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: http://www.uscis.gov/files/form/i-9.pdf.

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.

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.

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.

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.

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.

Title VII allows for employers to discriminate on the basis of religion, sex, or national origin in their hiring and employment practices in instances where religion, sex, or national origin is a “bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise …”.  Courts have determined that discrimination on the basis of religion, sex, or national origin is permissible if the discriminatory action is required due to the “essence of the business”.  Note that “race” and “color” are conspicuously absent from the allowed BFOQ defense.  Under Title VII, there cannot be any reason that would justify discrimination on the basis of race or color.

In order to show that a discriminatory action was allowable as a BFOQ, an employer must prove:

1. There is a direct relationship between the protected characteristic and the ability to perform the job duties;
2. The bona fide occupational qualification directly relates to the “essence” or to the “central mission of the employer’s business”; and
3. There is no less-restrictive, reasonable alternative available to the employer

Employers who attempt to use the BFOQ “defense” to discrimination need to be aware that courts have interpreted the statute very narrowly and will only infrequently find that a permissible BFOQ exists.  One of the seminal cases on BFOQ exceptions is International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW, et. al. v. Johnson Controls, Inc.  In that case, the employer established a policy excluding fertile women from working in a position that required exposure to high doses of lead, in order to protect the possible unborn fetuses from damage due to the lead exposure. 

In that case, the U.S. Supreme Court found that the BFOQ defense was not available to the employer.  The Court specifically stated that the BFOQ exception must be interpreted narrowly, and advised that “[n]o one can disregard the possibility of injury to future children; the BFOQ, however, is not so broad that it transforms this deep social concern into an essential aspect of battery-making.”

When considering whether to adopt a discriminatory business practice due to a BFOQ, employers should seek advice from legal counsel before taking any action.  Because of the restrictive language of the statute itself, and the extremely narrow interpretation of the statute by the judiciary, advice from an attorney on whether a specific situation would rise to the level of an allowable BFOQ would be invaluable in preventing liability for discrimination claims down the road. 

In addition to the three prohibitions listed above, the ADA also forbids an employer from discriminating against an employee who has a relationship or association with an individual who has a physical or mental impairment which limits one or more major life activities. According to the EEOC, the purpose of this provision is to prevent employers from taking adverse employment actions based on unfounded stereotypes and assumptions about individuals who associate with people who have disabilities.

A familial relationship is not required to support a claim of discrimination by association. The association may be with a family member or anyone else with whom the employee has an association. For example, an employer would violate this provision of the ADA if it took adverse employment action against an employee who volunteers at a homeless shelter which has a high population of HIV/AIDS individuals, if the employer’s decision was based on concerns about the disabilities of the individuals that the employee works with at the shelter.

The association provision does not require an employer to provide a reasonable accommodation to a person without a disability on the basis of that person’s association with a disabled individual. However, an employer must avoid treating an employee in a different manner than other employees based on the employee’s relationship or association with a disabled person. For example, an employer would not be required to modify its leave policy for an employee who needs time off to care for a disabled child as a “reasonable accommodation” under the ADA.

According to the EEOC, types of employer conduct that would be prohibited under the association provision include:

• Terminating or refusing to hire an individual due to his/her known association with a disabled individual
• Denying an employee promotion or advancement opportunities due to the employee’s association with a disabled individual
• Denying an employee health care coverage that is available to other employees because of the disability of someone with whom the employee has an association

In February 2008, the Seventh Circuit handed down a decision in an ADA association discrimination case – Dewitt v. Proctor. In that case, a nurse was fired by the hospital due to the excessive health care costs incurred by her husband during his treatment for prostate cancer. In its decision, the Court held that an individual may establish a case for association discrimination under the ADA by showing that:

1) The individual was qualified for the job at the time of the adverse employment action;

2) The individual was subjected to an adverse employment action;

3) The individual was known by the employer to have a relative or associate with a disability; and

4) The individual’s case falls within one of three categories: the employer believes the individual will be: costly to the employer, distracted from work, or a possible threat in spreading the disabling condition.

If the individual is successful in establishing these requirements, the burden then shifts to the employer to prove a non-discriminatory reason for the adverse employment action in question.

With the increased litigation being brought under the association provision, the EEOC is increasing its scrutiny of allegations of association discrimination made by employees. Employers would be well-served to review their own policies and procedures with counsel to ensure that they don’t run afoul of the ADA’s prohibition against association discrimination.

There are generally 2 types of sexual harassment claims – quid pro quo and hostile environment. Quid pro quo harassment occurs when an employer / supervisor makes some type of sexual conduct a requirement of employment, to obtain a raise or promotion, or to avoid adverse employment consequences. Hostile environment harassment occurs when an employer, supervisor, or co-worker creates an offensive, hostile, or intimidating work environment for another employee through actions such as inappropriate remarks or physical contact.

