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Archive for the ‘Employment Law Blog (US)’ Category

Dear California Legislature the Constitution Prohibits Ex Post Facto Laws

Posted on: June 10th, 2019

By: David Molinari

If you have practiced law in the State of California for an appreciable period of time you become numb to warnings from out-of-state clients and counsel bemoaning enactments by the state’s legislature that will doom business and cause exodus of industries from the state. We are a resilient people, capable of prospering despite the “well-intentioned” actions of the state’s governing bodies.  However, did the State Assembly really intend to draft a bill that violates California Constitution Article 1, Section 9 prohibiting ex post facto laws with California Assembly Bill 5, adding Labor Code 2750.3?

Assembly Bill 5 seeks to codify the recent California Supreme Court decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018.). In the Dynamex case, the State Supreme Court virtually eliminated the status of independent contractor. The California Supreme Court adopted an “ABC” test for determining whether workers are employees under California Wage Order laws. The test requires the hiring entity establish three elements to disprove employment status: (A) That the worker is free from control of the hiring entity in connection with work performance-both under the contract and in fact; (B) That the worker performs work outside the hiring entity’s usual business; and (C) That the worker is customarily engaged in an independent business of the same nature as the work performed.

Under Assembly Bill 5, the legislature seized on the ability to expand the categories of individuals eligible to receive benefits by creating a legislative instrument that would result in additional monies being deposited into the state via continuously appropriated funding from an expanded pool of employers. The Bill seeks to codify the Dynamex decision. But the legislature simply adopted the Supreme Court’s opinion which includes retroactive application. The legislative findings clearly show a financial purpose behind codifying Dynamex: The loss to the state of revenues from companies that use “misclassified” workers to avoid payment of payroll taxes, premiums for workers’ compensation, Social Security, unemployment and disability insurances. The Assembly clearly did not overlook or ignore retroactive application of Dynamex may subject this new pool of employers to criminal penalties they currently are not exposed to suffering. The Assembly in its findings concluded: Assembly Bill 5 “Would expand the definition of a crime.”

The Supreme Court held applying Dynamex retroactively was consistent with due process because the Court was “merely extending” principles previously stated in S.G. Borello & Sons, Inc v. Department of Industrial Relations, 48 Cal.3rd 341 (1989) and represented “no greater surprise than tort decisions that routinely apply retroactively.” The holding has been cited for authority for retroactive application by the 9th Circuit in Vasquez v. Jan-Pro Franchising as well as the State Courts of Appeal including the 4th District, Division 1 in Garcia v. Border Transportation Group, LLC, 28 Cal. App. 5th 558.

Codification of Dynamex threatens to create an ex post facto law that expands exposure to criminal penalties. Thus, it would seem to be in violation of California Constitution, Article 1, Section 9 that the legislature shall not pass ex post facto laws.  For example, the new pool of employers will be immediately subject to prosecution under California Labor Code Section 3700.5. Labor Code Section 3700.5 makes it a crime, punishable by imprisonment in the county jail for up to one year, or by a fine of not less than $10,000.00 or both, for any entity that fails to secure workers’ compensation insurance. A second or subsequent conviction is punishable by imprisonment for up to a year and a fine of not less than $50,000.00.

Article 1, Section 9 has been applied to past employment-related legislation; but only with respect to the Article’s prohibition against laws impairing the obligation of contract. The language of Article 1, Section 9 appears unambiguous and absolute. However, prior challenges have run into judicial interpretation that the Article may not be read literally and the prohibitions of Article 1, Section 9 may not be absolute; at least with respect to the impairment of contracts. The clause “is not to be read with literal exactness like a mathematical formula.” Torrance v. Workers’ Compensation Appeals Board, 32 Cal.3rd 371 (1982).

The guidelines for determining the constitutionality of a statute imposing an ex post facto criminal penalty applies a presumption against retrospective application unless the legislature expresses such specific intent. The legislature’s findings expressly stated Assembly Bill 5 “would expand the definition of a crime.” Is that enough of a legislative expression of intent even though the State Supreme Court only referenced civil “tort decisions” to justify retroactive application? Maybe we shouldn’t be numb to those warnings any longer.

For more information, please contact David Molinari at [email protected].

Did You Really Terminate That H-1B Employee?

Posted on: May 21st, 2019

By: Layli Eskandari Deal

U.S. Department of Labor Awards $43,366 Back Pay to Engineer.

In January, a Microfabrication Engineer, employed under the H-1B visa program by Minnesota-based TLC Precision Wafer Technology, Inc., was awarded $43,366.67 in back wages and interest after an investigation by the Department of Labor’s Wage and hour Division.

The employment began in October 2008 under the H-1B visa program. After a downturn in business, the company began experiencing financial difficulties. In a letter dated November 16, 2008, TLC notified the Engineer that he would be laid off effective immediately. However, TLC continued to employ the Engineer until January 2009, at which point he was advised by email that his hours would be reduced to part-time. The Engineer resigned his position in February 2010 and in the same month filed a complaint with the Department of Labor’s Wage and Hour Division alleging that the company had failed to pay him the required wage.

