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FMG Law Blog Line

Archive for May, 2013

I-9 Audits: ICE Targets Restaurants; Administrative Judges Respond by Slashing Fines

Posted on: May 29th, 2013

By: Kelly Moul

The hospitality industry is no stranger to unwanted “special attention” from administrative agencies, including the Department of Labor (DOL) and Immigration and Customs Enforcement (ICE).

In 2012, for instance, slightly more than 38% of ICE audits were directed at restaurants.

Many of these audits resulted in proposed fines from ICE, which the employer restaurants then appealed to the Office of the Chief Administrative Hearing Officer (OCAHO).

Several decisions were recently issued in these cases, significantly reducing the proposed fines.  These cases clearly illustrate that ICE’s proposed fines are usually excessive, and employers can significantly reduce their liability by appealing ICE’s findings after an audit.

Below are a few recent examples of reductions in fines, along with the reasons given by OCAHO for the reductions:

Subway #37616: Reduced from $46,282 à $9,600

  • Small employer (7 employees)
  • No unauthorized workers employed at location
  • No history of violations

Subway ##35029 & 23095: Reduced from $82,280 à $15,800

  • Small employer
  • No unauthorized workers employed at location
  • No history of violations

Black & Blue Steak & Crab: Reduced from $44,165 à $32,850

  • Small employer (despite employing 77 workers)
  • Acting in good faith
  • No unauthorized workers employed at location
  • No history of violations

El Azteca Dunkirk: Reduced from $11,000 à $2,200

  • Small employer (10 employees)

Siam Thai Sushi Restaurant: Reduced from $16,308 à $8,350

  • Small employer (10 employees)
  • No unauthorized workers employed at location
  • S-Corp had lost money in the previous year

In 2013, OCAHO is on track to review four times the amount of cases docketed for 2012.  This increased litigation is likely due to employers realizing that fighting back against ICE’s assessed fines after an audit often reduces their payout significantly.


Wage and Hour Lawsuits Increasing at a Much Faster Pace in Georgia

Posted on: May 29th, 2013

By: Marty Heller

A recent article posts the astounding 437% increase in FLSA lawsuits over the last 20 years.  While the article mentions a 10% jump in wage and hour suits over the past year, this figure is just the national average, and wage and hour lawsuits are actually increasing at a much faster pace in Georgia and the Eleventh Circuit.  This is a great reminder to review your exempt positions and ensure that you put in place proper FLSA policies so that you are armed if and when a wage and hour law claim is filed.



DOL Issues Model “Notice of Exchange” for Use by Employers

Posted on: May 28th, 2013

By: David Cole

The U.S. Department of Labor recently released new guidance on the “Notice of Exchange” employer disclosure responsibility under the Affordable Care Act, along with two model notices that employers may use to meet this requirement.  Under the Affordable Care Act, all employers who are subject to the Fair Labor Standards Act must give written notice to employees of the availability of insurance through state or federal health exchanges, which are scheduled to open for enrollment on October 1, 2013, for coverage to begin on January 1, 2014.  In a prior post, we reported that the DOL extended the deadline for providing this notice to employees from March 1, 2013, until an unspecified time sometime in the “late summer or fall” of 2013.

Given this prior announcement, the DOL’s publication of the model notices in May is much earlier than expected.  This seems to be the DOL’s response to a large number of requests from employers to provide model notices before then.  Thus, the DOL says the new guidelines are only interim guidelines, but that employers may rely on them and the model notices until it issues final regulations.  Under the interim guidelines, employers must provide all of their employees with the required notice by October 1, 2013, which is the date open enrollment in the exchanges is scheduled to begin.  This applies regardless of full-time or part-time status, and regardless of their enrollment status under existing group plans.  Thereafter, employers must provide notice to each new employee upon hire, which the guidelines define as within 14 days of an employee’s start date.

The DOL’s interim guidance provides two model notices for use by employers – one for employers that offer group health coverage, and one for employers that do not.  Both versions provide the required information about the existence of exchanges and the services they provide, the availability of premium tax credits and cost-sharing reductions, and the potential for losing employer contributions to any health plan sponsored by the employer.  In addition, the version for employers that offer group health coverage contains information about the employer and its group health coverage options in numbered sections that correspond to items the employee will have to complete when enrolling for coverage and/or financial aid through an exchange.  Employers are not required to complete this section unless and until an employee requests the information in order to enroll through an exchange, but supplying the information up front is a good idea because it will let employees enroll through an exchange without seeking individualized help from the employer.

Employers do not have to use the model notices, and are free to instead prepare their own versions of notice, so long as it provides all of the information required by the statute.  In addition, the guidance states that the notice must be provided in writing in “a manner calculated to be understood by the average employee,” a standard which presumably is met by the model notices.   Employers may deliver it by first-class mail, in person at the workplace, or electronically if certain DOL safe harbor requirements are met.



New Limitations to Application of Georgia Restrictive Covenants Act

Posted on: May 23rd, 2013

By: Joyce Mocek

Recently, a Fulton County Superior Court judge, in an unpublished order in the case of Cone v. Marietta Recycling Corporation, limited the application of the Georgia Restrictive Covenants Act, and provided guidance on whether a company could enforce a non-compete covenant against a former employee.

The Georgia Restrictive Covenants Act, which became effective on May 11, 2011 when signed by Georgia Governor Nathan Deal, established significant new guidelines concerning non-compete and non-solicitation agreements.  Since the enactment of the Georgia Restrictive Covenants Act, many employers have taken steps to require employees to sign new covenants so that they can benefit from the Act.

In Cone, an employee signed an employment agreement that contained a restrictive covenant on February 25, 2011, before the new law went into effect.  The employee was later fired, and subsequently signed a separation agreement on May 4, 2012.  The separation agreement provided that it “superseded” and “rendered null and void” all prior agreements, except the confidentiality provisions and restrictive covenants from the employment agreement, which “would remain in full force and effect.”   The employer argued that the covenants should be interpreted under the new law because the separation agreement, which post-dated the new law, was applicable by ratification and novation.   Judge Dempsey, Jr. disagreed, stating that the restrictive covenants were not ratified through the separation agreement, and there was no novation. He clarified that the only way the employer could have taken advantage of Georgia’s new law, was to require the employee to execute a new contract with new restrictive covenants having a new effective date after May 11, 2011, or by replacement of the old restrictive covenants with new ones.

Although this unpublished order is not binding on other courts, it provides useful insight into how other judges may determine whether the new law is applicable to a particular agreement, and what will be required to ensure the application of the new law.


Working Families Flex Act Update

Posted on: May 15th, 2013

By: Marty Heller

Updating a previous blog post, the House of Representatives passed the Working Families Flexibility Act of 2013. As explained in greater detail here, this Bill would allow private sector employees to opt to use comp time in lieu of overtime pay in the same manner that federal workers may choose to use comp time. The Bill will now move to the Senate, where it likely will face stronger opposition. We will follow the progress of this Bill, and update the blog if and when the Senate votes on this it.