will likely determine the fate of similar laws recently enacted throughout several Southern California cities. The lawsuit challenges the constitutionality of the Legal Arizona Workers Act (LAWA).

Arizona’s law increased the level of state action by taking advantage of an exception to the preemption clause of the Immigration Reform & Control Act of 1986 (IRCA) relating to licensing laws. The law’s bold move in authorizing Arizona state courts to suspend or revoke business licenses provides the state with an enforcement mechanism not used previously. One of the primary issues in that case is whether the preemption clause applies and if state and local governments — as opposed to only the federal government — can require participation in the E-Verify program. Those challenging Arizona’s E-Verify requirement argue that immigration related legislation falls within the purview of the federal government, consequently laws like that enacted in Arizona conflict with, and are therefore preempted by, federal laws. In this instance referring to federal laws which contemplate that, except in limited circumstances, the use of E-Verify by employers would be voluntary. Prior to the Supreme Court granting review of the case, the Ninth Circuit upheld Arizona’s legislation, finding that it was not preempted by federal law. In light of the decision and arguments upholding the LAWA, it will be interesting to see the outcome of the pending Supreme Court case.

What These Developments Mean for California Employers

Pending the Supreme Court’s decision on the Arizona law, the number of state and local governments enacting laws mandating use of E-Verify is expected to continue and increase. In light of the evolving nature of immigration compliance and the intricacies of E-Verify and the Memorandum of Understanding that employers must agree to and sign when enrolling in E-Verify, it is critical that employers remain apprised of relevant developments, understand the E-Verify laws applicable in each state and city where they employ workers, and ensure their hiring practices are legally compliant. If your company has not yet enrolled in E-Verify and it is being considered either because of legal mandate or as a best practice, it is critical that an internal review of the existing workforce and Form I-9s be conducted first and with experienced counsel. The “culture of compliance” is the theme of the Obama administration and it is spreading to cities and states across the nation. A few proactive steps will go a long way in limiting liabilities and exposure.

Resources

Promoting a Culture of Compliance — Best Practices for your Business

  • Establish a comprehensive immigration compliance policy
  • Conduct in-house audits of Form I-9 documents and company policies, as well as E-Verify if applicable
  • Establish policies, protocols and training for employment verification
  • Diligently verify the identity of job applicants to ensure that they “are who they say they are”
  • Consider use of E-Verify after consultation with experienced immigration compliance counsel
  • Establish protocols for addressing Social Security No-Match letters
  • Establish and maintain safeguards against the use of the I-9 process for unlawful discrimination
  • Create a protocol for immigration compliance related to contractors and subcontractors

ICE utilizes various tools to target employers, particularly those involved with vital infrastructure and national security, as well as the usual suspects – unofficially “targeted” industries – food service, textile, meat/poultry plants and constructions. Employers must take steps now to ensure full compliance or face serious consequences. Actions taken before a government-initiated audit or investigation generally help mitigate damages, reduce exposure and save the company both time and money in the long-run.

1 E-Verify is an Internet-based system operated by the Department of Homeland Security in partnership with the Social Security Administration. Its purpose is to enable participating employers to electronically verify the employment eligibility of their workforce. Under the system, employers fill out an online form with the information provided by new hires on the Employment Eligibility Verification Form (commonly referred to as the I-9 Form). That information is then cross-referenced with an assortment of government databases to confirm the worker’s employment eligibility.

2 The evaluation was conducted by Westat, a Rockville, Maryland-based social science research firm under contract to U.S. Citizenship and Immigration Services (USCIS). The evaluation was managed by the USCIS Office of Policy and Strategy, independent of the E-Verify program office, which is run by the USCIS Verification Division.

3 OSC is responsible for enforcing the anti-discrimination provisions of the INA. The antidiscrimination provisions include violations involving: (1) citizenship status discrimination, (2) national origin discrimination, (3) unfair documentary practices during the employment eligibility verification process (document abuse) and (4) retaliation.

4 That legislation requires all employers in Arizona to use E-Verify to confirm the employment eligibility of new hires. It penalizes employers who knowingly or intentionally hire illegal immigrants by suspending or revoking their business licenses.

©2011 Greenberg Traurig, LLP. All rights reserved.

 

 

Agencies Issue Additional FAQs on Health Care Reform and the Mental Health Parity Act

Recent featured guest blogger at the National Law Review Penny C. Wolford of Ford & Harrison LLP – brings to our attend the recent actions by Departments of Health and Human Services, Labor and Treasury regarding the implementation of the the Patient Protection and Affordable Care Act (“health care reform”) and the Mental Health Parity and Addiction Equity Act.  Of most note to employers is: 

Right before the holidays, the Departments of Health and Human Services, Labor and Treasury issued additional Frequently Asked Questions (FAQs) regarding implementation of the Patient Protection and Affordable Care Act (“health care reform”) and the Mental Health Parity and Addiction Equity Act. The guidance of most note to employers is as follows:

1. Automatic Enrollment in Health Plans: The agencies clarified that the automatic enrollment requirement of health care reform does not become effective until the agencies issue regulations on the requirement. The Department of Labor indicated that it intends to issue regulations on the automatic enrollment requirement sometime before 2014.

2. 60-Day Prior Notice Requirement for Material Modifications: Health care reform requires group health plans to provide notice of modifications to participants no later than 60 daysprior to the date on which the modification becomes effective. The agencies clarified that group health plans are not required to comply with the 60-day advance notice requirement until standards for the requirement are issued by the agencies.

3. Dependent Coverage of Children to Age 26: Health care reform prohibits group health plans from making distinctions based upon age in dependent coverage. (For example, charging a higher premium for adult children than for minor children would be a prohibited distinction.) The agencies clarified that health care reform does not prohibit distinctions based upon age that apply to all coverage under the plan. Therefore, in answer to the specific question posed in the FAQs, the agencies determined that it is permissible for a group health plan that normally charges a co-payment for physician visits that do not constitute preventive services, to charge a co-payment to individuals age 19 and over, including employees, spouses, and dependent children but waive the requirements for those under age 19.

4. Grandfathered Health Plans: The agencies clarified that a fixed amount cost-sharing, other than a co-payment, that is based on a percentage-of-compensation formula, will not cause a plan to lose grandfathered plan status as long as the formula remains the same as that which was in effect on March 23, 2010, even though the actual cost-sharing may change as a result of a change in the employee’s compensation.

5. Mental Health Parity Act: The agencies issued several answers to questions on the Mental Health Parity Act, including: (a) confirming that a small employer exempt from the Act is an employer with 50 or fewer employees; (b) stating that a contracting health care provider can request and is entitled to receive the plan’s criteria for medical necessity determinations; and (c) explaining that plans can apply for the increased cost exemption under the Act if costs under the plan have increased at least 2 percent in the first year that the Act applies to the plan (the first plan year beginning after October 3, 2009), or at least 1 percent in any subsequent plan year (generally, plan years beginning after October 3, 2010.) The exemption lasts for one year and allows the plan to be exempt from the requirements of the Act for the following year. Plans can apply for the cost exemption by following the exemption procedures described in the 1997 Mental Health Parity Act regulations.

6. Wellness Programs: Along with health care reform and the Mental Health Parity Act, the agencies also addressed a few FAQs on HIPAA and wellness programs. Most notably, the Department of Labor explained that under health care reform, the maximum reward that can be provided under a HIPAA wellness program will increase from 20% to 30%. The increase will not occur under health care reform until 2014. However, the agencies intend to propose regulations using regulatory authority under HIPAA to raise the percentage for the maximum reward that can be provided under a HIPAA wellness program to 30% before the year 2014.

