Author Archives: smithamundsen

2018 Immigration Updates

Contributed by Sara Zorich, January 16, 2018

Deferred Action for Childhood Arrivals (DACA) Renewals Resume
As of January 13, 2018, the United States Citizenship and Immigration Services (USCIS) has announced that, due to pending litigation and a federal court order, it is going to resume accepting and processing renewals for DACA recipients including Employment Authorization Documents granting work status.  This only applies to DACA recipients who had previously been granted deferred action status and USCIS is NOT accepting first time DACA applications.

USCIS has indicated the following:

  1. If the person previously received DACA and their DACA expired on or after Sept. 5, 2016, the person may still file a DACA request as a renewal request which includes a request for extension of the person’s work authorization.
  2. If the person previously received DACA and the DACA expired before 9/5/16, the person may file a new initial DACA request including work authorization.

Employers should check the USCIS website for additional information, but this is good news for employers and employees as employees on DACA now have an avenue to once again renew their employment authorization and legal work status.

Temporary Protected Status
On November 20, 2017, the Acting Secretary of Homeland Security announced the decision to end Temporary Protected Status (TPS) for Haiti.  The transition period is for 18 months and the TPS designation will end on 7/22/19.

On January 8, 2018, the Secretary of Homeland Security announced the decision to terminate the TPS designation for El Salvador.  Again, there is an 18 month transition period and the TPS designation will terminate on 9/9/19.

These announcements will eliminate the ability for individuals from Haiti and El Salvador to apply for employment authorization documents and work authorization based on their TPS status.

If a company employs an alien authorized to work, the company must keep track and monitor the date in which an alien’s work authorization expires.  These employees require reverification.  See USCIS Handbook for employers for more information about reverification of current employees.

Federal Court Strikes Down Certain EEOC Wellness Program Regulations, Effective January 1, 2019

Contributed by Steven Jados, January 12, 2018

In a recent decision with a nation-wide effect, the U.S. District Court for the District of Columbia struck down certain provisions of the EEOC’s Wellness Program regulations.

As we have previously discussed, workplace wellness programs generally provide certain incentives to employees as part of programs intended to prevent illness and encourage healthier lifestyles.  But these programs can run afoul of various federal and state anti-discrimination laws, particularly the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”), if the programs require employees to disclose private medical information under circumstances that are not truly “voluntary.”

The inherent difficulty with wellness program incentives is the notion that, at some point, a reward or penalty becomes so great that it becomes impossible to refuse.  At that point, the incentives are so coercive that the wellness program can no longer be considered voluntary under the ADA and GINA.

To assist employers with implementing ADA and GINA-compliant wellness programs, the EEOC issued regulations in May 2016 that set an upper limit on incentives (which can take the form of rewards or penalties) linked to wellness program participation of 30% of the cost of employee-only health care coverage.  Under the regulations, the EEOC considered wellness programs that complied with the 30% incentive threshold as falling within the definition of “voluntary.”

In August 2017, however, the D.C. district court ruled that the 30% incentive regulations were improper.  The main shortcoming of the regulations, as identified by the court, is that the EEOC apparently set the 30% threshold without any concrete data or reasoning to support the proposition that an incentive crosses the line from voluntary to involuntary at 30% of the cost of health insurance.  Instead of striking down the regulations entirely at that time, the court gave the EEOC the opportunity to modify the regulations.

In the closing days of 2017, the court revisited the issue and determined that the EEOC was not moving quickly enough to correct the regulations on its own, and the court vacated the 30% incentive regulations—but did so with an effective date of January 1, 2019, in order to minimize disruptions to existing wellness programs and to allow employers sufficient time to modify their wellness programs in the future.

The court also noted that the effective date of January 1, 2019, was intended in part to provide the EEOC additional time to issue new regulations.  Prior to the December ruling, the EEOC told the court that the EEOC intended to issue proposed regulations by August 2018, but that final regulations would not go into effect until 2021.  The court’s response was that 2021 is “unacceptable,” and the court “strongly encouraged” the EEOC to accelerate its timeline.

