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FMG Law Blog Line

Archive for December, 2013

Minimum Wage To Rise In 13 States On January 1, 2014

Posted on: December 31st, 2013

By: Brad Adler 

While you are munching on leftovers and watching bowl games, business owners should not forget that the minimum wage will rise in 13 states starting January 1, 2014.  Most states are increasing minimum wage by just a few cents in 2014, but there are some that are increasing minimum wage more significantly.  For instance, earlier this year, New Jersey residents voted to raise the state’s minimum wage by $1 to $8.25.  California is set to raise its minimum wage to $9 in July, 2014.  In total, on January 1, state minimum wages will be higher than the federal requirement of $7.25 an hour in 21 states, up from 18 two years ago.  Wage increases are also set to take place at the local level, including in two counties in Maryland.

Employers also should be aware that the White House (and congressional Democrats) is supporting legislation that would raise the federal minimum wage to $10.10 an hour by 2015.  In fact, President Obama apparently is planning a series of speeches across the country focused on improving minimum wages for workers.  Of course, if you have business operations in any state (or locale) where the minimum wage is higher than the federal minimum wage, you are required to pay the higher wage.

Seventh Circuit Allows EEOC Free Reign in Conciliation Efforts

Posted on: December 31st, 2013

By: Amanda Cash

On December 20, 2013, in EEOC v. Mach Mining, LLC, — F.3d —-, 2013 WL 6698515 (7th Cir. 2013), the Seventh Circuit dealt a blow to employers seeking dismissal of Title VII discrimination suits filed by the EEOC based upon a “failure to conciliate” affirmative defense.  In a unanimous decision, the Seventh Circuit found that the statutory directive to the EEOC to negotiate first and sue later does not implicitly create an affirmative defense for employers seeking to challenge the adequacy of the EEOC’s conciliation efforts.  In effect, this decision provides the EEOC with complete discretion on engaging in conciliation efforts before bringing suit against employers.  For employers in the Seventh Circuit, this decision renders them without any meaningful recourse to challenge the EEOC’s conciliation efforts, even if it is clear the EEOC’s efforts were not taken in good faith.

Notably, the impact of this decision is unlikely to remain limited to employers in the Seventh Circuit.  This decision marks the first Circuit to explicitly reject the affirmative defense of failure to conciliate.  The Second, Fifth, and Eleventh Circuits currently evaluate the EEOC’s conciliation efforts under a three-part inquiry.  The Fourth, Sixth, and Tenth Circuits require instead that the EEOC’s efforts meet a minimal level of good faith.  With the Seventh Circuit creating a third approach to this issue, it appears possible that the Supreme Court will grant certiorari in this case to determine whether an affirmative defense of failure to conciliate is available to employers sued by the EEOC.  Until such time, employers should anticipate that the EEOC will use the Mach Mining decision to fight employers challenging its conciliation efforts in all Circuits, not just the Seventh Circuit.

No Good Deed Goes Unpunished

Posted on: December 23rd, 2013

By: Lisa Gorman

Restaurant servers can earn as much money as attorneys.   Take a client of mine, for instance, a high end restaurant in the Bay Area.  This small establishment staffs two servers per shift, each of whom earn $9 per hour and up to $300 in tips in a 6 to 7 hour shift.  Servers working 5 nights a week earn over $90,000 per year, a salary commensurate with many white color jobs.

I recently defended this restaurant in a wage and hour law lawsuit.  California law requires restaurant servers receive an off-duty 30-minute meal break prior to their 5th hour of work.  To be legally compliant, the owner would have had to staff a third server to relieve the other two for their breaks.  The original servers would then earn 1/3 less each night. As a courtesy, my client agreed not to hire a third server at the request of his staff.  Instead, he provided complimentary meals at the end of the servers’ shifts.  That good deed cost him over $100,000 in back pay, penalties and attorney’s fees in a Private Attorneys General Act case brought by one server on behalf of all similarly situated employees.

The problem with this antiquated legislation is that, except in extraordinary circumstances, a non-exempt employee’s right to an off-duty meal break cannot be waived.  This rigidity in the law precludes small business owners with good intentions from making adjustments for the benefit of their employees.

Last year, the California Supreme Court loosened the reins on the meal break laws in Brinker v. Superior Court by holding employers must relieve employees of all duties during meal periods but need not ensure they perform no work.  While this is progress, we have a ways to go before the meal break laws enacted during the era of factory-worker abuse catch up with modern business practices.

