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A Contradiction In Terms – Recent Developments On 3rd Party Placement Of STEM Opt Students

Posted on: July 13th, 2018

By: Kenneth Levine

In April 2018, USCIS issued official guidance that precluded the assigning of a U.S. employer’s STEM OPT employees to off-site third-party locations.  A STEM OPT employee is a foreign national who is pursing “practical training” through a U.S. employer after having received a degree from a U.S. college/university in a science, technology, engineering or mathematics program.  This development was viewed as especially detrimental to IT consulting companies, whose business model is largely predicated on providing IT services to 3rd party client sites.   These client sites have always served as a fundamental training ground for recent graduates of information technology programs.

In issuing the April guidance, USCIS appears to have blatantly disregarded conflicting guidance that remains in effect.  3rd party placement of STEM OPT employees by staffing agencies is clearly permitted in the preamble to the STEM OPT regulation (8 CFR 214.16 and 81 FR 13040, 3/11/16) and ICE’s “Frequently Asked Questions and Answers” document.

The ICE FAQ addresses this issue as follows:

STEM OPT students are permitted to use staffing/placement agencies to find a training opportunity. However: … [a]ll STEM OPT regulatory requirements must be maintained, and … [t]he staffing/placement agency cannot complete and sign the Form I-983 as an employer, unless … the staffing/placement agency is an E-verified employer of the student, and … [t]he staffing/placement agency provides and oversees the training.

FMG Immigration Attorneys have received recent independent verification from colleagues that H-1B petitions are being approved where USCIS sought to challenge eligibility for the visa based on 3rd party placement of the OPT STEM employee.   Accordingly, so long as it can be demonstrated that each element of the above referenced ICE guidance for 3rd party placement (including full compliance with the I-983 training program) have been satisfied, then there is no reason for staffing companies to discontinue this practice.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected].

California Appellate Court Concludes That Employer Lawfully Rounded Employee Time Up and Down

Posted on: July 12th, 2018

By: Laura Flynn

The Second District of the California Court of Appeal has ruled that calculating payroll by automatically rounding workers’ hours either up or down to the nearest quarter-hour is legal as long as it does not result in workers being systematically underpaid over time. In a published opinion, the three-judge panel found the payroll system implemented by a Southern California hospital system was neutral both on its face and in the way it was applied.

Under the employer’s payroll system, an hourly worker who clocked in between 6:53 and 7:07, was paid as if they clocked in at 7:00.  Meal breaks that lasted between 23 and 37 minutes were rounded to 30 minutes.  The legality of the calculation method was challenged by two former employees who alleged they weren’t paid properly or given adequate meal breaks or rest periods.  The primary allegation was that the rounding system did not comply with the California Labor Code because it did not use employees’ exact clock-in and clock-out times.

A statistical expert analyzed the time records for all of the hospital employees over a four-year period.  Although some employees lost work time, the remainder either gained time or broke even. Overall, the calculation method resulted in the employer over compensating employees.  The Appellate Court held a rounding system is valid if it “average[s] out sufficiently,” rejecting claims that minor discrepancies in an individual employee’s wage calculations establish that the employee is entitled to assert a claim for underpayment.

The Court relied on Section 785.48 of title 29 of the Code of Federal Regulations which allows employers to round work time as long as it doesn’t result in workers being underpaid over statistically significant periods of time. California’s Division of Labor Standards Enforcement has adopted the federal regulation as part of its enforcement standards.  The Court’s opinion confirms Section 785.48 and the policies underlying it “apply equally to the employee-protective policies embodied in California labor law.”

AHMC Healthcare, Inc. v. Superior Court, filed 6/25/18, Los Angeles Superior Court Case No. B285655.

If you have any questions or would like more information, please contact Laura Flynn at [email protected].

California’s New Independent Contractor Test

Posted on: July 11th, 2018

By: Christine Lee

On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations West, Inc. v. Superior Court, No. S222732, in which the Court adopted an extremely broad view of workers who will be deemed “employees” as opposed to “independent contractors” for purposes of claims alleging violations of California’s Wage Orders.  This decision will undoubtedly lead to increased litigation challenging classification of workers across the state as employers will now have a much higher burden to defeat such claims.

Under the new “ABC” test set forth in Dynamex, a worker will be presumed to be an employee unless the hiring entity proves all of the following:

(A) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract and in fact; and

(B) The worker performs work that is outside the usual course of the hiring entity’s business; and

(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work he or she performed for the principal.

An employer’s failure to establish any one of the three factors will result in a determination that the worker is an employee as a matter of law.  The Court’s ruling specifically applies to claims asserted under the IWC Wage Orders, which impose obligations related to minimum wages, overtime, and required meal and rest breaks. It is presently unclear how the case applies to claims arising under other statutes.

