Legal Briefs for HR

Welcome to Legal Briefs for HR, an update on employment issues sent to over 4700 HR professionals, in-house counsel and business ownersall over the U.S. to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in!  Back issues are posted on my firm’s NEWLY UPDATED WEBSITE at www.munckcarter.com under Media Center/Legal Briefs.  Welcome to new readers who attended my presentation at the Texas Association of Business (TAB) Employment Relations Symposium in San Antonio on July 15! 

Here’s what’s hot:
 

1. Put it on ICE– Dep’t of Homeland Security’s Immigration and Customs Enforcement (ICE) division issued a final rule on electronic storage of Form I-9, replacing an interim rule that’s been in place since 2006.  The final rule takes effect August 23 and a complete copy of the final rule is available at http://edocket.access.gpo.gov/2010/2010-17806.htm.   Some of the questions addressed in the rule are:
   1. Time frame for completing Form I-9?  Within three business days (not calendar days) of the date employment begins.
   2. OK to use a combo of electronic and/or paper storage systems to retain copies?  Yes.
   3. OK to change electronic storage systems, as tech evolves?  Yes, so long as new system meets stated requirements.
   4. OK to store in electronic system with no option to produce a hard copy of the record?  No.
   5. OK to store ancillary docs (i.e., copy of proof of identify and/or authorization to work in U.S.) electronically?  Yes.  Not required to keep them at all but if you decide to, do it for all employees to avoid discrimination claims.  It’s really everyone or no one.
   6. OK to store I-9 with employee’s other records?  Separately?  Yes to both.  OK to keep I-9 with individual employee’s record, or put all I-9s together in a discrete file.
   7. Required to store the entire Form I-9?  No.  You do not need to store the instruction pages, only the pages with employee or employer data entered.
   8. Must required audit trail on each Form I-9 track every time file is accessed, even when record not modified but only viewed?  No.  Audit trail should track each time file is “created, completed, updated, modified, altered or corrected.”
   9. Must employer supply a receipt of transaction to every employee who completes an I-9?  No, only if employee requests it.
   10. Can I have a license or contract restriction on my electronic storage system that limits or prohibits access by U.S. government agencies?  No.  Feds gotta peek to ensure compliance.
        
2. Get on Top of SOX – The Dodd-Frank Wall Street Reform and Consumer Protection Act amends Sarbanes-Oxley Act (SOX) to, among other things, encourage employee whistle-blowing and protect against ensuing employer retaliation.  A few key changes:
   1. Old – SOX protection only if employee “reasonably believes” reported info amounts to securities, bank or wire fraud, SEC violation or other federal law violation relating to shareholders.  New – Any complaint to SEC is protected, regardless of employee’s reasonable belief, or lack thereof.  Internal complaints still subject to “reasonable belief” requirement.
   2. Old – SOX protection only if employee worked for publicly-traded company.  New – Protection expanded to cover publicly-traded companies and “any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company.”
   3. Old – 90-day statute of limitations.  New – 180-day SOL for opposition-type claims & six years (from date of violation) or three years (from date of discovery of violation) for participation claims.  Ten year from date of violation limit on “discovery” claims.
   4. Old – Start claim by filing with U.S. Dep’t of Labor.  New – Employee can file participation claim in court, bypassing DOL.
   5. Old – Courts allowed individual waiver of SOX claims.  New – Anti-retaliation remedies may not be waived by any agreement, policy or condition of employment, including predispute arbitration agreement. 
   6. There is more, including cash rewards of between 10% and 30% paid by the SEC to the whistleblower, where sanctions are $1 million plus.  For a complete copy, go to http://thomas.loc.gov and type in H.R. 4173 as the bill number.
       
3. It’s Baaaaack . . . Paycheck Fairness Act (H.R. 1338) – Proposed changes to the Equal Pay Act (EPA) did not fly in 2009, when the Lilly Ledbetter Fair Pay Act became law, but President Obama is again urging passage.  What’s in store for employers, should Paycheck Fairness Act pass this time?
   1. Unlimited  compensatory and punitive damages replace EPA’s current offering of liquidated damages;
   2. Class actions would change from current opt-in model for plaintiffs to opt-out, increasing the size of the class;
   3. Expanding types of employer conduct which would support employee’s retaliation claims;
   4. Lessening of employers’ ability to use the “factor other than sex” defense; and
   5. Broadening of the definition of “establishment,” opening up pay comparisons beyond a single worksite of the employer.
   6. For full text and to track status of the bill, go to http://thomas.loc.gov and insert bill name or number.
       
4. Painful Lesson– Add another sky-high class action settlement to the growing case for making sure that your employees are properly classified and paid under federal and state wage and hour laws.  In two actions, an employer has agreed to pay $1.37 million to computer engineers misclassified as exempt and $6.6 million to loan specialists, mortgage sales assistants and loan document specialists who claim they [1] received a flat rate of pay regardless of hours worked; [2] managers disapproved overtime hours worked that had been recorded by employees in an electronic timekeeping system (aka the dreaded manager override option on so-called “smart” time-keeping systems); and [3] meal and rest period violations.  Total cost on paper?  Nearly $8 million.  Actual costs, including tangibles (e.g., cost of defense) and intangibles?  You don’t want to know.  Russell v. Wells Fargo and Co. and In re Wells Fargo Overtime Pay Litigation (N.D. Cal. 7-10).
    
