Welcome to Legal Briefs for HR! This employment law update is provided to give HR professionals, in-house counsel and business owners a short and sweet summary of what’s up and what’s coming, from all three branches of the government. Here’s hoping you and yours have a wonderful and safe 4th of July holiday. No firecrackers. No tomatoes. No ground beef. What’s left?

Here’s the latest:

1.Not So Independent Contractors – The battle against employers who misclassify workers as independent contractors has gone nationwide. The Employee Misclassification Prevention Act (H.R. 6111) would amend the FLSA, elevating such misclassifications to an FLSA violation and triggering civil penalties and the potential for liquidated damages for willful violations. Employers would be required to advise workers of their classification, as well as their right to challenge the classification. State unemployment insurance agencies (like the TWC, in Texas) would audit employers and share their findings with the IRS and the U.S. Department of Labor (DOL). The DOL would be tasked with audits of industries that tend to misclassify the most. What to do? Audit yourself before someone does it for you.

2.Extraordinary Ordinances – Most multi-state employers understand that they need a good working knowledge of both federal and state laws, but don’t forget those local ordinances. One employer was just tagged for $1.44 million because it failed to pay its workers at least the local “living wage” rate of either $9.25 per hour without employee benefits or $8 per hour if benefits are provided. Amaral v. Cintas Corp. (Cal. Ct. App. 6-08). This Hayward, CA ordinance applies to businesses that contract with the city, even if the work is performed outside of the city limits. Other local ordinances are tied to a geographic location and not conditioned upon contractor status.

3.Retire the “No Rehire” Designation – Yet another company learned that a seemingly innocuous rehire policy can support a discrimination claim. As part of a massive restructuring and RIF, an employer said certain RIF’d employees would not be considered for rehire for one year following discharge or while receiving severance payments, whichever period of time was longer. The district court found and the appeals court affirmed that [1] this was an “employment policy” that could be challenged as having a disparate impact on older workers; and [2] EEOC statistics established prima facie disparate impact, allowing them to proceed with their case against the employer. EEOC v. Allstate Ins. Co. (8th Cir. 6-08). Eligibility for rehire designations are often a vestige of old practices that can do more harm than good. “No rehire” status does the employer a disservice when rigidly applied, where a worker’s intervening solid work history and new skills make him or her a good catch. And “no rehire” status has triggered successful claims against employers, when the refusal was based on prior poor attendance (and it turned out the absences should’ve been protected under the FMLA) or past drug use (and this was seen as regarding the person as disabled, under the ADA). Preserve your flexibility to make the rehire decision in light of old and new facts.

4.Age Old Problem – The U.S. Supreme Court made it a bit harder on employers to defend themselves against age bias claims, by shifting the burden of persuasion from the employee to the employer in ADEA cases where the employer is claiming a “reasonable factor other than age” is behind the adverse employment action at issue. Meacham v. Knolls Atomic Power Lab (U.S. 6-08). Before, employers could articulate a legitimate business reason and it was up the plaintiff employee to prove the reason was bunk. Now the employer is the one who has to do the proving. The immediate impact may be seen in RIFs that are being effected in a soft economy. Employers’ analyses of “who stays and who goes” will be subject to increased scrutiny and don’t even think about finalizing those picks before you’ve done an adverse impact analysis.

5.No Match No-No – An employer was forced to rehire 33 workers who were fired after failing to produce requested SSN documentation in three work days after being told they were the subjects of “no match” letters received from the SSA. The district court agreed with the employer’s view that the workers’ failure to respond was constructive notice of illegal status and the employer should not have to risk violating the Immigration Reform and Control Act. The appeals court, however, said the letters themselves are not constructive notice of illegal status and even the enjoined DHS “no match” regulation proposes to give employers a 90-day safe harbor, during which employees can remain employed while working out their paperwork problem. The court also took notice of SSA’s testimony that an estimated 17.8 million of its 430 million records contain errors. Aramark Facility Servs. v. SEIU Local 1877 (9th Cir. 6-08).

6.Garbage In, Garbage Out – So the SSA database is rife with errors and yet employers are being pressured (and in some cases, required) to use the E-Verify system (fka Basic Pilot) which relies on the SSA and DHS databases to determine whether an individual is eligible to work in the U.S. Why? Newest developments:

a.President Bush signed an executive order on June 6, mandating that businesses that contract with the federal government must use E-Verify

b.Federal Acquisition Regulation (FAR) Council issued a proposed rule on June 12, to implement the new executive order and makes clear that subcontractors are included, too

c.South Carolina has a new law which phases in mandatory verification of worker status, starting on 1-1-09 (applying to all public sector employers and private sector employers with a public contract and more than 500 employees) and applying to all employers as of 7-1-10.

d.An Oklahoma court has blocked implementation of a mandatory verification of status law that was due to take effect on July, stating that the provisions are “substantially likely” to be preempted by federal immigration law

e.The House appropriations committee has denied funding for DHS’s E-Verify system past the 11-30-08 expiration date

7.Gas Pains – Lots of things going on, to try to ease the pain in commuters’ pocketbooks:

a.IRS increased the mileage reimbursement rate from 50 cents to 58.5 cents per mile, effective July 1.

b.Pending federal bill (H.R. 4106) would require federal agencies to develop programs for eligible employees to telework at least 20% of each two-week period

c.Utah public employees will be converted to a four-day workweek starting in August (no Fridays), with the exception of essential services

d.Employers are passing out gas cards, paying for public transportation and setting up car pools for their workers

e.What are your ideas? Share them with me via email and I’ll post them in next month’s LB4HR!

8.American Idol (Not) – A west coast semiconductor production equipment manufacturer just learned that bad music hurts more than your ears. It will pay $168,000 to settle a racial harassment lawsuit based on the complaints of an African American worker who was regularly exposed to a 27 year old Vietnamese American co-worker who played and rapped aloud using lyrics that included racial epithets. The offended worker reported the utterances to his supervisors, but no action was taken for six months. As part of the settlement, the employer will add “harassment through the playing of music” to its anti-harassment policy and include “offensive musical lyrics” in the list of prohibited examples.

9.Charged Up – While mandatory arbitration and separation agreements may waive an employee’s right to litigate a claim, the right to file a charge with the EEOC or a state or local civil rights agency is protected. This became clear to an employer, who not only had to revise their mandatory arbitration agreements but also provide the EEOC with the names of hundreds of current and former employees who had used the company’s arbitration process over a two-year period, and who will have the right to file a charge regardless of the outcome of their arbitration. EEOC v. Ralphs Grocery Co. (N.D. Ill. 5-08)

10.Listen Up! – Yours truly will present a speech on FMLA developments during the Texas Employment Relations Symposium on July 17 -18 in San Antonio. Go to www.tx.biz.org for an agenda and registration info. Also, I’m presenting a webinar for BNA on July 24 from 1 to 2:30 CST, so you can listen in without leaving your desk. The topic will be “Babes in (Tech) Toy Land”, which discusses all the ways employees and employers can get themselves in trouble via misuse of communications technology. For registration info, go to www.bna.com and click on “All BNA Events.”

Until next time . . . stay cool!

Audrey E. Mross Labor & Employment Attorney Munck Carter P.C. 600 Banner Place 12770 Coit Road Dallas, TX 75251 972.628.3661 (direct) 972.628.3616 (fax) 214.868.3033 (cell) amross@munckcarter.com www.munckcarter.com

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