Employers’ Bottom Line

The agencies continue to define the landscape of health care reform even for the first round of requirements that have already gone into effect or will be going into effect for employer‑sponsored plans beginning on or after the first plan year following September 23, 2010. Employers should keep an eye out for additional guidance and make a good-faith effort to comply with existing guidance with an understanding that additional adjustments may be necessary as further guidance and clarifications are issued.

© 2011 Ford & Harrison LLP

E-Verify Tentative Nonconfirmations: Don’t Panic Just Yet

Recent Business of Law Guest Blogger at the National Law Review, John Fay of LawLogix Group, Inc. provides a nice walk-through of what employers can expect when they receive a mismatch or tentative nonconfirmation (TNC) through the e-verify system. 

As an employer, there’s a certain amount of trepidation that comes with using the E-Verify system. While roughly 97% of all employees are instantly (or shortly thereafter) confirmed as work authorized, it’s the potential 3% which receive a mismatch or tentantive nonconfirmation (TNC)  that keep us up at night. Was there a mistake in the information that we submitted or perhaps a mistake with the SSA or DHS database? Or what if the employee is unauthorized to work? When do I have to terminate him? Processing a TNC requires employer guidance, employee action, and often, lots of patience. The most important thing to remember is that a TNC does not mean that your employee is unauthorized to work. It’s just the first step in an E-Verify dance with government systems. Sounds like fun, right?

Process Overview

First, there are many perfectly legitimate reasons for a TNC, and your role as the employer is to communicate that fact with your employee. For example, your employee could receive a Social Security mismatch because of the following:

  • Name, SSN or date of birth is incorrect in SSA database
  • Employee failed to report a name change to SSA (married name, perhaps?)
  • USCIS immigration status was not updated with SSA

You might also receive a DHS TNC because of the following:

  • Photo ID of green card, EAD , or US passport (starting September 26th) does not match DHS records (this is a comparison you would perform manually when prompted)
  • Information was not updated in DHS records
  • Citizenship or immigration status has recently changed
  • Name, alien number, and/or I-94 admission number were incorrect in DHS database

Regardless of the reason, you must first notify the employee in private of the TNC case result by printing the TNC Notice (to be signed) which is automatically generated by the E-Verify system. This letter explains all of the possible reasons why the TNC may have occurred and instructs the employee to review their information to make sure it was correct. Assuming it was, the employee then has 2 choices: CONTEST or NOT CONTEST. If the employee chooses to contest, then you must initiate a referral (in the E-Verify system) and provide them with a TNC Referral Letter (to be signed) that is automatically generated. This letter instructs the employee to contact the appropriate government agency (SSA or DHS) within 8 federal government work days to resolve the case. If there was a photo mismatch, you will also be instructed to send a copy to E-Verify. Alternatively, if the employee chooses not to contest, you may terminate employment and close the case.

The Waiting Game

Assuming that your employee has contested and you have properly referred them, the waiting game begins. E-Verify instructs employers that they will provide a case update (in the system) within 10 federal government working days. Employers using the web interface will need to check the system periodically, whereas employers using electronic I-9 systems can see updates automatically on their dashboard. Regardless of how you check, remember that you may not ask the employee for additional evidence of confirmation that SSA or DHS resolved the case. Doing so might be viewed as discriminatory. On the other hand, you should be diligent in checking on the case to see if there are updates. I did say this was a dance didn’t I?

Occasionally, the SSA or DHS may need more time to resolve a TNC – this could happen for a variety of reasons. Local SSA offices may be over-burdened with their core tasks (application for SSA benefits) or the employee may not have the documentation needed by SSA to support a change in their records. These record requests can add weeks to the process, and needless gray hairs to the worried HR representative. Regardless, the rules make it clear that you may not terminate, suspend, delay training, withhold or lower pay, or take any other adverse action against an employee based on the employee’s decision to contest a TNC or while the case is still pending with SSA.

The End Game

If all goes well, SSA or DHS will update its records and the employee’s case in E-Verify to indicate “Employment Authorized.” Occasionally, SSA may require the employer, employee or the U.S. Department of Homeland Security (DHS) to take additional action before a final case result can be issued. In these cases, SSA will update the employee’s case with a different message. Once the employee has received a final case status, such as “Employment Authorized” or “SSA FNC,” the employer must close the case in E-Verify. If the employee received an “SSA FNC,” the employer must also indicate whether the employee was terminated.

Paper Trail

If you review the last 4 paragraphs, you’ll notice I mentioned a variety of letters and notices. As with most areas of I-9 compliance, documentation is key. Therefore, as an employer, you’ll want to make sure to keep these signed letters on file with the I-9 (as instructed in your E-Verify User Manual). In the event of a government audit (relating to I-9s or E-Verify), you may be required to present these.  If you are usinga good electronic I-9 and E-Verify compliance system, the employee and employer should be able to electronically sign these letters, and the system should automatically attach them to the employee’s record along with a detailed audit trail.  Documentation is good, but paperless documentation with detailed audit trails is even better yet in building your “Good Faith” defense in case of an EEOC/OFCCP investigation and/or ICE audit!

More Information

Resolving TNCs can be a complicated process, and I’ve just given you a very brief overview. For more information, check out the USCIS web site here and review the latest E-Verify user manual. And if you’re stuck with a tricky E-Verify situation, make sure you consult experienced immigration counsel to avoid any missteps in this government dance

LawLogix Group, Inc. © 2001-2010 All Rights Reserved

Final Genetic Information Non Discrimination Act "GINA" Regulations Impact All Employers

From National Law Review’s featured blogger Patricia Anderson Pryor of Taft Stettinius & Hollister LLP, important information for both employers and employees about the Genetic Information Non Discrimination Act (“GINA”).

On November 9, 2010, the EEOC published its final regulations concerning the employment aspects of the Genetic Information Non Discrimination Act (“GINA”).

Although very few employers consciously utilize genetic information or discriminate against individuals because of genetic information, the prohibitions in GINA impact all employers.  Prohibited genetic information includes medical information about an employee’s family members.  The new regulations provide that an employer may violate GINA even if the employer does not specifically intend to acquire genetic (or family medical) information.

Many employers inadvertently come into contact with what the law defines as “genetic information” when they send employees for medical exams, when they request medical information in connection with requests for accommodation or requests for leave, when they provide employee wellness programs, when their supervisors engage in, or overhear, general, water cooler type conversations or even when supervisors look through Facebook posts.

In order to protect themselves, employers may need to update postings, policies and leave of absence or other medical request forms.

Employers should take precautions to avoid receiving genetic information in connection with requests for medical information and medical exams.

An employer who requests medical information from an employee or provider to support a request for an accommodation, FMLA leave or other leave, may inadvertently receive genetic information, including family medical information, that is already contained in the provider’s file.  The regulations provide that such receipt will not run afoul of GINA if either the employer informed the provider not to provide genetic information, with language similar to that suggested by the EEOC, or the request was so narrowly tailored that the request for medical information was not likely to result in the production of genetic information.

However, according to the final regulations, if an employer is requiring an employee to submit to a medical exam in connection with employment (either a pre-employment/post-offer exam or a fitness for duty exam), the employer “must” tell the health care provider not to collect genetic information, including family medical history, as part of the exam.  If the provider nonetheless requests genetic information, the regulations provide that the employer may need to take additional reasonable measures, including potentially no longer using that health care professional’s services.

Wellness programs cannot include a financial incentive for the disclosure of genetic information.

Many wellness programs include a health risk assessment that often requests family medical history.  Requesting genetic information in connection with a wellness program is permissible only if the employee’s participation is knowing and voluntary (among other things).  The final regulations clarify that “voluntary” means that an employer cannot offer a financial incentive to induce individuals to provide genetic information.  If a health risk assessment includes questions concerning genetic information, the employer must inform the employees that any incentive will be provided regardless of whether the employee answers the particular questions identified as requesting genetic or family medical information.