If your company receives a complaint from an employee of alleged sexual harassment, you do have a defense available to you. However, in order to fully access the defense’s protection, you must have set the procedures in place prior to the claim.

A U.S. Supreme Court decision allows employers a defense against a claim of sexual harassment if it can show that:

1. the employer took reasonable care to prevent sexual harassment behavior and promptly correct such behavior; and

2. the individual claiming harassment “unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer”.

The most effective method for complying with the “defense” requirements is to have an established sexual harassment policy in place. The policy should be tailored to your specific work environment, should provide for employee communication and training, and should be followed in all instances of alleged harassment.

Companies that do not implement a policy against sexual harassment in the workplace are basically “throwing away” one of the strongest defenses to a claim of sexual harassment by an employee. By adopting, distributing and adhering to an internal employment policy against harassment, employers have a ready-made defense to sexual harassment claims. Without such policies and procedures, employers leave themselves vulnerable to these claims. You should consult with your employment attorney for advice on establishing the appropriate policy and procedures to ensure that your company is protected to the fullest extent possible.

For instance, the Sarbanes-Oxley Act of 2002 created record retention requirements that apply to all companies, both publicly traded and privately held.  Section 802 which provides that it is a crime for someone to intentionally destroy, alter, mutilate, conceal, cover up or falsify any records, documents or tangible objects that are involved in (or could be involved in) a U.S. government investigation or prosecution of any matter or in a Chapter 11 bankruptcy filing.

A records retention program can protect businesses in litigation and disputes that arise during the course of business.  These programs help ensure compliance with federal and state laws and regulations.  Additionally, evidence of a clear and consistently enforced records retention program, provided it is enacted for valid purposes, will go a long way to convince courts that the destruction was reasonable and will generally provide a “safe harbor” under current rules of civil procedure.

However, while it is important to keep clutter to a minimum, a company can get into difficulties by tossing the wrong paper or deleting an important e-mail.  It is important to have all relevant documents during a lawsuit.  Not having a document can mean the difference between winning and losing in a lawsuit.  A judge or jury may be permitted to conclude that the document contained information detrimental a business should they not be able to product it.

Any policy a company creates should cover both hard copy documents and electronic documents.  Now that electronic discovery has been recognized in law suits, companies need to ensure they review their electronic records with the same careful attention as other documents.  Electronic records include records stored in email; on employee’s voicemail, computers, PDAs, cell phones, external drives, CDs, and DVDs; and on company networks and backup systems.

A comprehensive policy should cover how long to keep a document, when and how to store the document, and how to dispose of the document, will depend on the type of document.  It should also include details on how the destruction of documents should be handled.  Things to consider in this should include how electronic records will be destroyed as well how confidential information will be destroyed.  Additionally, the policy should include a procedure that preserves all records once a company is reasonably anticipates litigation. 

It is important for the success of the policy that employees be trained and be held accountable for compliance.  Additionally, a periodic audit should be held to ensure that the appropriate records are being destroyed. 

Due to the magnitude of legal requirements, as well as the specific needs of each company, it is advisable to consult legal counsel before implementing a tailored records retention policy.  In addition, businesses should consider any industry standards that may affect the holding period of records due to unusual legal circumstances.

Although succession planning is most frequently used for presidents, CEOs, or other senior management personnel, it can be a useful tool for virtually all levels of an organization, regardless of the organization’s size.  Many businesses have positions that require specialized knowledge, skills and/or abilities.  If the employee that filled such a position retired or left the company, the company needs to ensure that there is someone immediately available with the same specific skill set to take over.  This is especially crucial for small to mid-sized businesses, where there is little-to-no employee redundancy, and everyone’s job is vital to conducting ongoing business activities.

A company’s first step in succession planning should be to conduct a risk evaluation.  This can be accomplished by examining every position in the company and assessing (1) possible retirement plans of the individual working in the position, (2) importance of the position in relation to the overall functioning of the company, and (3) current status of possible replacements for the individual working in the position.

Once the risk evaluation is complete, the company should develop a strategy for minimizing the potential impact of retirements by various HR tools, including succession planning and updating recruitment and training policies.  Some potential avenues to explore include:

• Create consulting agreements with senior managers that would provide access to their knowledge and experience after retirement
• Create policies and procedures allowing for part-time return to work after retirement
• Update existing training policies and procedures to allow for accelerated training opportunities for key positions

Keep in mind that employment and employee benefits issues could arise as a result of the succession planning.  For example, re-hiring retirees can have an impact on benefits eligibility.  Consulting with your benefits attorney during the risk evaluation and strategy development can identify and correct employment and benefit issues before the employer implements policies and procedures that can create problems in these other areas.