Law Enforcement Drones: Presenting 21st Century Risk Questions

Posted on: December 20th, 2013

By: Wayne S. Melnick

With the recent news reports that commercial sales companies such as are beginning to use drones to deliver packages ordered online, governmental insurers might want to turn their attention to the use of drones in law enforcement and the questions of what risk the use these drones bring with them.  There is no doubt that the use of drones by law enforcement is on the rise.  However, there is no all-inclusive set of standards that would appear to be applicable as to when and how it is proper to use drones in law enforcement.  However, in a recently-issued report, the United States Department of Justice via the Office of the Inspector General, is recommending that the Department of Justice consider enacting guidelines for such use.

That, however, brings the next set of questions to the forefront.  What are the insurance risks that go along with using such drones?  While there are certain obvious risks (property damage and personal injury) that could come along with the negligent usage of this equipment, certain other risks need to be considered especially from a coverage standpoint.  What about the citizen who alleges that the drone’s pilot illegally spied through her bedroom window thereby violating her Constitutional right to privacy?  Is this alleged civil rights violation covered under the government’s insurance policy?  At some point, it is safe to assume that law enforcement will begin using armed drones for crime suppression and not merely use unarmed drones for surveillance.  If the armed drone is used to fire upon a suspected crime perpetrator, and that person (or his estate’s representatives) sue a claim based on excessive force, is such a claim covered under the government’s policy as currently written?

Any time there is new technology that is emerging, it is imperative for both the insurer and the insured to review their current policy language to determine what is, and just as importantly, what is not, included in coverage.  Drones and the use thereof by law enforcement are just the latest example of such a technology that should make all involved pause and perform such a review.

Preventing Common Form I-9 Errors

Posted on: December 19th, 2013

By: Kelly Eisenlohr-Moul

The Form I-9 appears simple.  After all, what could possibly go wrong in populating one to two pages of fill-in-the blanks?

It turns out that an almost infinite combination of errors are possible—and all of them can subject an employer to liability, including administrative charges, complaints and fines from such varied agencies as Immigration and Customs Enforcement (ICE), the Department of Labor (DOL), the Department of Homeland Security (DHS), the Social Security Administration (SSA), and the Office of Special Counsel of the Department of Justice (OSC).

Gone are the days when the Form I-9 could be “phoned in” and forgotten in a dusty file.  Instead, Forms I-9 now contain information submitted electronically via E-Verify to USCIS, the DHS, and the SSA.

In turn, those agencies have the power to share submitted information with ICE and/or the OSC.  Submission of Form I-9 errors via E-Verify now results in an employer being “flagged” by one of the above-mentioned agencies, and placed on the short list for an audit.

As my great-grandmother loved to say, “an ounce of prevention is worth a pound of cure.”  Below are the most common categories of avoidable errors resulting in fines to employers:

Section 1: Employee Errors

Many employers assume that they have no responsibility for errors or omissions on Section 1 of the Form I-9, as Section 1 is completed by the employee.

Unfortunately, ICE does not agree, and regularly fines employers for mistakes made by employees, including:

• Failure to check a box indicating immigration/citizenship status; • Checking two or more boxes offering contradictory immigration/citizenship status; • Checking a box indicating that they are a foreign national legally authorized to work, then failing to provide their authorization number; or • Failure to sign the attestation.

The good news is that these mistakes are easily avoided by training human resources staff to conduct a thorough review of Section 1 before filling out Section 2.

Section 2: Employer Errors

Most of the employer errors committed in Section 2 result from the failure to provide detailed information regarding supporting documentation.  The most common are:

• Failure to indicate whether the employee utilized List A or List B/C documentation; • Failure to enter all the necessary information regarding the documentation utilized; • Use of improper/expired documentation; and • Failure to sign the attestation.

Again, training staff to be aware of these common issues is key.  If possible, it helps to have a second human resources staff member review the completed I-9s before filing to ensure that they have been filled out appropriately.

Training & Prevention

Although most employers are aware that ICE conducts audits, they may not be aware that the federal government also provides free training webinars.  Not only are these hour-long training sessions free, but they provide employers with ongoing insight into what the federal government focuses on when conducting an I-9 or E-Verify audit.

At the very least, every employer should conduct an annual audit of their Forms I-9.  Correcting your Forms I-9 before an administrative audit could save your company thousands of dollars in fines and litigation expenses.

Stay tuned–our next blog post will discuss tips for conducting an internal I-9 audit each year.