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“An ounce of prevention is worth a pound of cure.” -Benjamin Franklin
Spring is a time of renewal; it is a good time to dig into our files and clean up any messes. Below are some tips from employment, immigration and employee benefits attorneys to assist you in making a fresh start and getting your workplace practices organized.
Refresh/Reinvigorate Your Annual Discrimination/Harassment-Prevention Training With A Focus on Retaliation-Avoidance and Reasonable Accommodation.
Training managers and employees, annually, is one of the most important preventive measures an employer can take to reduce the risk of an employee lawsuit. Many managers have no idea what constitutes unlawful retaliation and even the best managers unwittingly may engage in unlawful retaliation. Now– more than ever– your annual training should focus on retaliation prevention and reasonable accommodation of disabilities and religious practices. Here’s why:
Retaliation tops all charges filed with EEOC.
For the 2nd year in a row,retaliation charges were the largest category of charges filed with the EEOC—approximately 1/3 of the nearly 100,000 charges filed in Fiscal Year 2011 (more than any category of discrimination charge). Remember that even where a discrimination claim is meritless, an employer may still face exposure on a retaliation claim arising from a complaint about alleged discrimination.
Damages for successful retaliation and discrimination claims can be costly.
2. Review Your Hiring Practices.
Conduct a self-audit of your hiring practices (with your legal counsel to be able to invoke the attorney-client privilege; otherwise it is discoverable in a litigation). Examine whether your neutral policies may be adversely impacting a legally protected group. The EEOC has been targeting employers that create barriers to hire—for instance, use of criminal background checks and credit histories in hiring that adversely impact applicants in legally protected categories (like minorities); exclusion of women from consideration for hire in traditional male occupations (like mechanic); use of job requirements that may adversely impact a legally protected group.
Additionally, when recruiting job candidates, critically analyze whether all of the requirements in a job posting are job-related and consistent with business necessity (i.e., is a high school diploma truly a necessary and job-related requirement?).
3. Update Job Descriptions
Ensure job descriptions are current, contain the essential functions of the job, reflect the duties employees are actually performing, and are job-related and consistent with business necessity. Accurately identifying and documenting the essential functions of all jobs can be helpful in many ways: managing a disabled employee’s/applicant’s request for a reasonable accommodation for a disability, assisting in defending against claims of unlawful pay disparity or other forms of discrimination, providing some basis of objectivity in evaluating performance, and assisting in defending against a wage-and-hour audit or lawsuit challenging the exempt status of an employee.
On that note, clean up your worker classifications. There were more than 7,000 wage-and-hour lawsuits filed in federal court last year, up 32% from 2008. In fiscal year 2011, the U.S. DOL recovered $225 million in back wages for employees, up 28% from fiscal year 2010. The U.S. DOL also has increased the number of wage-and-hour investigators by 40%, to 1,050.
In light of the increasing wave of lawsuits alleging misclassification of workers as exempt from overtime laws and increased federal and state government enforcement of wage and hour laws, your organization should review all of its worker classifications for accuracy with legal counsel (employee versus independent contractor and exempt versus nonexempt from overtime pay).
4. Internally Audit Personnel Files
Regularly conduct and complete performance appraisals and ensure they are reviewed and signed by both the employee and the reviewing supervisor. Ensure that I-9s for all employees are complete and kept in a separate file that can be produced in the event of a government audit. Ensure that medical records are not kept in employees’ personnel files, but instead in a separate set of secured medical files accessible only on a need-to-know basis.
5. Examine the Likely Effects of Any Group Terminations and Retirement Practices
In March, 2012, the EEOC issued its final rule on disparate impact and the “reasonable factors other than age” defense to claims of age discrimination under the Age Discrimination in Employment Act (ADEA). According to the EEOC, the final rule clarifies that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, unless the employer can show that the policy or practice is based on a reasonable factor other than age.
Review the impact of reductions-in-force on legally protected groups, including any mandatory retirement practices that may violate the Age Discrimination in Employment Act (ADEA). The EEOC recently sued an employer alleging that the Company unlawfully laid off workers over the age of 45 in a series of reductions-in-force in violation of the ADEA. It also claimed that the Company denied workers over the age of 45 leadership training and then laid them off to make way for younger leaders. The Company settled the case with the EEOC for approximately $3 million. The EEOC also recently sued and settled with a national law firm for allegedly violating the ADEA because of a firm policy requiring partners to relinquish their equity stake in the partnership at age 70.