Department of Labor Regulations set the wage requirement employers must meet in employing H-1B workers. Employers must pay the H-1B employee the greater of the prevailing wage for the occupational classification or the amount they pay other employees with similar experience or qualification. The H-1B employee must be paid beginning on the date that they “enter into employment” with the employer. This condition occurs when the employee becomes “available for work or otherwise comes under the control of the employer, such as reporting for orientation or training.” H-1B employees must be paid the required wage even if they are not performing work and are in nonproductive or idle status.

In the instance case, the Administrative Law Judge found that TLC was obligated to pay the Engineer $43,000 per year starting in October 2008 until his departure in February 2010.

How can employers limit exposure?

U.S. Citizenship & Immigration Services (USCIS) regulations address the employer’s obligations with regard to material changes to H-1B employment.

  1. Employer must notify USCIS immediately of any changes in the terms and conditions of employment which may affect eligibility under the H-1B regulations. This includes changes in position or duties, changes in job location, changes in any condition of employment such as going from full-time to part-time status.
  2. If the employer no longer employs the H-1B worker, the employer must send a letter to USCIS indicating the termination of employment. DOL considers such communication to USCIS to effectively terminate the employer’s wage obligation.

It is clear that DOL will look at the actions of the employer and communication with USCIS to determine whether the employer has abided by rules governing the employment of H-1B workers.  It is vitally important for employers to be familiar with the rules and timely communicate with USCIS when dealing with changes in employment status of foreign national employees.

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

 

Are You Prepared To Grant Intermittent Family Medical Leave?

Posted on: May 14th, 2019

By: David Daniels

One of the biggest employer complaints about the Family and Medical Leave Act (FMLA) is the productivity problems caused by employees’ use—and abuse—of FMLA intermittent leave.

The problem: Employees with chronic health problems often take FMLA leave in short increments of an hour or less.

The Department of Labor (DOL) took a big step to help minimize workplace disruptions due to unscheduled FMLA absences in its revised regulations, which took effect in 2009. The DOL says that, in most cases now, employees who take FMLA intermittent leave must follow their employers’ call-in procedures for reporting an absence, unless there are unusual circumstances.

Tracking Intermittent FMLA Leave

Even though managing FMLA intermittent leave can be vexing, the law does give employers some tools to combat leave abuse.

As with leave taken in one block, employees requesting FMLA intermittent leave must provide his or her employer with notice. Employees must give at least 30 days’ notice when their need for FMLA leave is foreseeable. When it’s not, they must notify you “as soon as practicable.”

A. Certify and schedule the leave.

Don’t accept FMLA requests at face value. The law gives employers the right to demand certification from the employee’s doctor of his or her need for leave. An employer can request new medical certification from the employee at the start of each FMLA year. The law also entitles an employer to ask for a second or third opinion, if necessary, before granting leave.

When employees have chronic conditions and their certifications call for FMLA intermittent leave, an employer should attempt to work out leave schedules as far in advance as possible. It’s legal to try to schedule FMLA-related absences, but an employer can’t deny them.

It’s important to immediately nail down the expected frequency and duration of FMLA intermittent leave. An employer can insist on a medical provider’s estimate of how often the employee will need time off. An employer also can wait until the provider gives an estimate to approve intermittent leave.

B. Intermittent Leave Tips.

  • Ask about the specific condition. Medical certification must relate only to the serious health condition that is causing the leave. An employer can’t ask about the employee’s general health or other conditions.
  • Allow 15 days to respond. After an employer requests certification, the employer should give employees at least 15 calendar days to submit the paperwork. If the employee’s medical certification is incomplete or insufficient, specify in writing what information is lacking and allow the employee seven days to cure the deficiency.
  • If an employer doubts the need for leave, it should investigate the certification. Under the updated FMLA regulations, the employer can contact the employee’s physician directly to clarify the medical certification. The employer’s contact person can be a health care provider, a human resources professional, a leave administrator (including third-party administrators) or a management official, but not the employee’s direct supervisor.
  • If an employer is still not convinced, it can require (and pay for) a second opinion. The employer should use an independent doctor who it selects, not a doctor who works for the employer. If the two opinions conflict, an employer can pay for a third and final, binding medical opinion.

Employees who take FMLA intermittent leave can wreak havoc with work schedules. Because their conditions can flare up at any time, their absences are by nature unpredictable. But there are ways you can legally curtail intermittent leave.

C. Use the Calendar-year Method.

Employees who take FMLA intermittent leave can wreak havoc with work schedules. Because their conditions can flare up at any time, their absences are by nature unpredictable. But there are ways you can legally curtail intermittent leave.

One way is to use the calendar-year method to set FMLA leave eligibility.

Here’s how it works. Sometime during the calendar year, an employee submits medical documentation showing she will need intermittent leave for a chronic condition. If she is eligible for leave at that time, she can take up to 12 weeks of intermittent leave until the end of the calendar year.