Information obtained through casual conversations or social network sites may still be inadvertent, as long as there is no intentional probing.

The final regulations keep intact the exceptions for certain inadvertent acquisitions of genetic information, including a supervisor overhearing a conversation about an employee’s genetic information or a family member’s medical condition or a supervisor viewing similar information on a social media site that he or she had permission to access.

However, the new regulations clarify that although an employer may obtain genetic information inadvertently or through information that is publicly or commercially available, these exceptions do not apply if the employer has deliberately sought the information by asking probing questions or searching for genetic information on line.

GINA’s requirements go far beyond simply prohibiting genetic testing.

Copyright © 2010 Taft Stettinius & Hollister LLP. All rights reserved.

Congressional Approach to Misclassification of Employees as Independent Contractors Would Confuse Rather than Clarify the Law

From featured guest blogger at the National Law Review   Richard J. Reibstein of Pepper Hamilton LLP – good commentary on why what Congress is proposing concerning Independent Contractors won’t work and what should be done instead: 

Congress has introduced two bills intended to discourage businesses from misclassifying employees as independent contractors and end the issuance of Form 1099s to workers who are not legitimate independent contractors.  Both bills – one a labor bill and the other a tax bill – have the laudable objective of curtailing misclassification of employees as independent contractors.  But the two bills, although related, contain different tests for determining who is an independent contractor or employee. 

The Obama Administration has firmly endorsed both bills.  While some Administration-supported legislative initiatives have little chance of passage in the lame-duck session of Congress or in 2011, these bills have a far better chance of passage because they are both revenue raisers.  Between the two bills, the labor bill may be passed earlier, inasmuch as hearings on the bill have already been held.

It can hardly be disputed that businesses that intentionally issue Form 1099s to workers contribute to the tax gap, deprive workers of federal, state, and local workplace protections, and places businesses that properly classify workers at a competitive disadvantage.  But, what about unintentional misclassification by businesses confused by varying definitions and legal standards used to determine who is an independent contractor and who an “employee” under an array of labor, tax, and benefits laws?

A 2006 report to Congress by the Government Accountability Office addressing misclassification observed that “the tests used to determine whether a worker is an independent contractor or an employee . . . differ from law to law,” even among various federal labor, employment, and employee benefits laws.  The GAO report notes, “For example, the NLRA, the Civil Rights Act, FLSA, and ERISA each use a different definition of an employee and various tests, or criteria, to distinguish independent contractors from employees.”  A 2009 report by theGAO concluded that while “the independent contractor relationship can offer advantages to both businesses and workers” and “[m]any independent contractors are classified properly,” Congress should take steps to help businesses that “may be confused about how to properly classify workers.” 

The tax bill expressly seeks to clarify confusion over who is an employee or independent contractor under the federal employment tax laws; however, the labor bill not only contains a test at odds with the tax bill but is also inconsistent with the test used in most other federal laws dealing with labor and employment.

The passage of the labor bill as drafted, with or without passage of the tax bill, will contribute to an even more confusing legal landscape for the hundreds of thousands of businesses that treat certain workers as independent contractors.

The Tax Bill:  The Fair Playing Field Act of 2010 

In mid-September 2010, both the Senate (S. 3786) and House (H.R. 6128) introduced the more recent of the two bills addressing misclassification – the Fair Playing Field Act of 2010.  The bill would close what the sponsors of the legislation, Senator John Kerry (D-MA) and Representative Jim McDermott (D-WA), refer to as a “tax loophole allowing businesses to misclassify workers as independent contractors.”  As set forth in the preamble of the bill, “Such misclassification for tax purposes contributes to inequities in the competitive positions of businesses and to the Federal and State tax gap, and may also result in misclassification for other purposes, such as denial of unemployment benefits, workplace health and safety protections, and retirement or other benefits or protections available to employees.”

The “loophole” that the Fair Playing Field Act seeks to close is Section 530 of the Revenue Act of 1978.  For the past 30 years, that law has afforded businesses a “safe harbor” to treat workers as independent contractors for employment tax purposes as long as the company has had a reasonable basis for such treatment and has consistently treated such employees as independent contractors by reporting their compensation on a Form 1099.

The tax bill’s “findings” recognize that while “many workers are properly classified as independent contractors, in other instances workers who are employees are being treated as independent contractors.”  The bill continues: “Workers, businesses, and other taxpayers will benefit from clear guidance regarding employment tax status.”  The bill therefore directs the Secretary of the Treasury to issue guidance in the form of regulations “allowing workers and businesses to clearly understand the proper federal tax classification of workers.” 

The Fair Playing Field Act bill provides that, in issuing such guidance, the term “employment status” for any individual shall be determined “under the usual common law rules applicable in determining the employer-employee relationship, as an employee or as an independent contractor (or other individual who is not an employee).”  

The IRS and the courts have historically used the “common law” test for determining independent contractor status under the Tax Code.  But, as noted below, the other federal bill seeking to curtail misclassification not only refers to a different test for determining who is an employee and who is an independent contractor, but also is out of sync with prevailing judicial precedent.

The Labor Bill:  The Employee Misclassification Prevention Act (EMPA)

EMPA was introduced in late April 2010 by the Senate (S. 3254) and House (H.R. 5107).  EMPA would amend an existing law, the Fair Labor Standards Act (FLSA), by creating a new labor law offense: misclassification of an employee as an independent contractor. 

If passed, EMPA would also impose strict record-keeping and notice requirements upon businesses with respect to workers treated as independent contractors, expose such businesses to fines of $1,100 to $5,000 per employee for each misclassification, and award triple damages for violations of the minimum wage or overtime provisions of the FLSA.

EMPA also makes specific reference to the definition of “employee” found in the FLSA, a 1938 law that regulates child labor and mandates the payment of minimum wage and overtime for employees who work more than 40 hours in a workweek. For decades, courts have interpreted the word “employee” in FLSA cases under an expansive legal standard that is commonly referred to as the “economic realities” test.  As the Supreme Court has noted, this expansive interpretation under the FLSA derives from laws that were intended to prevent child labor violations, and “stretches the meaning of ‘employee’ to cover some parties who might not qualify as [an employee] under a strict application of traditional [common] law principles.”

As drafted, however, the EMPA bill would arguably incorporate the FLSA’s broad “economic realities” test into its definition of “employee.”  That test gives undue weight to the economic dependence by workers on the business that has retained them.  Such a test is inconsistent with the Supreme Court’s most recent judicial precedents applying the “common law” test and is at odds with what the that Court referred to as  the “common understanding…of the difference between an employee and an independent contractor.”

At least one house of Congress is presumably well aware of this disconnect.  As the Assistant Secretary of Labor testified in writing before the Senate at a hearing held on EMPA on June 17, 2010, “Whether a worker is an employee [or independent contractor] depends on which law is applicable.”  He continued, “We recognize that it is conceivable for a worker to be correctly classified differently under the different standards that apply for different statutory purposes.”  Thus, absent a legislative “fix,” a business that properly classified a particular worker under the “common law” test used to determine independent contractor status under the Tax Code, ERISA, and the nation’s discrimination laws, may be found to have misclassified the same worker under the new EMPA law if the “economic realities” test of the 1938 FLSA law is used. 

Congress Should Provide a Common Federal Definition of “Employee” for Misclassification Purposes

The “common law” test for determining if an individual is an independent contractor or employee focuses on whether the business controls the manner and means that the work is accomplished.  The Supreme Court has set forth twelve factors relevant to the issue of “control,” but noted that there are many additional factors that can be useful in determining employee status, including the additional factors set forth in the IRS’s so-called “20 factor” test.

