Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance - Best Practices

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Avoiding Workplace PitfallsDomestic and Foreign Employee Compliance

Session III – Best Practices for Businesses

Agenda

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Immigration Compliance Best Practices

How to Prevent and Defend Government Investigations

The FLSA, Worker Misclassification & North Texas Businesses

Immigration ComplianceBest Practices

Ann Massey BadmusAngela M. Lopez

Katrina M. MooreCowles & Thompson, P.C

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Immigration Compliance Plan

Written Procedures and Policies

Written Procedures & Policies

I-9 procedures for hiring and re-verification

Anti-discrimination policies

Retention of I-9 forms

E-Verify procedures, if

applicableInvestigations


Training and Supervision

• Group training• Individual training• Sample training• Ongoing and periodic

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Secure and Consolidated Recordkeeping

• Retention• Electronic storage• Separation from

personnel records• Consolidation


• Establish a protocol to respond to no-match letters and other agency notifications

• Be consistent and do not discriminate

• Allow employees to make a good faith effort to resolve the discrepancy

Social Security No Match


Independent Contractor Compliance – Clear communication that contractor is

responsible for I-9 compliance

– Require proof of I-9 policies and procedures

– Get commitment to send only work authorized employees to your worksites

– Include indemnification clauses

– Reserve right to cancel if contractor has violated I-9 rules

– Notify contractor you will investigate credit reports of unauthorized workers

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Anti-Discrimination Best Practices

– Consistency – do not treat workers differently because of immigration status

– No “citizen only” policy

– Do not demand specific documents, e.g. “green card”

– Do not re-verify “green card” when the card expires

– Do not demand more documents than needed to complete I-9

– Do contact an immigration attorney if uncertain


Violations reporting and investigations

• Non-discriminatory and consistent

• Credible, detailed reports

• Follow company policy regarding terminations and other related policies

• Enforce, enforce, enforce!

I-9 Self Audits

Prepare for government audit

Identify errors

Identify training issues

Demonstrates good faith compliance

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I-9 Self Audits

Internal – experienced HR

Attorney audit

Third-party auditors

Post-Audit Implementation

Conduct training

Ensure corrections are made

Review audit report and implement procedural changes

Maintain ongoing project attitude

ICE Enforcement Action

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Responding to ICE Enforcement Actions

Choose a point person

Ask to see documents authorizing the search of premises or employees (warrant)

Make copy of the warrant, notice of inspection (NOI), subpoena, etc


Ask about purpose and scope of inspection

Accompany agents on the search

Comply with the warrant but do not volunteer information not covered by warrant


If I-9 inspection, don’t waive right to 3-day notice (ask for extension)

Separate I-9 forms from personnel files

Offsite review – make copies of all documents submitted

Onsite review – seat office in conference room or somewhere separate from work areas

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Call an experienced attorney immediately upon receipt of the NOI or initiation of enforcement action and do not allow agents to talk with employees before calling an attorney.

Immigration Counsel

Develop written compliance plans and

audit safeguards

Conduct compliance audits

Develop contractor compliance and

termination policies

Immigration Counsel

Conduct training and reviews

Advise on immigration-related hiring or firing issues

Represent company during enforcement

actions

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The FLSA, Worker Misclassification & North Texas Businesses

Mark Hill

Shareholder, Cowles & Thompson, P.C.

Legal Landscape

100s of claims are filed in North Texas State and Federal Courts everyday.

Employment claims against local businesses are an increasing part of the legal landscape in Collin, Dallas and surrounding counties.

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Most Common Business Claims

Fiduciary cases Contract casesEMPLOYMENT

cases

Employment Cases

Non-Compete

Confidentiality & Trade Secret

Discrimination

FLSA

What is the FLSA?

