Archive for the 'Employment' Category

New I-9 Form Required Effective April 3, 2009

April 5th, 2009

The U.S. Citizenship and Immigration Services (USCIS) amended the regulations governing the use of Form I-9 – Employment Eligibility Verification – at the end of last year.  The new regulations had an original compliance date of beginning February 2, 2009.  However, USCIS delayed the implementation of the new regulations until April 3, 2009.  These regulations apply to employees hired on or after the implementation date and for employees who require reverification on or after the implementation date.

Numerous changes and updates were made to the existing I-9 form.  Some of the most noteworthy changes include:

  • Expired documents are no longer acceptable for Form I-9 purposes. Employers may no longer accept expired U.S. passports or List B documents as proof of identity and/or employment authorization.
  • The Section 1 status boxes now include separate selections for U.S. nationals and U.S. citizens. Prior to this update, Form I-9 grouped U.S. nationals and U.S. citizens into one category. The new form now separates these individuals into separate categories. U.S. nationals are individuals born in American Samoa, certain former citizens of former Trust Territory of the Pacific Islands, and certain children of U.S. nationals born abroad.
  • Certain List A identity and authorization documentations have been eliminated. Forms I-688 (Temporary Resident Card), I-688A (Employment Authorization Card) and I-688B (Employment Authorization Card) have been eliminated from List A. These Forms are older employment authorization documents and are no longer issued.
  • Valid passports for certain individuals have been added to the List A evidence of identity and employment authorization. The final regulations add valid passports for citizens of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI), as well as Form I-94 and Form I-94A nonimmigrant admission under the Compact of Free Association between the U.S. and the FSM or RMI to the List A documents to prove identity and employment authorization.
  • Foreign passports containing certain machine-readable immigrant visas have been added to the List A evidence of identity and employment authorization. A temporary I-551 printed notation on a machine-readable immigrant visa in addition to the foreign passport with a temporary I-551 stamp has been added to the List of Acceptable Documents on List A.

The current Form I-9, dated 06/05/07 will no longer be valid for use on or after April 3, 2009.  The revised I-9 form can be found at:

Please contact our office for more information about compliance with the new Form I-9 requirements or for any other employment or employee benefits matter.

Employment and ERISA Law Considerations When Reducing or Laying Off Employees

January 7th, 2009

According to the Administrative Office of the U.S. Courts, for the 12-month period ending June 2007, there were a total of 23,889 business bankruptcy filings.  For the same period ending June 2008, business bankruptcy filings had increased by more than 40% (33,822 filed for the 12-month period ending June 2008).  With the downturn of the U.S. economy, many companies are struggling to reduce costs in order to remain in business.

Unfortunately, during tough times, companies are forced to make hard decisions in order to survive.  One of the largest expenses for most companies is human capital and the associated costs, such as salaries and employee benefits programs.  As companies analyze whether to use terminations and/or layoffs as a means to control or reduce costs, they need to ensure that the analysis includes consideration of legal risks involved and ensure that the ultimate course of action complies with any applicable laws.  Some of the laws that should be taken into consideration include the Family Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Older Workers Benefit Protection Act (OWBPA), the Employee Retirement Income Security Act (ERISA), Equal Employment Opportunity (EEO) laws and the Consolidated Omnibus .Budget Reconciliation Act (COBRA).

For example, when determining which employees will be terminated and/or laid off, companies need to ensure that the criteria used is objective and does not create a disparate impact on a protected class.  One of the most common mistakes companies make is to use compensation as criteria for determining which employees will be reduced.  In many cases, employees with the highest wage rates in positions generally tend to be older because their salaries have increased with their work experience and time in a position.  Employers should ensure that they are using objective, legitimate business criteria to make their selections, so they do not leave themselves open to an age discrimination claim.

Additionally, depending on the size of the employer and the number of employees being laid off, companies may need to comply with The Worker Adjustment and Retraining Notification Act (WARN).  WARN is a federal law that requires that employers with greater than 100 employees (excluding part-time employees) provide 60 calendar days advance notice of mass layoffs.  A mass layoff is defined as a layoff that either (1) involves at least 50 employees who make up at least 33% of the employer’s work force, or (2) involves at least 500 employees.  Additionally, some states have enacted their own versions of the WARN Act that have lower thresholds which trigger a notice period.  This analysis can be complex for employers to determine whether these laws will apply to them, especially if there have been intermittent lay-offs of some workers during periods of slow downs.