5. Got Milk?– The Dep’t of Labor has posted a new Fact Sheet to help employers comply with the requirement of providing break time and a space for nursing mothers under the Patient Protection and Affordable Care Act (PPACA), which amended the Fair Labor Standards Act.  Go to www.dol.gov/whd/regs/compliance/whdfs73.htm# for a copy of Fact Sheet #73. Odd quirk – employers are only required to provide breaks to nursing mothers who are nonexempt, not those who are exempt (unless required to do so under State law).  Hmm.  Do you really want to tick off your exempt (e.g., executive, professional, administrative) mamas? Really?
    
6. Got Prevention?– Another effect of PPACA is taking shape, with the release of an interim final rule which requires (with some exceptions) health insurance plans to cover certain preventive procedures, such as mammograms, colonoscopies, cancer screenings, blood pressure/cholesterol screenings, smoking/obesity counseling, regular check-ups and recommended shots (Disclaimer:  does not include tequila), without requiring the plan participant to pay a deductible, copayment or coinsurance when the service is provided in-network.  The rules take effect for plan/policy years beginning on or after Sept. 23, 2010.  This missive was a joint exercise of U.S Treasury/IRS, U.S. Dep’t of Labor/EBSA and U.S. Dep’t of Health and Human Services.  A summary fact sheet is posted at www.healthcare.gov/law/about/provisions/services/background.html along with links to full text of the rule and the PPACA.
    
7. HIRE Act Update –If you were wondering if the HIRE Act tax breaks spurred hiring, read the stats and draw your own conclusions.  The Treasury Dep’t says, in a July 12 report, that 4.5 million private sector workers were hired between February 5 and May who had been out of work or at least 60 days, qualifying their new employers to take advantage of the tax break.  The break has two parts – skip the 6.2% contribution to Social Security and, if the employee remains on board for 52 weeks, an additional tax credit of $1000.  The break is good for the rest of the calendar year, so be sure and get yours!
    
8. Right to Work 101 –Still think that “employment at will” and “right to work” are the same thing?  Set yourself straight by reading a great article from the Dallas Morning News at http://tinyurl.com/23g64le.
    
9. Stated Differently– Here are some tidbits for you multi-state employers:
   1. California– Wage statements do comply with Labor Code sec. 226 if they state the number of hours worked “straight time” and the number of hours worked overtime, but do not add the two to provide a total number of hours worked.  Morgan v. United Retail Inc. (Cal. Ct. App. 7-10).
   2. Connecticut – Effective October 1, employers of 3+ employees must provide at least 12 days of family violence leave for victims, if reasonably necessary to [1] seek medical care or psychological or other counseling; [2] obtain services from a victim services group; [3] relocate; or [4] participate in any civil or criminal proceeding related to the violence.  Also,  employers are prohibited from refusing to hire, firing, penalizing, threatening or otherwise retaliating against a worker because the worker is a victim of family violence or because the worker attends or participates in a related court proceeding.
   3. Illinois- The minimum wage rate in IL for adult workers jumped up to $8.25 per hour, effective July 1.  New employees may be paid $7.75 for the first 90 days and those under age 18 can also be paid $7.75/hour.  Where a tip credit is being used, the new minimums are $4.95 (adult) and $4.65 (under age 18), plus the tip credit, which brings their pay up to at least $8.25 and $7.75 per hour, respectively.
   4. Kentucky– No writing, sending or reading text, instant message or email while operating a motor vehicle that is in motion.  Persons under age 18 cannot write, send, read or speak on a personal communications device  while operating a motor vehicle that is in motion.  Only courtesy warnings will issue until January 1, 2011 when penalties will be enforced.
   5. Massachusetts – MA court denied employer’s motion to dismiss on jurisdictional grounds, where employee of MA-based employer made claim for unpaid overtime while working in CT.  MA wage and hour statute provides for treble damages (CT does not).  Court found that the MA law applies to a MA corporation that operates in the Commonwealth and elsewhere.  Gonyou v. Tri-Wire Engineering Solutions, Inc. (D. Mass. 6-10).
   6. Ohio – Effective July 2, employers of 50+ must provide up to two weeks of unpaid leave to an employee who is the spouse, parent, or has/had custody of a U.S. military service member when that service member is deployed or is injured.  Unlike similar leave under the NDAA amendments to the FMLA, there is no requirement that the employee work at location where there are 50 employees of the employer within 75 miles.
   7. South Carolina – Effective July 1, all SC employers (not just those with 100 or more employees) must either verify a new hire via the federal E-Verify system or confirm that the employee possesses qualifying identification, within five days after employing the worker.  Penalties can include fines of $100 to $1000 per violation and suspension of license to do business in SC.  For more info, go to www.llr.state.sc.us/ and scroll down to “On-Line Training Program on New Immigration Law Available.”
       
10. Hire a Vet– Mark your calendar for Friday, Sept. 24 and go to www.texasshrm.org after August 1 for more info on “Building Veteran Human Capital for Texas Employers” to be held at the Hilton DFW Lakes in Grapevine, TX.  
     
11. For the Birds – If you like being tweeted and want breaking news on employment law changes, follow me on Twitter.  I’m at @amross.

Until next time,

Audrey E. Mross
Labor & Employment Attorney
Munck Carter LLP
600 Banner Place
12770 Coit Road
Dallas, TX  75251

972.628.3661 (direct)
972.628.3616 (fax)
214.868.3033 (iPhone)
amross@munckcarter.com
www.munckcarter.com

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