With all of that in mind, the bottom line is that until the EEOC issues new regulations, employers must consider structuring wellness program incentives with an eye toward documenting, with concrete data and analysis, that the program’s incentives are not so great–and, therefore, not so coercive—that the program becomes involuntary.  Stay tuned, as we will closely monitor any further action and guidance from the EEOC on this issue.

DOL Says Goodbye to Six-Factor Unpaid Internship Test

Contributed by JT Charron, January 10, 2018

On Friday, the Department of Labor abandoned its six-part test for determining whether an intern must be paid, and replaced with the more employer-friendly “primary beneficiary test.” This announcement came less than a month after the Ninth Circuit became the fourth federal appellate court to expressly reject the DOL’s six-factor test in favor of the primary beneficiary test.

Background

Under the Fair Labor Standards Act (FLSA) employers must generally pay employees minimum wage for all hours worked, and overtime for all hours worked over 40 in a week. The FLSA, however, exempts certain individuals from these requirements, including bona fide interns. To determine whether an intern was bona fide, the DOL introduced a six-factor test in 2010, which required that:

  1. The internship was similar to training that would be offered in an education environment;
  2. The internship experience was for the benefit of the intern;
  3. The internship was not displacing a regular employee;
  4. The training provide by the employer to the intern may have impeded the employer’s operations;
  5. The intern was not expecting a permanent position at the conclusion of the internship; and
  6. Both the employer and the intern understand that there was no compensation.

    56243229 - interns wanted internship training trainee concept

    “interns wanted” sign

According to the DOL, if even one of these factors did not apply, the individual was an employee — not an intern — and was required to be paid minimum wage and overtime.

The Primary Beneficiary Test

First articulated in 2015 by the Second Circuit Court of Appeals, the primary beneficiary test is a case-by-case approach that gives consideration to the following seven factors:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee — and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Importantly, no single factor is dispositive, and the employee/intern distinction will be based on the unique circumstances of each case.

Bottom Line

While the primary beneficiary test will provide more flexibility for businesses preparing for the 2018 internship season, employers must still be careful in designing internship programs. As the above factors indicate, the primary beneficiary of any program must still be the intern — not the employer.

The Impact of Local Minimum Wage and Paid Sick Leave Ordinances on the Transportation Industry

Contributed by Michael Wong, January 5, 2018

Over the past few years, cities, counties and local municipalities have been enacting laws and ordinances increasing the minimum wage and requiring paid sick leave for employees. While there have been growing pains with how these apply to normal hourly non-exempt employees and tipped servers, do these apply to motor carriers and employees who are truck drivers?  This can be the most frustrating legal response of all, “it depends.”

In most cases, minimum wage laws enacted by states follow the Fair Labor Standard Act (“FLSA”) and provide exemptions for motor carriers.  Indeed, under Section 12(b)(1) of the FLSA, employees whose duties, wholly or in part, affect the safety of operation of a motor vehicle and are involved in interstate commerce are exempt from being paid overtime. Whether a municipality’s minimum wage ordinance applies, depends on the language and rules of the ordinance. For example, the rules of the Cook County, Illinois minimum wage specifically state that a regulated motor carrier subject to subsection 3(d)(7) of the Illinois Minimum Wage Law is not a “Covered Employer” that would be required to pay covered employees the Chicago or Cook County minimum wage. Similarly, the rules of the City of Chicago minimum wage states that individuals employed for a motor carrier who are subject to the Department of Transportation regulation are not subject to the Chicago minimum wage.

