Touching on the Most Common Issues
Most employers are too busy with their day-to-day operations to expend much bandwidth wringing their hands over the nuances of employment-law compliance. With this in mind, take a quick look at a rundown of the four most common employment law issues we see in our practice. Simply knowing that these land mines are out there can go a long way towards avoiding serious problems down the road.
I-9 and Immigration Compliance: With virtually no exceptions, the federal Immigration Reform and Control Act (IRCA) requires employers to complete a Form I-9 for each employee within three days of the commencement of employment. The I-9 purportedly establishes identity and eligibility to work in the United States. Although it appears straight-forward, its simplicity is deceptive. It is not uncommon for an audit of an employer’s I-9 files to discover more than 1/2 of the forms completed improperly.
As of January 1, 2012, Georgia requires private employers with 500 or more employees to verify the employment status of new hires using E-Verify, the federal internet-based database. Employers with 100 or more employees must begin using E-Verify by July 1, 2012, and employers with 11 or more employees must start using E-Verify by July 1, 2013. Employees with 10 employees or less are exempt from the Georgia law.
Nothing in Georgia law (or federal law with respect to E-Verify) obviates an employer’s obligation to complete and retain an I-9 on every employee.
A review of an employer’s I-9 practices and an audit of an employer’s I-9 files can be undertaken in a day or two, depending on the number of employees.
Misclassification of Employees as Independent Contractors: Contrary to what many companies believe (and many practice), whether an individual worker is considered an independent contractor or an employee is not a matter of agreement between the parties. Instead, it is a matter of law – determined by one or more of dozens of non-determinative factors depending upon the governmental agency making the inquiry and the venue in which the issue arises. Although the tests for contractor/employee vary, most boil down to the “economic realities” of the relationship and how much control the company exercises over the worker. Companies who misclassify (purposefully or inadvertently) their employees as independent contractors may face federal and state tax penalties, issues with state unemployment and workers’ compensation authorities, and wage-and-hour headaches.
Although there are occasions in which the assessment of whether a worker may be properly classified as a contractor will require an in-depth inquiry, in most cases, a quick review of the job description and application of the “economic realities” factors is all that is necessary.
Misclassification of Employees as Exempt from Overtime: Unless an employee falls into one of the narrow exemptions from the law, the Fair Labor Standards Act (FLSA) requires employers to pay employees an overtime premium (1.5 times the employee’s regular rate) for any hours worked in excess of 40 in a workweek. Simply because an employee earns a “salary,” even a “good salary,” and even if the employee would prefer the prestige of an exempt position, it does not mean that they are not entitled to overtime. FLSA violations are the hot-ticket for plaintiffs’ attorneys these days and it’s a target-rich environment: in my experience, 1/3 to 1/2 of employers have some type of FLSA violation in their workforce. Adding to the hassle, many states and some municipalities have there own statutes and rules regulating overtime pay.
Finding FLSA violations is similar to finding employees misclassified as contractors – there are a few issues on the fringes for which in-depth research is required to provide a solid opinion, but most positions fall squarely in the exempt or non-exempt category. Correcting FLSA problems once they’re discovered, however, is a mess and not something employers should do without counsel from a qualified attorney.
The Family Medical Leave Act: Employers with more than 50 employees (in a 75-mile radius) are subject to the Family and Medical Leave Act – possibly the biggest PITA of all the employment laws. For employees who have worked for the employer for 12 months and worked at least 1,250 hours in the past 12 months, employers are required to provide the employee up to 12 weeks of unpaid time off for the birth or adoption of a child, the employee’s serious health condition, or to care for a family member with a serious health condition. Employers may require that the employee take any accrued paid-leave concurrently with FMLA leave, but the employee may be eligible to take his FMLA leave intermittently. Recent changes to the law also provide rights and protections to employees serving in, or with family members serving in, the armed forces.
The law is an administrative black-hole, particularly for employers without a full-time HR practitioner. Most of the FMLA violations I see are inadvertent and a result of the simple ignorance of an employer’s obligations and employee’s rights under this exceptionally burdensome statute.