6. No Requirement To Post NLRB Notice Regarding Workers’ Right to Unionize (At This Time)
You may recall that the NLRB issued a final rule requiring employers subject to the NLRB’s jurisdiction– most private-sector employers (even if they do not have union workers) — to post a notice of workers’ right to unionize. The NLRB’s rule had been scheduled to take effect on April 30, 2012. On April 13, 2012, however, a federal district court judge in South Carolina struck down the posting rule, in its entirety, as unlawful, finding that the NLRB lacked the authority to promulgate the rule. On April 17, 2012, the D.C. Circuit Court of Appeals temporarily enjoined the NLRB from enforcing its final rule. Thereafter, the NLRB announced that it would not implement its final rule pending resolution of the issues by the D.C. Circuit Court. The NLRB also plans to appeal the South Carolina District Court decision and a portion of the D.C. District Court’s decision which invalidated certain of the rule’s enforcement sanctions (although it upheld the posting requirement).
Stay posted for further developments because the ultimate fate of this posting rule is uncertain. Contact your employment counsel to find out what labor postings your State requires.
It’s Time to Clean Up Your I-9s
Many employers do not believe they have immigration issues because they do not employ illegal aliens or sponsor foreigners for H-1B visas or other work permits. In reality, if an employer has employees, then it has immigration issues.
The I-9 process is fraught with peril for employers because this deceptively simple form– if not filled out correctly and the correct process is not followed– can result in fines ranging from $110 to $1,100 per I-9. For example, if you have 50 employees and did not fill out their I-9s correctly, depending on what you did wrong, you could face a paperwork fine ofup to $55,000. (In my 18 years of practice, I have never found a client that has not made a mistake on an I-9. Once we have assisted the client in conducting a self-audit, we have caught and corrected the errors, and have been able to help mitigate the risk of potential fines in case of an audit by ICE.)
Discard I-9s of former employees that you no longer need to keep. If you are not discarding the I-9s of former employees that you no longer need to keep and the I-9s of former employees are audited, you can be fined for paperwork violations on former employees too, again up to $1,100 per I-9.
Since 2009, ICE has audited over 6,000 employers; debarred 441 companies and individuals from filing work permit petitions and labor certification application with the USCIS and DOL; imposed more than $76 million in financial sanctions on companies for I-9 violations; and arrested 221 employers accused of criminal violations related to employment. In addition, there have been reports from ICE that they are gearing up for a new wave of I-9 audits this year.
Based on the above, employers would be well-advised to self-audit their I-9s this Spring.
Julia L. Stommes, FSB Partner– Immigration
Retirement Plans: A Stitch in Time Saves Nine!
Common Errors in Tax-qualified Retirement Plans May Lead to Costly Sanctions upon IRS Audit. Several errors occur frequently in retirement plan administration. Catching these mistakes early and correcting them before the IRS identifies the errors on an audit can save you costly sanctions. Here are some of those errors:
We can review documents and procedures to help find and correct these or other common errors in retirement plan administration. Please see the next item for reasons why a proactive effort now may be particularly worthwhile.
Plan sponsors also need to maintain their retirement plans in compliance with Department of Labor (DOL) requirements. Some new DOL compliance requirements are on the horizon:
The regulations require certain service providers to 401(k) plans (mainly) to disclose information that will help plan fiduciaries determine the reasonableness of their service provider contracts and arrangements and identify potential conflicts of interest. The initial disclosures generally must be made in advance of the date a service provider contract or arrangement is entered into, extended, or renewed. After that, most information must be updated within 60 days of any change, although errors and omissions must still be communicated within 30 days of discovery.
Harvey Kurtz, FSB Partner — Employee Benefits & Executive Compensation
Springtime is a good time to revisit– with a fresh outlook– the contents of personnel files, policies, practices, I-9s, and plan documents that have not been reviewed for awhile. Benjamin Franklin wisely once said: “An ounce of prevention is worth a pound of cure.” Being proactive in taking small steps to clean up your workplace practices now rather than reactive when a crisis occurs may save you “pounds” in the long run.
Lisa M. Brauner, Esq.
212.580.5279 or 347.695.0025
Telephone: (914) 631-1774
2 Overhill Road, Suite 400
Scarsdale, NY 10583