Then the process starts again.

If, on Jan. 1, she hasn’t worked 1,250 hours in the preceding 12 months, she’s no longer eligible—and won’t be eligible again until she hits 1,250 hours.

Final tip:  Employees who are approved for FMLA intermittent leave can take that time off as needed. But that doesn’t mean an employer isn’t entitled to some supporting documentation for each absence. An employer can ask for proof that the absence was for the chronic condition—but a simple doctor’s note to that effect should suffice. No new formal certification is required.

Wait until the end of your FMLA leave year to get the new intermittent-leave certification.

This is only a short primer on FMLA leave laws which can be a trap for the unwary employer. David Daniels the managing partner of the FMG Sacramento office. Please feel free to contact him at (916) 765-2570 ([email protected]) should you wish to further discuss the FMLA or any other areas of employment law at your convenience.

New Federal Test Relaxes Standards for Unpaid Internships

Posted on: May 6th, 2019

By: Zinnia Khan

In a recent announcement, the U.S. Department of Labor loosened the Obama-era federal test for determining if an intern should be classified as an employee. That is good news for employers, although there still remain other potential risks for employers including inadvertent misclassification of interns and stricter state laws.

The new standard, known as the “primary beneficiary” test, examines whether unpaid interns or their employers get the primary benefit of the internship. If the intern gets the primary benefit, he or she may be unpaid. The test has seven equivalent factors, which include the degree to which both parties recognize the work is unpaid and whether the internship is for academic credit. The DOL has added whether an intern or student is an employee under the Fair Labor Standards Act necessarily depends on the unique circumstances of each case. For a program to satisfy the new test, there must be an emphasis on the educational benefit to the intern, which often means the intern receives academic credit for the internship.

At the same time, unpaid internships for public sector and nonprofit charitable organizations, where the intern volunteers are working without expecting to be paid, are generally acceptable.

Previously, employers were required to look to a six-factor test for determining intern status. Generally speaking, if any single factor went against the employer, it had to pay the intern. One particularly challenging requirement of the old test was that employers could not properly classify a worker as an unpaid intern if the employer derived “immediate advantage” from the individual’s work.

Although the new test is less stringent than its predecessor, there are still risks of misclassification. The FLSA authorizes misclassified interns to bring suit for back pay, liquidated damages and attorney fees. Furthermore, some states may continue to have more rigorous tests for unpaid interns under their own wage and hour laws.  Employers must adhere to the strictest requirements in each state where they have employees.

As a result of these additional considerations, employers need to be comfortable when using interns that they can satisfy their burden in establishing the individual truly is an intern, even under the more relaxed test. Useful steps that could mitigate an adverse determination include hiring interns who receive academic credit, memorializing the unpaid nature of the internship in a written offer letter and creating a formal internship program that coordinates with the intern’s academic schedule.

If you have any questions or would like more information, please contact Zinnia Khan in the National Labor & Employment Practice Section at [email protected].

California Judge Approves $3M Settlement with FedEx Workers

Posted on: April 29th, 2019

By: Marshall Coyle

A California federal judge gave the green light to a $3.15 million deal ending a pair of putative class actions accusing FedEx unit Genco I Inc. of not giving breaks to workers and of violating the Fair Credit Reporting Act by conducting secret background checks.

U.S. District Judge Yvonne Gonzalez Rogers initially approved the agreement in August following a revision of a “confusing” settlement first proposed in June.

Under the terms of the agreement, half the settlement will be allotted to the nearly 900 members of a California wage and hour class, and the other half will go to over 20,000 members of a national Fair Credit Reporting Act (FCRA) class.

In a brief order, Judge Gonzalez Rogers certified the classes for settlement purposes and granted an award of $787,500 in attorney fees, or 25% of the total fund, along with $16,809.70 for litigation expenses. The lead plaintiff for both suits, Adan Ortiz, will receive $5,000 for his time and effort.

“The Court further finds and determines that the terms of the Settlement are fair, reasonable, and adequate to the Classes and to each Class Member,” the judge said. “The Court finds and determines that the Classes, as conditionally certified by the Preliminary Approval Order meet all of the legal requirements for class certification for settlement purposes only.”

The settlement resolves two lawsuits that Ortiz filed against Genco, which has since been renamed FedEx Supply Chain Inc. Ortiz was a nonexempt worker for Genco, which operated a Kraft Heinz Food Co. facility, from March to October 2015. He filed the wage and hour suit against Genco and Kraft Heinz in June 2016, followed by a separate suit alleging FCRA violations in May 2017.

The first suit alleged Genco and Kraft Heinz failed to give workers meal and rest breaks and improperly rounded employee time records. Ortiz voluntarily dropped allegations against Kraft Heinz in December 2016. The other action accused the company of violating the FCRA by failing to disclose it was conducting preemployment background checks.

The cases are Ortiz v. Genco I Inc. and Ortiz v. Genco I Inc. et al., case numbers 4:16-cv-04601 and 4:17-cv-03692, in the U.S. District Court for the Northern District of California.

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