Making the decision to reduce headcount in order to help a company survive is probably one of the toughest decisions an employer can make.  Frequently, an employer is focused on its financial situation and can overlook potential legal pitfalls associated with the decision. 

Companies should consult with legal counsel when they face these difficult situations so that they ensure they comply with all applicable laws and that they have as much legal protection as possible.  Please contact our office with any questions you have or for additional information.

Can an Employee’s ERISA Rights Be Waived As Part of an Employment-Based General Release and Waiver?

September 10th, 2008

Most employers have a standard release and waiver that is usually used in conjunction with severance packages for former employees. The former employee agrees not to bring suit against the employer in exchange for the offered severance package. Most release and waivers use broad, inclusive language (as broad as permitted by various employment laws) to ensure that the employer gains the most protection it can. In general, the release and waiver would include language that releases the employer from any claims for employment and/or re-employment by the employee and discharges the employer from any and all causes of actions arising from the employee’s employment. Within this language, specific causes of action and/or statutes are named as examples, including the Employee Retirement Income Security Act of 1974 (ERISA).

Generally, severance release and waivers are held to be enforceable, provided they comply with specific provisions required by laws such as the Older Workers Benefit Protection Act (OWBPA). However, with regards to waiving ERISA rights, a couple of recent cases indicate that employers need to evaluate their release and waiver language and procedures to ensure that they are getting the maximum protection against ERISA claims by former employees.

In March 2006, the U.S. District Court for the District of Connecticut ruled on Linder v. BYK-Chemie USA Inc. In this case, an executive executed a release and waiver upon termination of employment. However, after termination, he brought suit against his former employer based on the calculations used in the executive’s supplemental executive retirement plan (SERP). The court ultimately found that, in this specific case, the executive was barred from bringing suit by the executed release. However, in its ruling, the court adopted the position that the release of ERISA/benefit claims should require a greater scrutiny than the release of general claims. Therefore, the totality of the circumstances surrounding the release should be reviewed to ensure that the employee’s waiver of claims was voluntary and knowing.

In September 2007, the U.S. District Court for the District of Minnesota ruled on Groska v. Northern States Power Co. Pension Plan. In this case, two employers merged and employees were offered a choice of either competing for remaining positions or terminating employment with severance benefits. The plaintiff, Groska, opted to terminate employment and accept severance benefits, which required the execution of a release and waiver. Groska subsequently filed suit under ERISA, alleging improper claim denial and breach of fiduciary duty. With regard to the improper claim denial allegation, the court found that Groska had knowingly and voluntarily signed the release and waiver, so it was enforceable and barred the claim for improper denial. However, the court did not dismiss the breach of fiduciary claim as barred by the release and waiver. The court held that because ERISA recognizes the plan as a separate and distinct legal entity from the employer/plan sponsor, the release and waiver in favor of the employer did not automatically release the plan. Therefore, participants were still able to bring a claim against the plan itself under ERISA.

These decisions should prompt employers to review their “standard” release and waiver language and their processes for obtaining the executed release from former employees. Since the waiving of ERISA claims can be seen as needing a greater level of scrutiny than general contract claims, employers should evaluate whether the language currently being used provides the greatest shield possible. Additionally, since an employer’s release and waivers may not extend protection to the ERISA plan, the language should be updated to ensure the plan itself is afforded the greatest degree of protection available through the employer’s release and waiver. Benefits counsel can assist employers in reviewing the existing release and waiver language. Please contact our office with any questions or for additional information on how our attorneys can assist you.

Periodic Audits of ERISA Plans and Employment Policies and Practices Can Prevent Costly Mistakes

June 10th, 2008

In today’s competitive business environment, employers and HR personnel are all too often put in the position of having to pay insufficient attention to employment and employee benefits legal compliance until problems arise – resulting in dire and costly consequences.  Failure to comply with the complex and ever-changing laws in these areas often results in one or a combination of: substantial penalties, steep fines, governmental agency audits, and / or litigation.  Unfortunately, all of these options usually have a very expensive price tag attached.