According to the Supreme Court, the “common law“ test “comports…with our recent precedents and with the common understanding, reflected in those precedents, of the difference between an employee and an independent contractor.”  Those recent precedents include the Court’s determination of whether a worker was an employee or independent contractor under the nation’s pension law and under one of the most important post-Civil Rights discrimination laws – the Americans with Disabilities Act (ADA).

The sponsors of EMPA as well as witnesses who testified in favor of the bill’s passage at a Senate committee hearing in June have noted that EMPA is intended to serve a number of important objectives: closing the tax gap that has deprived the federal and state governments of tax revenues; affording protections to misclassified workers under an array of federal laws that govern employers and employees (including ERISA, FLSA, OSHA, and the federal discrimination laws); and promoting fair business competition by outlawing the practice of misclassification, which creates an unfair advantage for businesses that improperly avoid the payment of payroll taxes.  Notably, these are the very same purposes set forth in the preamble of the Fair Playing Field Act.  Thus, both misclassification bills are intended to serve the same broad tax, labor, and business purposes.  There is no reason, therefore, for Congress to have two different and potentially conflicting tests for determining if a worker is an employee or independent contractor. 

The FLSA is one of over a dozen major federal labor and employment laws; it is not a misclassification statute.  Congress appears to have attached EMPA to the FLSA merely as a matter of legislative convenience. The value of piggy-backing new legislative initiatives on existing laws can have many benefits, such as eliminating the need for Congress to draft definitional, administrative, procedural, and other similar provisions for a new piece of legislation. 

This valuable use of legislative piggy-backing, however, should not automatically incorporate special definitional sections within the existing law where the definitions were enacted to serve purposes wholly unrelated to the purpose of the new legislation.  Indeed, the Congressional Declaration of Policy underlying the FLSA, which was enacted as part of the New Deal legislation, was to address “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.”  The broad purposes of EMPA have little if nothing to do with the narrow remedial purposes of the FLSA or the child labor law statutes that were used to craft the expansive definition of “employee” in the FLSA. 

The Congressional goal expressed in the Fair Playing Field Act of “allowing workers and businesses to clearly understand the proper federal tax classification of workers” is beneficial, but if Congress allows EMPA to be passed with a different definition of “employee” than what prevails under the Tax Code and most other federal laws, all Congress will have done is created more confusion among workers and businesses.  In addition, in order to comply with all federal laws covering “employees,” a prudent business would have to disregard the “common law” test applicable under most federal statutes including the Fair Playing Field Act and only treat workers as independent contractors if they satisfied the narrower test under the New Deal child labor and wage and hour law.  This would have the effect of limiting the use of legitimate independent contractors, a result that Congress has never articulated as a purpose of either of the two bills.  Indeed, as stated in the preamble to the Fair Playing Field Act, Congress has found that “many workers are properly classified as independent contractors….”

What Congress Should Do

Congress should use the legislative process to take one of the following two steps to remedy this important discrepancy between the two bills or, if only the labor bill is passed, to ensure that it does not create even greater confusion about who is and who is not an independent contractor: 

  • Modify the definition of “employee” within EMPA so that it uses the same wording found in the Fair Playing Field Act for determining employee or independent contractor status.  Such determinations under that law should be made, as stated in the Fair Playing Field Act, “under the usual common law rules applicable in determining the employer-employee relationship, as an employee or as an independent contractor (or other individual who is not an employee).” 
     
  • Make it crystal clear in the legislative history of the bill, including the Senate and House committee reports, that the definition of “employee” for purposes of EMPA should be construed in a manner consistent with both the “common law” test – which is the prevailing judicial standard under most federal laws including ERISA, the ADA, and the Tax Code – and the “common understanding” of contemporary independent contractor relationships. 

Another approach would be to amend the definition of “employee” or “employ” under the FLSA to language that updates the New Deal definitional terms and, like the Fair Playing Field Act bill,  incorporates the “common law” test that prevails under virtually every other federal law.   

The urgent need for thoughtful federal legislation in the area of misclassification is hard to argue against.  The one witness that testified in a critical manner about EMPA at the Senate hearing this past June did not suggest that federal legislation is not needed.  Rather, he criticized the size of the proposed penalties for misclassification, the nature of the record-keeping requirements, the language of the proposed notice to be given to all workers, and the potential that the anti-retaliation provision could reward unethical conduct. 

The determination of whether an individual worker is an independent contractor or employee is, more often than not,  in the “gray area” and it oftentimes presents a close question of law.  Regardless of whether Congress conducts further hearings on EMPA, it is imperative that legislators avoid placing businesses and workers in the untenable position where they may be found by the very same court to have properly classified an individual under one of the two new proposed laws but improperly classified him or her under the other.

Copyright © 2010 Pepper Hamilton LLP

Congress has introduced two bills intended to discourage businesses from misclassifying employees as independent contractors and end the issuance of Form 1099s to workers who are not legitimate independent contractors.  Both bills – one a labor bill and the other a tax bill – have the laudable objective of curtailing misclassification of employees as independent contractors.  But the two bills, although related, contain different tests for determining who is an independent contractor or employee. 

The Obama Administration has firmly endorsed both bills.  While some Administration-supported legislative initiatives have little chance of passage in the lame-duck session of Congress or in 2011, these bills have a far better chance of passage because they are both revenue raisers.  Between the two bills, the labor bill may be passed earlier, inasmuch as hearings on the bill have already been held.

It can hardly be disputed that businesses that intentionally issue Form 1099s to workers contribute to the tax gap, deprive workers of federal, state, and local workplace protections, and places businesses that properly classify workers at a competitive disadvantage.  But, what about unintentional misclassification by businesses confused by varying definitions and legal standards used to determine who is an independent contractor and who an “employee” under an array of labor, tax, and benefits laws?

A 2006 report to Congress by the Government Accountability Office addressing misclassification observed that “the tests used to determine whether a worker is an independent contractor or an employee . . . differ from law to law,” even among various federal labor, employment, and employee benefits laws.  The GAO report notes, “For example, the NLRA, the Civil Rights Act, FLSA, and ERISA each use a different definition of an employee and various tests, or criteria, to distinguish independent contractors from employees.”  A 2009 report by theGAO concluded that while “the independent contractor relationship can offer advantages to both businesses and workers” and “[m]any independent contractors are classified properly,” Congress should take steps to help businesses that “may be confused about how to properly classify workers.” 

The tax bill expressly seeks to clarify confusion over who is an employee or independent contractor under the federal employment tax laws; however, the labor bill not only contains a test at odds with the tax bill but is also inconsistent with the test used in most other federal laws dealing with labor and employment.

The passage of the labor bill as drafted, with or without passage of the tax bill, will contribute to an even more confusing legal landscape for the hundreds of thousands of businesses that treat certain workers as independent contractors.

The Tax Bill:  The Fair Playing Field Act of 2010 

In mid-September 2010, both the Senate (S. 3786) and House (H.R. 6128) introduced the more recent of the two bills addressing misclassification – the Fair Playing Field Act of 2010.  The bill would close what the sponsors of the legislation, Senator John Kerry (D-MA) and Representative Jim McDermott (D-WA), refer to as a “tax loophole allowing businesses to misclassify workers as independent contractors.”  As set forth in the preamble of the bill, “Such misclassification for tax purposes contributes to inequities in the competitive positions of businesses and to the Federal and State tax gap, and may also result in misclassification for other purposes, such as denial of unemployment benefits, workplace health and safety protections, and retirement or other benefits or protections available to employees.”

