Shawe Rosenthal - Management's Workplace Lawyers

HIGHLIGHTS FOR THE MONTH OF AUGUST 2007

By Darryl G. McCallum

Department of Homeland Security Issues Safe-Harbor Procedures for Employers That Receive “No-Match” Letters

Employee Only Able to Work Light Duty Status After 12 Weeks Not Entitled to Same or Equivalent Position and Pay Under FMLA

Adverse Employment Action

Punctuality As An Essential Job Function

D.C. Human Rights Act

New Jersey Penalties For Misclassifying Construction Workers

Project Labor Agreements

RECENT DEVELOPMENTS

Department of Homeland Security Issues Safe-Harbor Procedures for Employers That Receive “No-Match” Letters

On August 15, 2007, U.S. Department of Homeland Security (“DHS”) issued a regulation that provides a safe harbor from penalties for employers who take specific actions following the receipt of a no-match letter from the Social Security Administration (“SSA”). The regulation becomes effective September 14, 2007. The SSA routinely sends “no-match” letters to employers with employees whose Social Security numbers do not match government records. Under the new rules, an employer will violate federal immigration laws if the “no-match” letters are ignored and the employer fails to take corrective steps within 90 days. Employers who follow the procedures described in the new regulation will qualify for the “safe harbor,” meaning that they will not be in violation. The new rules require employers to fire any workers whose “no-match” Social Security number cannot be resolved in 90 days.

In order to be protected from liability under the safe harbor, the following steps must be followed upon receipt of a no-match letter:

1. Within 30 days of the employer’s receipt of a no-match letter, it must verify company records to determine whether the discrepancy is the result of clerical error. If the discrepancy was caused by such an error, the employer must make the necessary corrections and verify that the employee’s name and social security number now match the SSA’s records.

2. If the discrepancy was not caused by an error in the employer’s records, the employer must promptly inform the employee that his employment will be terminated if he cannot resolve the problem with the SSA within 90 days from the employer’s receipt of the no-match letter. Clearly, the sooner the employee is informed of the problem, the better chance he has to resolve the issue and retain his employment.

3. If the discrepancy is not resolved by the employee with the SSA within 90 days from the employer’s receipt of the no-match letter, the employer must complete a new I-9 form for the employee, without accepting any document that contains a disputed social security number to establish employment authorization or identity. The employee must also present a document that contains a photograph in order to establish identity or both identity and work authorization. The employee must complete section one of the I-9 form and the employer must complete section two of the I-9 within 93 days of the employer’s receipt of the no-match letter from the SSA. The newly completed I-9 form must be retained with the prior I-9 form(s).

4. If at the end of the 93 day process, the employee’s work eligibility cannot be re-verified, his employment must be terminated. An employer who fails to terminate such an employee within the 93 days, assumes the risk that DHS will impose penalties on the company for “knowingly” employing an unauthorized alien in violation of the law.

To avoid potential discrimination claims, these procedures must be applied to all employees identified in no-match letters.

As a side note, the AFL-CIO, along with other organizations, has not embraced this new regulation and filed a suit earlier this week in federal court in California, seeking a restraining order to prevent enforcement of the regulation before it becomes effective in mid-September. The Union contends that the regulation will sweep up innocent immigrants and U.S. citizens because of flaws in government record-keeping. DHS has responded it will vigorously defend enforcement of the new regulation.

Employee Able to Work Only Light Duty Status After 12 Weeks Not Entitled to Same or Equivalent Position and Pay Under FMLA

In Hendricks v. Compass Group USA, Inc., the U.S. Court of Appeals for the Seventh Circuit held that an employee who suffered a work-related injury, and subsequently applied for FMLA leave, was not entitled to the same pay when he returned to work in light duty status.

Facts of the Case: The employee, a utility driver for a vending company, injured her shoulder while at work. Immediately after the injury, the employee applied for workers’ compensation benefits. While the employee was entitled to FMLA leave as a result of her injury, she elected instead to take light duty under the employer’s workers’ compensation policy. She did not apply for FMLA leave until three months after her injury. While on light duty, the employee could not perform her job as a utility driver, but instead performed office work for twenty-five hours per week. Her rate of pay as an office worker was $3.23 less than her pay as a utility driver. She continued to perform light duty until her employment ended, approximately nine months after her injury. The employee sued her employer under the FMLA to recover the $3.23 pay differential between her pay as an office worker and her pay as a utility driver. The employer prevailed on summary judgment.

The Court’s Ruling: The employer’s position was upheld on appeal. In discussing the interplay between workers’ compensation and the FMLA, the Court noted that under some workers’ compensation programs, such as the one at issue in this case, a health care provider may certify that an employee is able to return to light duty work and an employee is free to accept that light duty work or continue on unpaid FMLA leave. The employee’s right to restoration to the same or an equivalent position is available until 12 weeks have passed within a 12 month period, including all FMLA leave taken and the period of light duty.

In this case, the Court noted, the record was unclear as to whether the employee ever actually took FMLA leave. However, at the end of 12 weeks (including the time she worked in light duty status), it was undisputed that the employee could not resume her regular duties as a utility driver. As a result, she was not entitled under the FMLA to restoration to her prior job at the same rate of pay. Moreover, because the FMLA requires only unpaid leave, once the employee elected to work in a light duty capacity under the workers’ compensation program, the FMLA did not require that she be paid the same as she had been paid prior to going on leave.

Lessons Learned: An employee who is entitled to FMLA leave cannot be required to return to work in a light duty capacity. However, if the employee chooses to do so, nothing in the FMLA requires that she be paid as if she were performing her regular job duties. Rather, the FMLA provides employees with job restoration rights at their same rate of pay only if they are physically able to perform their regular duties at the end of 12 weeks from the point of the employee’s FMLA leave entitlement.