However, paid sick leave laws and ordinances are different.  Neither the Cook County, Illinois earned sick leave ordinance or City of Chicago earned sick leave ordinance have the same exclusion for motor carriers or truck drivers.  While neither expressly states that motor carriers are required to provide paid sick leave to employees who are truck drivers, they also do not state that motor carriers or truck drivers are exempt.  Due to the plain language exempting motor carriers and truck drivers from the minimum wage ordinances, there is a very strong argument that motor carriers are required to provide their employees who are truck drivers with paid sick leave.

Indeed, this interpretation is not unusual within the growing trend of states, cities and local municipalities expanding employee rights – including those of truck drivers. Currently there are 8 states and 30 cities and municipalities that have paid sick leave laws which include:  Illinois (local), Washington (state and local), California (state and local), Arizona (state and local), Oregon (state and local), Minnesota (local), Vermont (state), Massachusetts (state and local), Pennsylvania (local), New Jersey (local), New York (local), Connecticut (state) and Washington, D.C. (local).

Bottom line, the different paid sick leave laws do not address or expressly exempt motor carriers or truck drivers from being subject to the law or ordinance. By not addressing or expressly exempting motor carriers and their employees, these laws are creating significant exposure for motor carriers that fail to make changes by providing employees who are truck drivers with the ability to earn paid sick leave or considering how those employees are being compensated. Certainly, with the patchwork of laws and nuances in each jurisdiction, it can be extremely frustrating and difficult to try and implement a globally compliant policy.  Thus, special attention must be taken when crafting such policies and review by experienced counsel should be part of the process.  Moreover, motor carriers utilizing truck drivers who are independent contractors or owner/operators should take particular pause to consider the increased liability from misclassification claims and the potential damages under the paid sick leave laws, in addition to any applicable minimum wage law or ordinance.

Tax Bill Cuts Deduction for Confidential Sexual Harassment & Abuse Settlements

Contributed by Noah A. Frank and Kelly Haab-Tallitsch, January 3, 2018

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law as P.L. 115-97.  Hidden about halfway into the law, in Section 13307, is an amendment to the tax code on itemized deductions for individuals and corporations. Generally, current law permits employers to treat the costs of settlement payments and related attorney’s fees as a tax deductible business expense. However, the recent amendment eliminates the deduction in certain situations, stating:

No deduction shall be allowed under this chapter for — (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment. (26 USC 162(q)).

This change applies to any payments made after December 22, 2017, including payments for settlements that occurred prior to this date.

The result of this amendment is that business must weigh their desires to (a) deduct the settlement as a business expense, versus (b) keep allegations and settlement of sexual harassment/abuse claims confidential. Employers may have been willing to pay more for an agreement with a non-disclosure provision, but the inability to deduct the settlement may be changing this calculus.

Interestingly, the amendment applies only to sexual harassment/abuse related settlements in for-profit businesses – it does not impact settlements:

  • Related to race, religion, age, disability, other civil rights-type causes of action, employee benefits claims, breach of contract, or other employment related claims.
  • For tax exempt enterprises (that do not have such deductions to take), or
  • For government agencies (that do not pay federal taxes).

The IRS and courts will be left to clarify the nature and extent of this amendment, including (i) what “related to” means; (ii) whether part of a settlement can be confidential if there are multiple causes of action (e.g., sex and age harassment); (iii) whether attorney’s fees may be apportioned between investigation, evaluation, multiple claims, etc. to allow for a deduction if the final result is a confidential, sexual harassment related settlement agreement.

What this means for your business:

Of course, the best position to be in is to prevent claims in the first place. Seek the advice of employment counsel for effective preventative measures. At a minimum, employers must conduct regular antidiscrimination/anti-sexual and other harassment training (bullying, too, in some states), and ensure that employment policies, reporting procedures and the like remain up to date.

But if there is a claim of sexual harassment and/or abuse for which a business decides to settle, the business will be left to determine whether a tax deduction or confidential settlement is more important, and how to handle related issues.

IRS Gives Employers a Welcome Christmas Gift

Contributed by Kelly Haab-Tallitsch, December 28, 2017

On December 22, 2017, the Internal Revenue Service (IRS) announced a 30-day extension of the deadlines for certain information reporting requirements under the Affordable Care Act (ACA).