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Fair Labor Standards Act (FLSA)

The FLSA establishes minimum wage, overtime pay, tip pooling, record keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Key FLSA Components

“Collective Action”

treatment

Liquidated Damages

Willful Violations

Recovery of Attorney’s

Fees

FLSA Claims FiledWithin The Last Month

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Recent FLSA Claims

Laundromat - Attendant

● Min. Wage, OT

Payroll co. - Consultant

● Misclassification, OT

Medical co. – Customer Serv. Coordinator

● OT, Time Sheet manipulation

Cleaning serv. – Maid/Cleaners

● Min. Wage, OT, Travel time

Worker Classification

Independent Contractor or Employee

This may surprise some, but having a worker sign an Independent Contractor agreement does not make that worker an independent contractor.

…At least not by itself.

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Worker Classification Analysis

The Supreme Court has said that there is no definition that solves all problems relating to the employer-employee relationship under the FLSA.

The goal of the analysis is to determine the underlying “economic reality” of the situation and whether the individual is economically dependent on the supposed employer.

Several Factors to Consider

A Framework has been established to determine whether a worker is an employee or an independent contractor.

Several factors to consider – no one factor controls.

The Supreme Court has said determination of the relationship cannot be based on isolated factors or upon a single characteristic, but depends upon the circumstances of the whole activity.

Independent Contractor Framework

(1) the extent to which the worker's services are an integral part of the employer's business;

(2) the permanency of the relationship;

(3) the amount of the worker's investment in facilities and equipment;

(4) the nature and degree of control by the principal;

(5) the worker's opportunities for profit and loss; and

(6) the level of skill required in performing the job and the amount of initiative, judgment or foresight required for success.

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Misclassification is a Focus

The U.S. Department of Labor (DOL) is also making employer compliance with the FLSA a focus, and misclassification of employees as independent contractors is at the center of its scrutiny.

A recent study by the University of Texas found that almost half of all construction workers were misclassified as independent contractors.

What can the Business Owner do?

How to Prevent and Defend Government Investigations

Brian Farrington

Shareholder, Cowles & Thompson, P.C

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Preparing for a Wage Hour Investigation

1. Identify all salaried exempt employees. (Distinguish from salaried nonexempt.)

2.Make sure you know what exemption you are claiming for each.

3. Some are obvious—CEO, etc. Focus on the ones which are not.


Make sure you have job descriptions in place for all, and that they are accurate.

Do periodic audits of jobs—interview incumbents, make sure duties are what you think they are, and are accurately represented in the job description.


When new job is created, or job functions change significantly, revisit the job soon thereafter—e.g., 90 days, 6 months. Make sure job duties are what you envisioned they would be.

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Make sure you pay salaried exempt employees according to the regulations.

Have a policy in place which allows exempt employees who think they have been improperly docked to complain, and fix any problems which arise.

Records of Hours Worked

Make sure you have a system in place to record accurately the hours worked by all nonexempt employees.

No such system works without proactive monitoring by first-level supervisors.

Audit periodically—interview employees to be sure they are recording all hours worked.

Records of Hours Worked

Focus on:

Employees coming in early/staying late and working off the clock.

Employees working through lunch.

Employees not paid for compensable travel.

Preparatory and concluding activities paid.

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Minimum Wage

Make sure all employees are paid federal/state/local minimum wage, whichever is the highest.

For employees paid on a contingent basis (piece rate, commission, etc.), make sure there is an automatic feature which identifies any week in which employee didn’t make MW, and preferably automatically supplements their pay.

Minimum Wage

Make sure recapture is explained in policies. If you intend to recapture such advances, make sure it’s clear and have employees sign an authorization to this effect.

Minimum Wage

Make sure that any deductions for employer’s benefit don’t reduce employees below MW.

Also, make sure to have employee consents for any deductions other than legal deductions.

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Tipped Employees

Make sure you only claim tip credit for eligible employees—employees with direct customer serving contact.

Watch state laws—many states don’t allow tip credit at all, or allow less than the feds.

Tipped Employees

Make sure all necessary disclosures are made—see 29 CFR 531. Have employees sign forms describing how they are paid, indicating that they understand, and put copies in personnel files.

Tipped Employees

Make sure employees are reporting enough tips to bring them up to MW. If not, make up the difference, preferably automatically. If employees can’t make at least MW, need to have another job.