The “loophole” that the Fair Playing Field Act seeks to close is Section 530 of the Revenue Act of 1978.  For the past 30 years, that law has afforded businesses a “safe harbor” to treat workers as independent contractors for employment tax purposes as long as the company has had a reasonable basis for such treatment and has consistently treated such employees as independent contractors by reporting their compensation on a Form 1099.

The tax bill’s “findings” recognize that while “many workers are properly classified as independent contractors, in other instances workers who are employees are being treated as independent contractors.”  The bill continues: “Workers, businesses, and other taxpayers will benefit from clear guidance regarding employment tax status.”  The bill therefore directs the Secretary of the Treasury to issue guidance in the form of regulations “allowing workers and businesses to clearly understand the proper federal tax classification of workers.” 

The Fair Playing Field Act bill provides that, in issuing such guidance, the term “employment status” for any individual shall be determined “under the usual common law rules applicable in determining the employer-employee relationship, as an employee or as an independent contractor (or other individual who is not an employee).”  

The IRS and the courts have historically used the “common law” test for determining independent contractor status under the Tax Code.  But, as noted below, the other federal bill seeking to curtail misclassification not only refers to a different test for determining who is an employee and who is an independent contractor, but also is out of sync with prevailing judicial precedent.

The Labor Bill:  The Employee Misclassification Prevention Act (EMPA)

EMPA was introduced in late April 2010 by the Senate (S. 3254) and House (H.R. 5107).  EMPA would amend an existing law, the Fair Labor Standards Act (FLSA), by creating a new labor law offense: misclassification of an employee as an independent contractor. 

If passed, EMPA would also impose strict record-keeping and notice requirements upon businesses with respect to workers treated as independent contractors, expose such businesses to fines of $1,100 to $5,000 per employee for each misclassification, and award triple damages for violations of the minimum wage or overtime provisions of the FLSA.

EMPA also makes specific reference to the definition of “employee” found in the FLSA, a 1938 law that regulates child labor and mandates the payment of minimum wage and overtime for employees who work more than 40 hours in a workweek. For decades, courts have interpreted the word “employee” in FLSA cases under an expansive legal standard that is commonly referred to as the “economic realities” test.  As the Supreme Court has noted, this expansive interpretation under the FLSA derives from laws that were intended to prevent child labor violations, and “stretches the meaning of ‘employee’ to cover some parties who might not qualify as [an employee] under a strict application of traditional [common] law principles.”

As drafted, however, the EMPA bill would arguably incorporate the FLSA’s broad “economic realities” test into its definition of “employee.”  That test gives undue weight to the economic dependence by workers on the business that has retained them.  Such a test is inconsistent with the Supreme Court’s most recent judicial precedents applying the “common law” test and is at odds with what the that Court referred to as  the “common understanding…of the difference between an employee and an independent contractor.”

At least one house of Congress is presumably well aware of this disconnect.  As the Assistant Secretary of Labor testified in writing before the Senate at a hearing held on EMPA on June 17, 2010, “Whether a worker is an employee [or independent contractor] depends on which law is applicable.”  He continued, “We recognize that it is conceivable for a worker to be correctly classified differently under the different standards that apply for different statutory purposes.”  Thus, absent a legislative “fix,” a business that properly classified a particular worker under the “common law” test used to determine independent contractor status under the Tax Code, ERISA, and the nation’s discrimination laws, may be found to have misclassified the same worker under the new EMPA law if the “economic realities” test of the 1938 FLSA law is used. 

Congress Should Provide a Common Federal Definition of “Employee” for Misclassification Purposes

The “common law” test for determining if an individual is an independent contractor or employee focuses on whether the business controls the manner and means that the work is accomplished.  The Supreme Court has set forth twelve factors relevant to the issue of “control,” but noted that there are many additional factors that can be useful in determining employee status, including the additional factors set forth in the IRS’s so-called “20 factor” test.

According to the Supreme Court, the “common law“ test “comports…with our recent precedents and with the common understanding, reflected in those precedents, of the difference between an employee and an independent contractor.”  Those recent precedents include the Court’s determination of whether a worker was an employee or independent contractor under the nation’s pension law and under one of the most important post-Civil Rights discrimination laws – the Americans with Disabilities Act (ADA).

The sponsors of EMPA as well as witnesses who testified in favor of the bill’s passage at a Senate committee hearing in June have noted that EMPA is intended to serve a number of important objectives: closing the tax gap that has deprived the federal and state governments of tax revenues; affording protections to misclassified workers under an array of federal laws that govern employers and employees (including ERISA, FLSA, OSHA, and the federal discrimination laws); and promoting fair business competition by outlawing the practice of misclassification, which creates an unfair advantage for businesses that improperly avoid the payment of payroll taxes.  Notably, these are the very same purposes set forth in the preamble of the Fair Playing Field Act.  Thus, both misclassification bills are intended to serve the same broad tax, labor, and business purposes.  There is no reason, therefore, for Congress to have two different and potentially conflicting tests for determining if a worker is an employee or independent contractor. 

The FLSA is one of over a dozen major federal labor and employment laws; it is not a misclassification statute.  Congress appears to have attached EMPA to the FLSA merely as a matter of legislative convenience. The value of piggy-backing new legislative initiatives on existing laws can have many benefits, such as eliminating the need for Congress to draft definitional, administrative, procedural, and other similar provisions for a new piece of legislation. 

This valuable use of legislative piggy-backing, however, should not automatically incorporate special definitional sections within the existing law where the definitions were enacted to serve purposes wholly unrelated to the purpose of the new legislation.  Indeed, the Congressional Declaration of Policy underlying the FLSA, which was enacted as part of the New Deal legislation, was to address “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.”  The broad purposes of EMPA have little if nothing to do with the narrow remedial purposes of the FLSA or the child labor law statutes that were used to craft the expansive definition of “employee” in the FLSA. 

The Congressional goal expressed in the Fair Playing Field Act of “allowing workers and businesses to clearly understand the proper federal tax classification of workers” is beneficial, but if Congress allows EMPA to be passed with a different definition of “employee” than what prevails under the Tax Code and most other federal laws, all Congress will have done is created more confusion among workers and businesses.  In addition, in order to comply with all federal laws covering “employees,” a prudent business would have to disregard the “common law” test applicable under most federal statutes including the Fair Playing Field Act and only treat workers as independent contractors if they satisfied the narrower test under the New Deal child labor and wage and hour law.  This would have the effect of limiting the use of legitimate independent contractors, a result that Congress has never articulated as a purpose of either of the two bills.  Indeed, as stated in the preamble to the Fair Playing Field Act, Congress has found that “many workers are properly classified as independent contractors….”

What Congress Should Do

Congress should use the legislative process to take one of the following two steps to remedy this important discrepancy between the two bills or, if only the labor bill is passed, to ensure that it does not create even greater confusion about who is and who is not an independent contractor: 

  • Modify the definition of “employee” within EMPA so that it uses the same wording found in the Fair Playing Field Act for determining employee or independent contractor status.  Such determinations under that law should be made, as stated in the Fair Playing Field Act, “under the usual common law rules applicable in determining the employer-employee relationship, as an employee or as an independent contractor (or other individual who is not an employee).” 
     
  • Make it crystal clear in the legislative history of the bill, including the Senate and House committee reports, that the definition of “employee” for purposes of EMPA should be construed in a manner consistent with both the “common law” test – which is the prevailing judicial standard under most federal laws including ERISA, the ADA, and the Tax Code – and the “common understanding” of contemporary independent contractor relationships. 

Another approach would be to amend the definition of “employee” or “employ” under the FLSA to language that updates the New Deal definitional terms and, like the Fair Playing Field Act bill,  incorporates the “common law” test that prevails under virtually every other federal law.   