TAKE NOTE

Adverse Employment Action. In Lewis v. City of Chicago, the U.S. Court of Appeals for the Seventh Circuit ruled that denying an employee the opportunity to work overtime may amount to an adverse employment action under Title VII, and would need to ultimately be decided by the jury. The employee applied for an assignment that involved overtime pay. After she was rejected, the employee filed a claim with the EEOC alleging, among other things, sex discrimination and retaliation when the company denied her the overtime opportunity. The District Court granted summary judgment for the City and the employee appealed. The Seventh Circuit reversed and stated that, depending on the type of work, overtime can be a significant and recurring part of an employee’s total earnings, similar to an annual raise. Thus, the denial of the opportunity to work overtime may constitute an adverse employment action for purposes of a Title VII discrimination claim.

Punctuality As An Essential Job Function. In Holly v. Clairson Industries, LLC, the U.S. Court of Appeals for the Eleventh Circuit held strict punctuality may not be an essential function of a job, especially if the job in question can be successfully performed despite occasional tardiness. The employee, who was confined to a wheelchair, worked as a mold polisher for the employer over a period of seventeen years. Throughout most of his career, his tardiness was not a problem and his supervisors still regarded him as a good employee. The company instituted a “no fault” attendance policy where each instance of tardiness (even by one second) would be counted against an employee as an “occurrence.” The plaintiff accumulated too many occurrences and was terminated. He sued under the ADA, claiming the employer should have provided him the accommodation of permitting him to be tardy. The employer won summary judgment, but the Court of Appeals reversed because it was unclear whether strict punctuality was an essential function of the job. The Court of Appeals deemed significant the employee’s supervisor’s testimony that the employee’s job was not time-sensitive and that making up the work, as this employee had been allowed to do for years, did not adversely affect business operations. This testimony created a jury question whether permitting the employee to clock in late and make up lost time over breaks or after hours was a reasonable accommodation. The Court did comment that if strict punctuality were an essential function of the job, the employer would not be required to waive it under the ADA.

D.C. Human Rights Act. In Purcell v. Thomas, the District of Columbia Court of Appeals held that supervisors can be individually liable for violations of the District of Columbia Human Rights Act. The employee alleged that her immediate supervisor, a high level official and co-founder of the center where she worked, made inappropriate sexual remarks to her for approximately two years, at the end of which time she was terminated. The employee sued the employer and her supervisor individually under the D.C. Human Rights Act and prevailed at trial. On appeal, the D.C. Court of Appeals confirmed that individuals can be held liable under the statute based upon its prior decision in Wallace v. Skadden Arps, Slate, Meagher & Flom, which held that the D.C. Human Rights Act allows for individual supervisor liability in the law firm context. This was the first case in which the D.C. Court of Appeals had occasion to confirm the issue of individual supervisor liability outside of the law firm context in a case brought pursuant to the D.C. Human Rights Act.

New Jersey Penalties For Misclassifying Construction Workers. New Jersey recently enacted the Construction Industry Independent Contractor Act (CIICA), which provides civil and criminal penalties for misclassifying certain construction-related employees as independent contractors. Under CIICA, individuals hired by employers to perform services in making improvements to real property are considered employees unless and until the employer can show that: (1) “the individual has been and will continue to be free from control or direction over the performance of that service, both under his contract of service and in fact;” (2) “the service is either outside the usual course of the business for which the service is performed, or the service is performed outside of all the places of business of the employer for which the service is performed;” and (3) “the individual is customarily engaged in an independently established trade, occupation, profession or business.”

Under the statute, any employer, including any officer, agent, superintendent, foreman or other employee of the employer, who fails to properly classify an individual as an employee may be held criminally liable, and may be fined up to $1,000 or imprisoned for up to 90 days, or both. Each week in which the employee is misclassified (even if for one day) constitutes a separate offense for each misclassified employee. Misclassifications deemed to have been made “knowingly” can subject the person to a $150,000 maximum fine and up to 10 years imprisonment (for contract amounts that equal or exceed $75,000). Civil penalties for misclassification may include fines of $2,500 for a first violation, $5,000 for each subsequent violation, and, for “knowing” violations, disbarment for up to three years from working on public work projects. The CIICA also provides for a private right of action by individuals or labor organizations acting on the individual’s behalf, and permits the recovery of attorneys’ fees.

Project Labor Agreements. The NLRB recently held that a labor union and a contractor (with whom the union does not have a collective bargaining agreement in place) cannot agree to use only union subcontract labor on a construction project. In Glen Falls Building and Construction Trades Council, a company called Indeck, which manufactures and operates power plants, sought to construct a new power plant and had hired a contractor to do the construction. Indeck had previously reached an agreement with the union that called for Indeck to require its contractor to utilize only subcontractors which had or would enter into a collective bargaining agreement with the union. Indeck filed an unfair labor practice charge with the NLRB seeking to void the agreement. In holding that the agreement was illegal, the Board noted that it is an unfair labor practice for any labor organization and any employer to enter into an express or implied agreement that requires the employer to cease doing business with any other person. While there is a statutory exception to this rule in the context of a construction contract, the Board noted that the exception does not apply where, as here, (1) there was no collective-bargaining relationship between Indeck and the union; and (2) Indeck’s purpose in entering into the contract was to remove the threat of union opposition to Indeck’s efforts to gain regulatory approval of its construction plans.

For greater clarification of any of these issues, you may contact any Shawe Rosenthal attorney.

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