We encourage all companies doing business in California to immediately evaluate classification of outside contractors or vendors.  Under Dynamex, the vast majority of persons performing services for a company will be considered employees if they are performing work within the usual course of the company’s business, even if those individuals act autonomously and are free from control or direction of the hiring entity.

Therefore, we strongly encourage employers to consult with counsel to evaluate and consider reclassifying independent contractors or risk finding themselves on the losing end of an expensive and painful misclassification case.

If you have any questions or would like more information, please contact Christine Lee at [email protected].

New Potential SCOTUS Justice: Friend or Foe of Qualified Immunity?

Posted on: July 10th, 2018

By: Sara Brochstein

President Trump announced his decision to nominate Judge Brett Kavanaugh to fill the Supreme Court vacancy created by Justice Anthony Kennedy’s retirement.  Should he be confirmed, Judge Kavanaugh could have significant impact on the preservation of qualified immunity, which continues to come under fire of late.   Essentially, the defense of qualified immunity protects government officials from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known. Given the current climate with unending allegations of excessive use of force by police, the call for reconsideration of the expansive protection offered by qualified immunity has become widespread.  And whether officers remain entitled to qualified immunity under the current parameters of the doctrine has substantial effect on civil litigation outcomes and potential damage awards.

Such a hot button issue continues to present itself to the Supreme Court.  In fact, just one year ago, Justice Clarence Thomas wrote separately in the Court’s decision in Ziglar v. Abbasi, stating that in an appropriate case, the Court should reconsider its qualified immunity jurisprudence.   It will be interesting to see how the Court evolves in its decisions to uphold officers’ entitlement to qualified immunity, especially given continuing outspoken public perception on the issue.   However, if Judge Kavanaugh’s recent dissent in Wesby et al. v. District of Columbia et al. is any indication of his views of qualified immunity and the position he would take as a Justice, it appears qualified immunity could endure as a strong  defense given that the Supreme Court ultimately sided with the dissent.

If you have any questions or would like more information, please contact Sara Brochstein at [email protected].

Is An Employee’s Intentional Act An Employer’s “Accident”?

Posted on: July 10th, 2018

By: Rebecca Smith and Zach Moura

It may just be, according to the California Supreme Court’s recent decision in Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., Inc. (June 4, 2018, No. S236765).  In Liberty v. Ledesma, the underlying lawsuit was brought by a minor who sought damages for molestation committed by an employee of a general contractor (“L&M”) while the employee was working on a long-term construction project at the minor’s school.  In response to this underlying suit and the tendering of the action by L&M to its carrier, Liberty Surplus Insurance Corporation and Liberty Insurance Underwriters (“Liberty”), Liberty filed a declaratory relief action seeking to adjudicate that they had no duty to provide coverage under a general liability policy.

The certified question presented to the Supreme Court by the 9th Circuit Court of Appeals was when a third party sues an employer for negligent hiring, retention and supervision of an employee who intentionally injured that third party, does the suit allege an “occurrence” under the employer’s general liability policy?  The Supreme Court responded that the answer turns on whether the injury can be considered “accidental” and concluded “it can.”

In reaching its decision, the Supreme Court acknowledged that the act of L&M in hiring the employee who later turned out to be the molester was intentional and that the employee’s molestation of the student was also intentional; however, held that because L&M did not “expect” its employee to molest a student, an accident transpired as required by the definition of “occurrence” in the Liberty policy.  The Court emphasized that the issue of whether an act constituted an accident for purpose of coverage MUST be viewed from the standpoint of the insured.  Explaining their decision, the Court stated that because the molester’s acts were unanticipated from L&M’s perspective, they were accidents in the context of providing insurance.  The allegedly negligent hiring, retention and supervision were independently tortious acts according to the Supreme Court, which form the basis of their claim against Liberty for defense and indemnification.  Further, the Court stated that the molester’s intentional conduct did not preclude potential coverage for L&M.

While the Supreme Court effectively wiped out a line of California Court of Appeal decisions which held that the unexpected consequences of an intentional act are not an accident, the Court pointed out that if the determination was justified in that if the insurer’s argument regarding the definition of occurrence and accident were accepted, it would leave employers without coverage for claims of negligent hiring, retention or supervision whenever the employee’s conduct is deliberate.  Such a result, the Court opined, would be inconsistent with California law, which recognizes the cause of action even when the employee acted intentionally.

It is expected that the opinion will lead to an increase in claims to insurers from employers facing negligent hiring claims.  It may also lead to an increase in litigation of coverage for liability claims based on intentional acts that result in allegedly unexpected injury, which would previously have been denied on the basis that the unexpected consequences of an intentional act are not an accident and therefore, not an occurrence under personal injury liability coverage.

If you have any questions or would like more information, please contact Rebecca Smith at [email protected] or Zach Moura at [email protected].