The urgent need for thoughtful federal legislation in the area of misclassification is hard to argue against.  The one witness that testified in a critical manner about EMPA at the Senate hearing this past June did not suggest that federal legislation is not needed.  Rather, he criticized the size of the proposed penalties for misclassification, the nature of the record-keeping requirements, the language of the proposed notice to be given to all workers, and the potential that the anti-retaliation provision could reward unethical conduct. 

The determination of whether an individual worker is an independent contractor or employee is, more often than not,  in the “gray area” and it oftentimes presents a close question of law.  Regardless of whether Congress conducts further hearings on EMPA, it is imperative that legislators avoid placing businesses and workers in the untenable position where they may be found by the very same court to have properly classified an individual under one of the two new proposed laws but improperly classified him or her under the other.

Copyright © 2010 Pepper Hamilton LLP

How the Supreme Court Skirted ADEA Issues During Reductions in Force and What Must be Done to Fix It

Congratulations to the Fall 2010 National Law Review Student Legal Writing Contest Winners Charles “Chip” William Hinnant III and John Erwin Barton of  the  Charlotte School of Law. 

Jack Gross was born in 1948, and grew up in Mt. Ayr, Iowa.[i] His father was an Iowa Highway Patrolman and his mother was a 3rd grade teacher.[ii] Throughout his childhood and into his adult life, health issues defined Mr. Gross.[iii] He developed chronic ulcerated colitis, and as a result underwent multiple operations involving the removal of his colon, and a part of his large intestine.[iv]When he graduated from Drake University with a B.S. in Personnel Management, he weighed 87 pounds.[v]

Upon graduating Mr. Gross went to work for Farm Bureau as a claims adjuster, eventually becoming the highest volume adjuster in the company.[vi]He stood out for his outstanding contributions, earned many professional designations, and began teaching classes to other employees.[vii]Mr. Gross’ exceptional work performance and contributions to his company were reflected in his annual reviews, which were in the top 3-5% of his company for 13 consecutive years.[viii]Yet, notwithstanding Mr. Gross’ improbable story, in 2003, all claims department employees over the age of 50 with a title of supervisor and above were demoted on the same day.[ix]Mr. Gross was replaced by a person he had hired who was in her early forties, did not have the required skills for the position as stated on the company job description, nor his breadth of experience.[x]Mr. Gross would later file an age discrimination lawsuit pursuant to the Age Discrimination in Employment Act (ADEA)[xi]in federal court, and the rest as they say, is history.

On June 18, 2009, the Supreme Court of the United States decided Gross v. FBL Financial Services, Inc.,[xii] which simultaneously held that mixed-motive theories are never proper in ADEA cases and that a plaintiff bringing a disparate-treatment claim pursuant to the ADEA must prove that age was the “but-for” cause of the challenged adverse employment action.[xiii] In effect, the Gross holding abrogated the mixed-motive theory presumably applicable to ADEA cases established inPrice Waterhouse v. Hopkins,[xiv]and led to a celebrated victory for employers to the detriment of older, ADEA protected employees just like Jack Gross, the prototypical individual that the ADEA was created to protect.

While Gross has considerably heightened the burden placed upon ADEA plaintiffs, particularly given the near universal absence of direct evidence of age discrimination in ADEA cases,[xv] its holding imposes a logically impossible burden upon ADEA plaintiffs in Reduction in Force (RIF) cases that the Supreme Court seems to have not contemplated given that Gross did not involve a RIF.[xvi] In short, during a RIF, an ADEA plaintiff always loses.  In order to correct this logical inconsistency, either the Supreme Court must grant certiorari to an ADEA RIF case to affirmatively correct its mistake, or Congress must pass legislation limiting the holding of Gross to non-RIF scenarios, if not all ADEA cases.

How Gross Prevents an ADEA RIF Plaintiff from Ever Prevailing at Trial

Gross prevents an ADEA RIF plaintiff from ever prevailing at trial because an employer will always be able to claim that a legitimate, non-discriminatory reason for the adverse action taken against the employee exists. Inherent in any RIF are financial troubles that force an employer to terminate some of its employees in an effort to remain in business; as a result, the courts have recognized that a RIF is a legitimate business justification for an adverse employment action.[xvii]

Consequently, prior to Gross, when an employer utilized a RIF as a legitimate business justification for an adverse employment action, the plaintiff was required to make an “additional showing” that age was a motivating factor in their termination in order to prevail using a mixed-motive theory of discrimination.[xviii]

However, because Gross simultaneously eliminated the mixed-motive theory as a viable option for ADEA plaintiffs and heightened the requisite showing necessary for a plaintiff to prevail from age as a “motivating-factor” of the adverse employment action to age as the “but-for” cause of the adverse employment action, such an “additional showing” can neverbe made under the law as it is currently interpreted.

Because an employer will always be able to claim that a RIF constitutes a legitimate business reason for termination, under Gross, a plaintiff cannot ever offer evidence that “illegal … motives … were the ‘true’ motives”[xix]for the adverse employment action taken against them.

As a result, an ADEA RIF plaintiff can never prove that “but-for” their age, the employer would not have initiated the adverse action against them given the ever-present excuse of a RIF. Thus, while Gross is detrimental to all ADEA plaintiffs, it is particularly prejudicial to ADEA plaintiffs whose adverse action is a result of a RIF, as it creates a logical impossibility for these plaintiffs to everhave a chance of prevailing against their employer.

What the Supreme Court Can Do to Fix the Gross Problem

The Supreme Court can and needs to fix the Gross problem and the confusion it has created for lower courts by granting certiorari to an ADEA RIF case and explicitly stating that mixed-motive theories are and must be applicable to ADEA RIF cases, and that evidence of age discrimination can be considered a “motivating factor,” rather than the “but for” cause, of illegal age discrimination within the burden shifting framework articulated within McDonnell Douglas Corp. v. Green.[xx]

As of this moment, the lower district and circuit courts are confused as to the application of Gross and its relationship with the McDonnell Douglas prima facie case and burden-shifting framework. Furthermore, this confusion is certain to increase as more RIF and non-RIF ADEA cases are filed in the near future as a result of the current economic recession, and as the unworkable nature of theGross holding in ADEA RIF cases is further exposed. Notably, post-Gross ADEA cases are relatively few and far between at the time this article is being written; however, early signs support the contention that the lower courts are not in conformity with how to interpret Gross.

The Tenth Circuit explicitly states that Gross has created some uncertainty regarding burden shifting in the ADEA context.[xxi] The Jones decision discusses in detail the application of Gross to McDonnell Douglas and clearly states that the court will not overturn their prior decisions applying the burden-shifting framework to ADEA claims.[xxii]

Furthermore, the Sixth Circuit attempts to reconcile Gross’ “but for” language with the burden shifting test in McDonnell Douglas.  By applying similar language from the application of Title VII in McDonnell Douglas, that “where there is a reduction in force, a plaintiff must … show that age was a factor [emphasis added] in eliminating his position”[xxiii]the court attempts to pigeonhole the two decisions together.  The use of the language “a factor” instead of “the factor” in the Johnsondecision enunciates the line that the court has drawn between “but for” causation of age discrimination and age being a “motivating factor” in determining whether illegal age discrimination is afoot.

The Ninth Circuit on the other hand, has essentially followed Gross to the letter.[xxiv] In the McFadden decision, the Ninth Circuit holds alongside the Supreme Court and agrees that the McDonnell Douglas burden-shifting framework does not apply to ADEA claims, and that a plaintiff must carry the burden of persuasion throughout the case.  Therefore, no burden shifting occurs, and causation must be “but-for.”