Consider the following:

Employment Practices

  • 67% of all employment cases that litigate result in a judgment for the plaintiff
  • 1/3 of employment case verdicts award punitive damages
  • 75% or more of the total judgment amount awarded in an employment case is usually for punitive damages
  • Based on 2000 data, median compensatory awards for employment cases were:
    • $268, 926 for age discrimination
    • $120,951 for race discrimination
    • $100,000 for gender discrimination
  • Median compensatory awards rose from $78,592 to $218,000 between 1994 and 2000

Employee Benefits Plans

  • From 2000 to 2001 the number of ERISA civil suits filed increased from 9,124 to 10,292 (almost 13%)
  • In 2001, the Department of Labor investigated 4,862 businesses and recovered $648 million in penalties and damages
  • In 2000, the average defense cost of a fiduciary liability claim was $124,000
  • In 2000, 47% of fiduciary liability claims were based on benefits disputes (including denial of benefits)

How can an employer protect itself:

Self-Audits are reviews that companies usually undertake with the assistance of benefits counsel to identify legal compliance gaps in their plans, policies and/or operational procedures.  The audit focuses on areas that could place the company at risk for governmental fines and penalties, as well as expose the company to an increased risk of lawsuits.  These audits can be done for either or both a company’s employment practices and employee benefits plans. 

The scope of an audit can vary from a basic overview of plans, policies and procedures with identification of possible compliance gaps, to a comprehensive assessment and analysis with specific recommendations for methods of correction of any identified gaps and drafting and/or updating any needed plans, policies and procedures.  By conducting these voluntary self-audits, a company can significantly reduce the costs of future problems – costs that can have a huge impact on the company’s bottom line.

Employers should consider performing self-audits at least annually.  Additionally, when there are major changes to the law or major changes to the business, a self-audit should be done.  Employers should work with professionals with experience conducting these audits.  Employment and benefits lawyers can assist employers in auditing their policies, practices and plans.  Proactively identifying and addressing issues can be the best protection from legal action for an employer.

Genetic Information Nondiscrimination Act (GINA) Signed Into Law

May 28th, 2008

President Bush signed the Genetic Information Nondiscrimination Act (GINA) of 2008 on May 21st.  GINA is designed to protect against discrimination in health insurance and employment based on genetic information.

This new law makes changes to the Health Insurance Portability and Accountability Act (HIPPA), the Public Health Service Act (PHSA) and the Internal Revenue Code (Code).  The provisions relating to health plans are effective as of May 8, 2009 and those relating to employment are effective November 8, 2009.  Additionally, the law provides that where states have more restrictive protection in place, the state law will continue to apply and employers will need to comply with the state law in addition to GINA.

This law prohibits health plan sponsors and health insurers from restricting enrollment or adjusting premiums based on genetic information.  It also restricts them from requesting or requiring genetic testing.  There are a few limited exceptions to these requirements and genetic information may be used by health plans for payment determinations.  However, the information must be handled in the same manner that other HIPAA-protected information is handled. 

Additionally under GINA, federal anti-discrimination laws such as Title VII of the Civil Rights Act (Title VII) and the American with Disabilities Act (ADA) are broadened.  Employers are prohibited from discriminating based on genetic information.  This includes discriminating in hiring, training and retraining, compensation and/or other terms and conditions or employment.  Employers may not segregate or classify employees based on genetic information in any manner that would deprive them of employment opportunities and they may not request, require or purchase genetic information.  Further, employers are prohibited from disclosing personal genetic information.

Under the new law, genetic information includes an individual’s or family member’s genetic tests, diseases and disorders and any request for or receipt of genetic services.   This includes genetic test results and participation in genetic research as well as the manifestation of a particular disease or disorder.  It does not include information such as a person’s gender or age.  However, there are some limited circumstances under which an employer may acquire genetic information. 

The Department of Labor (DOL) has been tasked with issuing final regulations on the health insurance provisions by May 21, 2009.  Additionally, the DOL will enforce the new law and has the authority to assess penalties.

Civil penalties of up to $100 per day per individual for violations may be imposed.  Additionally, if violations are not corrected, a minimum penalty of $2,500 for de minimis violations or $15,000 for material violations may be imposed.  There is a cap on penalties of the lesser of 10% of the amount paid by the plan sponsor during the preceding taxable year or $500,000.  However, under certain circumstances the DOL may waive penalties.

Employers, health plan sponsors and insurers will need to become familiar with the new requirements under the law.  They will need to ensure their practices are compliant with the new requirements and make certain that any genetic information they have about employees is treated with strict confidentiality, as required.  Employers should seek the advice of their benefits counsel to fully understand the law and its impact on their current and future practices and procedures.

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