In IRS Notice 2018-06, the agency announced a 30-day automatic extension — until March 2, 2018 — for employers and insurers to provide 2017 IRS Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) and 1095-B (Health Coverage) to employees. The original due date was January 31. This extension is virtually identical to the extension provided last year for 2016 Forms.

Despite the extension, the IRS encourages employers and other coverage providers to furnish the forms to individuals as soon as possible and states that due to the automatic extension, further extension beyond March 2, 2018 is not available.

Employers and insurers should be aware that although the due date to furnish forms to individuals has been extended, the due date to file the forms with the IRS was not extended and remains February 28, 2018 for paper filers, or April 2, 2018, if filing electronically.

Notice 2018-06 also extends the prior good-faith transition relief from certain penalties related to the 2017 information-reporting requirements. Relief from penalties for incomplete or inaccurate information reported on a 1095-C or 1095-B is available to employers or insurers that can show they made a good faith effort to comply with the requirements. No relief is available for entities that fail to furnish the forms to employees by the due date or fail to file the forms with the IRS.

Employers should be ready for questions from employees who do not receive their Forms 1095-B or 1095-C by the time they are ready to file their 2017 individual income tax return. Although the forms contain information that can be helpful when preparing a tax return, they are not required to file an individual income tax return. Notice 2018-06 explains that individual taxpayers can prepare and file their returns using other information about their health coverage. Individuals do not have to wait for Forms 1095-B or 1095-C.

To address employee questions head on employers should consider a proactive communication to employees. Such a communication should:

  • Provide the expected timeframe for distribution of the Forms 1095-B or 1095-C;
  • Remind employees the forms are not required to file an individual tax return; and
  • Provide information on employer-sponsored health coverage to assist employees in preparing their returns, such as whether the coverage provided was minimum essential coverage under the ACA.

Dust off Those Handbooks: NLRB Restores Sanity to Employment Policies

Contributed by JT Charron, December 27, 2017

Thirteen years ago the National Labor Relations Board issued its decision in Lutheran Heritage Village-Livonia, 343 NLRB 646, which held that facially neutral work rules violated the National Labor Relations Act if employees would “reasonably construe” the rule to restrict the employees’ rights to engage in protected concerted activity under Section 7 of the Act. Following that decision, the Board used the “reasonably construe” standard to invalidate even the most well intentioned work rules. See e.g., T-Mobile USA Inc., April 29, 2016 (finding that employer’s policy requiring employees to maintain a positive work environment violated the NLRA).

On December 14, in The Boeing Company, 365 NLRB 154, the Board overturned Lutheran Heritage and articulated a new test for evaluating the validity of facially neutral work rules. In place of the unworkable “reasonably construe” standard, the Board introduced a balancing test for analyzing facially neutral work rules. Under the new standard, the Board will “evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.” (emphasis in original).

Workplace investigation

Examining Documents

Utilizing this standard, the Board reversed the administrative law judge’s decision that Boeing’s no-camera rule violated the NLRA. Instead, it found that the employer’s legitimate business reasons for the policy — protecting proprietary information and national security interests — outweighed any potential Section 7 violation. The Board also articulated three broad categories of work rules that would result from the new balancing test:

  • “Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.”
  • “Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.”
  • “Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.”

Boeing is a big win for employers and represents a clear change in the Board’s attitude towards work rules. While only time — and additional Board decisions — will tell, the new standard should provide “far greater clarity and certainty” to employers in drafting workplace policies. Additionally, employers may want to consider taking a second look at policies previously removed and/or revised in the wake of Lutheran Heritage and its progeny. Finally, as we head into 2018, employers should evaluate all workplace policies in light of the Board’s new balancing test and be prepared with strong justifications for any policies that have the potential to infringe on an employee’s rights under the Act.