These cases, et al., are the first evidence of post-Gross confusion, and illustrate the growing problem facing the lower courts as well as plaintiffs soon to bring mixed-motive age discrimination cases involving RIFs. Some circuits and district courts continue to apply theMcDonnell Douglas burden-shifting framework and will consider whether age was a “motivating factor” of an adverse employment action, while others require a heightened burden of proof that age was the “but for” cause of an adverse employment action. Such varying interpretations of Gross will inevitably lead to circuit splits, the absence of uniformity in the application of federal law, and a future Supreme Court decision to clean up the mess.

Thus, the Supreme Court should grant certiorari to an ADEA RIF case and seek to dispel the impossible burden it has placed upon RIF plaintiffs.

What Congress Can Do to Fix the Gross Problem

Congress can fix the Gross problem by enacting legislation that limits the scope of the Gross decision to non-RIF ADEA cases, or, in the alternative, to all ADEA cases by explicitly stating that the mixed-motive theory articulated in Price Waterhouse v. Hopkins,[xxv] as well as the burden shifting framework articulated in McDonnell Douglas Corp. v. Green,[xxvi] are fully applicable to ADEA cases.

As this article is being written, both houses of Congress have responded to theGross problem by proposing bills entitled the “Protecting Older Workers Against Discrimination Act,”[xxvii] the stated purpose of which are “to amend the Age Discrimination in Employment Act of 1967 to clarify the appropriate standard of proof.”[xxviii] While these bills clearly reflect Congressional understanding of the harm that Gross causes ADEA plaintiffs, their current language as well as their present place in the legislative process creates foreseeable problems that should be swiftly resolved.

First and foremost, both bills are presently tied up in Committees.[xxix]As a result, amidst a nationwide economic recession resulting in numerous corporate RIFs as discussed infra, plaintiffs filing age discrimination lawsuits while in post-Gross, pre-Congressional action “purgatory” will be left without a remedy.

Second, because such “purgatory plaintiffs” will likely exist given the current economic recession, Congress should seek to include retroactive language in the proposed bills in an effort to afford these plaintiffs a remedy. Currently, no such retroactive language exists in either bill proposal.[xxx]

Third, the proposed bills as presently written include no language recognizing theGross problem’s disproportionate and logically impossible burden it places on ADEA RIF plaintiffs, as opposed to the more classic, non-RIF ADEA plaintiff.[xxxi]While it may be reasonably presumed that general language that disavows the Gross decision’s applicability to ADEA cases would prevent its application to ADEA RIF plaintiffs as well, there is no sense in leaving any provisions of these bills subject to judicial interpretation.

The role of Congress cannot be understated in fixing the Gross problem, and while it has taken the proper initial steps to remedy the subversion of federal law thatGross represents, timeliness, retroactivity, and precision in language choice to guarantee the protection of ADEA RIF plaintiffs soon to be effected is essential in ensuring that the rule of law is upheld.  As Justice Ginsburg famously stated in another recent travesty of judicial interpretation in the employment context,[xxxii]“the ball is in Congress’ court.”[xxxiii]

Why Fixing the Gross Problem Matters Now More than Ever

A survey of ADEA charges filed with the EEOC from 1997 to 2009 indicates that in 2008 and 2009, more ADEA charges were filed with the EEOC than in any other fiscal year in the 12-year sample size.[xxxiv]Furthermore, a tremendous increase in ADEA charges is glaringly apparent from 2007 to 2008.[xxxv]While no known data exists to support the contention, it can be reasonably inferred that such a substantial rise in ADEA charges filed with the EEOC is a byproduct of the ongoing economic recession in the United States.

As this article is being written and during the time period reflected in the EEOC charge data, numerous corporate employers, all of which are subject to the protections of the ADEA, are reducing their workforces in droves in an effort to reduce operating costs and maintain profit margins. To name a few that can be quickly found with a simple Google search, the health insurer Humana,[xxxvi] the discount retailer Target,[xxxvii] the drug manufacturers Sanofi-Aventis,[xxxviii]Eli Lilly,[xxxix]and Bristol-Meyers Squib,[xl] the oil giant Shell,[xli] the healthcare giant Cardinal Health,[xlii]and the telecommunications provider AT&T,[xliii]are all reducing their workforces during the current economic recession.

With every RIF that takes place between now and the moment that either the Supreme Court or Congress act to eliminate the applicability of the Gross decision to ADEA RIF cases if not ADEA cases as a whole, multitudes of ADEA protected plaintiffs adversely effected by a RIF that may or may not have a compelling case for illegal age-motivated discrimination against their employer, will ultimately be denied the legal protections afforded to them under federal law.[xliv]

Above all else, the Supreme Court, Congress, and the readers of this article must remember that people like Jack Gross are exactly those that the ADEA was meant to protect.  Now, the Supreme Court has to fix its mistake, or Congress must do it for them.

 

[i]Testimony of Jack Gross:  Hearings Before the Senate Judiciary Comm., 111thCong. (2010).

[ii]Id.

[iii]Id.

[iv]Id.

[v]Id.

[vi]Id.

[vii]Id.

[viii]Id.

[ix]Id.

[x]Id.

[xi]29 U.S.C.A 621 (1967)

[xii]129 S. Ct. 2343 (2009).

[xiii]Id.

[xiv]109 S. Ct. 1775 (1989).

[xv]See Generally, Desert Palace, Inc. v. Costa, 123 S.Ct. 2148 (2003).

[xvi]See 129 S.Ct. 2343 (2009).

[xvii]See Hardin v. Hussmann Corp., 45 F.3d 262 (8th Cir. 1995); Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000).

[xviii]See Hardin v. Hussmann Corp., 45 F.3d 262 (8th Cir. 1995).

[xix]NLRB v. Transp. Mgmt. Corp., 103 S. Ct. 2469, 2473 (1983).

[xx]93 S. Ct. 1817 (1973).

[xxi]Jones v. Okla. City Pub. Schs., 617 F.3d 1273, 1278 (10th Cir. 2010).

[xxii]Id.

[xxiii]Johnson v. Franklin Farmers Cooperative, 378 F. Appx. 505, 509 (6th Cir. 2010).

[xxiv]McFadden v. Krause, 357 F. Appx. 17 (9th Cir. 2009).

[xxv]109 S. Ct. 1775 (1989).

[xxvi]93 S. Ct. 1817 (1973).

[xxvii]H.R. 3721, 111th Cong. (2009), 2009 FD H.B. 3721 (NS) (Westlaw), See also S. 1756, 111th Cong. (2009), 2009 FD S.B. 1756(NS) (Westlaw).

[xxviii]Id.

[xxix]Id. (H.R. 3721 presently rests in the Subcommittee on Health, Labor, Employment, and Pensions, while S. 1756 presently rests in the Committee on Health, Education, Labor, and Pensions.)

[xxx]See http://www.govtrack.us/congress/billtext.xpd?bill=h111-3721 andhttp://www.govtrack.us/congress/billtext.xpd?bill=s111-1756

[xxxi]See Id.

[xxxii]Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 127 S. Ct. 2162 (2007)

[xxxiii]Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 661, 127 S. Ct. 2162, 2188 (2007) (Ginsburg, J., Dissenting).

[xxxiv]http://www.eeoc.gov/eeoc/statistics/enforcement/adea.cfm (24,582 charges were filed in 2008 and 22,778 charges were filed in 2009.)

[xxxv]Id. (Only 19,103 charges were filed in 2007.)