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Tipped Employees

If you use service charges, make sure they are announced to the customers, and are included in gross receipts. Records should clearly reflect this, even if all are distributed so it’s “in and out.”

Also, remember that service charge distributions are wages, not tips, and increase the regular rate for overtime purposes.

Tipped Employees

Make no deductions for the employer’s benefit—uniforms, shortages, breakage, walkouts, etc.—from the wages of tipped employees.

Tip Pools

Make all necessary disclosures.

Make sure tipped employees who contribute are left with MW

Make sure recipients get enough to make MW, or supplement them.

Make sure only serving employees receive anything from tip pool—not managers, not back of house.

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Overtime

Make sure OT is paid on w/w basis, not longer periods.

Don’t pay OT on paid time off unless you really want to.

Overtime

Make sure all compensation except statutory exceptions are included in Regular Rate. Pay particular attention to bonuses, shift differentials, on-call pay.

Also, remember that commissions, bonuses, etc. earned over periods longer than a workweek must be allocated back over the entire period they are intended to recognize.

Overtime

Make sure expense reimbursements are exact or reasonably approximate.

If use fluctuating workweek, or daily rate, make sure these payments are the employees’ only form of compensation.

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Child Labor

No one under 14.

14 – 15: make sure they aren’t working in hazardous or prohibited occupations, and make sure they don’t exceed hours/time standards

16 -17: make sure they don’t work in Hazardous Occupations.

Investigations

NEVER ALLOW UNANNOUNCED WALK-IN INVESTIGATIONS! Politely refuse to provide any information at all. Make an appointment for investigator to return. Make sure all your satellite offices know this.

(exception: investigator has a warrant)

Investigations

Best practice—give them your lawyer’s contact info, and let the lawyer handle it.

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Investigations

When investigator arrives, only provide what you’re asked. DON’T VOLUNTEER.

Copies of records: don’t have to provide photocopies or electronic copies, but makes sense in most cases.

Investigations

Interviews: generally allow investigator to interview on premises.

Don’t coach employees, but for exempt employees, make sure they understand and can explain all their duties and responsibilities. Pre-interviews are helpful.

May sit in on interview of supervisors when discussing employer policies, not individual’s exempt status.

Investigations

Final conference: don’t agree to anything you are uncomfortable with without checking with your lawyer.

DON’T SIGN THE BACK WAGE SUMMARY! Unless you agree.

If you can’t resolve with investigator, ask for a second level conference

If you are assessed CMP’s, appeal timely. You can then negotiate.

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EEOC—General

Audit policies—have all the ones you need: EEO, harassment, etc.

Have a discrimination/harassment complaint procedure in place.

Thoroughly and timely investigate all internal complaints, no matter how unlikely.

Inform complainant of results, positive or negative.

NO retaliation!

EEOC—General

Accurate essential function job descriptions should be in place for all jobs, updated as needed and audited periodically.

EEOC—General

EEO, anti-harassment training should be provided:

-all supervisors

-all interviewers

-all HR personnel

-all employees, to some extent

Record who took the training, when, and have copies of content on file.

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Responding to Charges of Discrimination

Issue a “document hold” ensuring no relevant documents are destroyed.

Make sure charge is timely—CP’s generally must complain within 300 days of date of alleged discrimination.

Decide if you want to mediate—usually do so if you are vulnerable.


Position statements:

-make sure all assertions in charge are accurate. If not, say so.

-Explain your reasons for adverse action.

-Provide documentation

-Address comparators—point out the helpful ones, distinguish the bad ones.


“Same actor” inference—if the same person(s) who fired the CP hired him/her, point this out.

Provide relevant policies, and show how you followed, or why you didn’t.

Respond to any questions in the Questionnaire or Request for Information, but briefly and succinctly.

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Employers have a right to be present for any interview of supervisors.

901 Main StreetSuite 3900

Dallas, Texas 75202

[email protected]

How to connect with us

mailto:[email protected]

http://www.cowlesthompson.com/

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What to Do Next?

Facts of each case are different. The general information provided here should not be relied and is not legal advice.

Consult with an experienced attorney to get the right advice for your specific circumstances.

Law

Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance - Best Practices