[xxxvi]Catherine Larkin and Alex Nussbaum, Humana Plans to Reduce Workforce by 1,400 This Year, Bloomberg Businessweek, Feb. 17, 2010,http://www.businessweek.com/news/2010-02-17/humana-plans-to-reduce-workf…

[xxxvii]Scott Mayerowitz and Alice Gomstyn, Target Among the Latest Chain of Grim Layoffs: Major Companies From Communications to Retail Layoff 40,000; More Americans Lose Jobs, ABC News, Jan. 27, 2009,http://abcnews.go.com/Business/CEOProfiles/story?id=6731375&page=1

[xxxviii]Linda A. Johnson, Sanofi-Aventis to Reduce US Workforce by 1,700, The Boston Globe, Oct. 8, 2010,http://www.boston.com/news/health/articles/2010/10/08/sanofi_aventis_to_…

[xxxix]Eli Lilly to Reduce Workforce, United Press International, Sept. 14, 2009,http://www.upi.com/Business_News/2009/09/14/Eli-Lilly-to-reduce-workforc…

[xl]Ellen Gibson, Bristol-Myers to Cut 3% of Workforce to Reduce Costs, Bloomberg Businessweek, Sept. 23, 2010,

http://www.businessweek.com/news/2010-09-23/bristol-myers-to-cut-3-of-workforce-to-reduce-costs.html

[xli]Shell To Layoff Workforce To Reduce Cost, Energy Business Review, April 30, 2009, http://utilitiesnetwork.energy-business-review.com/news/shell_to_layoff_…

[xlii]Press release, Cardinal Health, Cardinal Health to Reduce Workforce to Respond to Economic Conditions, (March 31, 2009.)

http://cardinalhealth.mediaroom.com/index.php?s=43&item=295 (

[xliii]AT&T to reduce workforce by 12,000, San Antonio Business Journal, Dec. 4, 2008,

http://www.bizjournals.com/sanantonio/stories/2008/12/01/daily29.html

[xliv]See the Age Discrimination in Employment Act at 29 U.S.C.A 621 (1967)

Charles “Chip” William Hinnant III and John Erwin Barton © Copyright 2010

New York Joins Other States in Suing FEDEX for Misclassification of its Ground Division Drivers as Independent Contractors

This week’s featured blogger at the National Law Review is Richard J. Reibstein of Pepper Hamilton LLP. Richard provides some great analysis of the FedEx issues related to the classification of it’s drivers as independent contractors. 

A year ago, the Attorneys General of New York, New Jersey, and Montana issued a joint statement that they intended to sue FedEx Ground for misclassifying drivers as independent contractors instead of employees.  Now, the second of those two Attorney Generals has done so when New York Attorney General Andrew Cuomo recently  filed a lawsuit against FedEx Ground on behalf of the State of New York.

The New York lawsuit was filed the same week as the Attorney General of theMontana, Steve Bullock, announced that his office settled its driver misclassification claims against FedEx Ground for $2.3 million.  The New York lawsuit also follows by two months the filing of a similar misclassification lawsuit by the Attorney General of  Kentucky, Jack Conway, and comes three months after the Attorney General of Massachusetts, Martha Coakley, settled its driver misclassification claims against FedEx Ground for $3 million.

Cuomo’s lawsuit (New York State v. FedEx Ground Package System, Inc.) was filed in the New York Supreme Court for New York County. It alleges that, by classifying its drivers as independent contractors, FedEx’s Home Delivery unit fails to provide its drivers the rights afforded to “employees” under New York’s labor laws, which includes the Unemployment Insurance, Workers Compensation, Wage Payment, and Overtime laws.  According to the complaint filed in court, Cuomo alleges that “FedEx has the power to control, and does in fact control, almost all aspects of its drivers’ work” including “hours, job duties, routes, and even clothing.”  There are reportedly over 700 drivers in the Home Delivery unit.  (Click “More” for “Takeaway” below)

Unlike FedEx’s Ground Division, its Express Division treats its drivers as employees, affording them rights under the state and federal labor laws.

Over sixty class action caseshave been brought against FedEx Ground under state and federal laws; many of those cases have been consolidated in a federal court in Indiana.  While FedEx Ground has won some important court battles in the past two years, it has lost a number including a California class action case in which it was required to pay $30 million in damages and legal fees.

FedEx Ground also defended itself against an IRSaudit over the misclassification issue.  Within the past year, the IRS withdrew a $319 million citation against FedEx Ground for unpaid federal employment taxes, penalties, and interest under the “safe harbor” provisions of the Revenue Act of 1978.  That “safe harbor” provision would be eliminated if Congress passes the “Fair Playing Field Act of 2010.”  Another independent contractor bill, the Employee Misclassification Prevention Act, is currently pending in Congress.  Eighteen states have passed laws cracking down on independent contractor misclassification in the past three years.

Takeaway: The New York lawsuit against FedEx Ground further demonstrates that misclassification has substantial legal consequences.  Regardless of the outcome of the New York case, defending enforcement actions and class action lawsuits is costly.  FedEx’s experience has led many companies, which utilize the services of a significant number of independent contractors, to take proactivesteps designed to enhance independent contractor compliance. Those steps are discussed by the author in an article found athttp://www.pepperlaw.com/publications_article.aspx?ArticleKey=1769.

Copyright © 2010 Pepper Hamilton LLP

The Danger of NLRB Changes to the Union Election Process

This week’s featured guest bloggers at the National Law Review are from Steptoe & Johnson PLLC.  John Merinar Jr. highlights some of the issues with some of the changes the National Labor Relations Board (“NLRB”) is contemplating such as electronic voting: 

Now that the mid-term elections are over, conventional wisdom is that the “card check” bill – also known as The Employee Free Choice Act – is not going anywhere in Congress.  Employers are right to celebrate this news, and to feel a sense of relief that such a disastrous step on the part of our legislature seemingly has been averted.

However, the celebratory mood should be tempered somewhat by the realization that employers are not out of the woods just yet.  Instead of waiting for Congress, the National Labor Relations Board (“NLRB”) is contemplating making some changes of its own to the union election process, and the ideas the NLRB has voiced are cause for concern.

One of the changes that the NLRB has been contemplating is switching from the current method of voting by secret ballot to electronic voting and voting over the internet.  The problems encountered with electronic voting in general elections have been well documented over the last several years.   There is no reason to think that the NLRB would find it any easier to make the transition to electronic voting than the people who run general elections did.

More importantly, there is no real reason to take on the change in the first place.  The move towards electronic voting in general elections was driven by the desire to obtain faster and more accurate results where hundreds of thousands, and in some elections, millions of voters cast ballots.  The number of voters in union elections is so small in comparison that the same rationale for change does not apply.

More troubling is the suggestion that internet voting might be a substitute for the conventional method.  As proof, look no further than the situation where an employer wins an election by an overwhelming margin.   In that situation, it would be apparent that many employees who signed authorization cards prior to the campaign actually voted for the employer when they had the benefit of confidentiality.  Undeniably, one of the reasons for that was the fact that these employees would cast votes at an independent polling place monitored by the NLRB.  They would vote in a booth protected by a curtain, fold the paper ballot, and stuff their folded ballots into the ballot box.  In short, they are given every assurance that their votes will be secret.  Without a secret ballot election, employees might end up with a union which they did not really want.

For example, if electronic voting were adopted, it’s not hard to imagine union organizers looking over voters’ shoulders as they vote on line.   Worse, it’s also not hard to imagine union organizers working hard to defeat passwords, disrupt service, and otherwise work to frustrate the right of every voter to have the opportunity to cast one ballot, and to do so secretively.

Sometimes the elaborate steps which NLRB representatives take to assure an employer, employee and union that the conventional method of voting is absolutely secret and not susceptible to tampering seem overdone, but the truth is there is no substitute for the confidence those steps give to everyone participating.  Employers depend on that level of confidence because only then can employees freely express their positions.  Employers should be very, very wary of suggestions from the NLRB that the time has come to consider alternatives which do not inspire that same degree of confidence.

© 2010 Steptoe & Johnson PLLC All Rights Reserved