Hiring Temporary or Seasonal Workers?? A Few Considerations

The holidays are approaching and you might be looking for extra staff for your business or workplace.  Even when it’s not holiday season, your business might be cyclical, so you’ll need extra help for a period of time or maybe part-time help. The key is to remember that seasonal, temporary or part-time workers are employees not independent contractors.  Many of the laws and regulations that apply to full-time employees also apply to seasonal or part-time employees.

Here are some things to consider:

Laws that cover harassment, discrimination, and workplace health and safety will apply to your temporary and part-time workers just as they do to the other employees in your business.  These employees are entitled to minimum wage and overtime pay.  As an employer, you are also responsible for appropriate documentation and record keeping.  These employees are not entitled to any special protection and are subject to the same employment considerations as other employees, e.g., at-will status, performance management, etc. 

Here’s a brief list of your obligations and benefits that you must provide to your temporary, seasonal or part-time workers.

• Unemployment Benefits – click here to determine your obligations as a New York employer.
• Taxes/Social Security/Medicare – IRS Publication 15 provides that regarding “federal income tax withholding and social security, Medicare, and FUTA tax purposes, there are no differences among full-time employees, part-time employees, and employees hired for short periods. It does not matter whether the worker has another job or has the maximum amount of social security tax withheld by another employer.” See full text here.  See IRS Guidelines here.
• Workers’ Compensation – Businesses with employees are required to carry Workers’ Compensation insurance coverage through a commercial carrier, on a self-insured basis, or through a state Workers' Compensation insurance program.  Click here for information New York Workers' Comp information.

Misclassification of employees or failure to provide benefits listed above can result in an audit or investigation by the IRS or Department of Labor.  Contact me if you're considering hiring part-time, seasonal or temporary workers or visit my website for additional information. 

Fewer Work Hours - Happy Employees??

In the wake of mounting wage and hour lawsuits and a recent fatality in the industry, Goldman Sachs recently announced the formation of a junior banker task force.  One of the first orders of business was requiring these interns to work saner and "more humane" hours.  These junior bankers are not allowed to enter Goldman Sachs buildings for 36 hours on the weekends (from 9pm on Friday through 9am on Sunday).  The task force, reportedly is also monitoring remote logins to determine wither these junior bankers are working through their weekends or enjoying them (or trying to figure out how to get a competitive edge over their fellow junior bankers).  Goldman Sachs is reducing the hours to make the organization more attractive top college graduates.   

This was considered a revolutionary step for Wall Street and the finance industry.  Even if you’re not a Wall Street firm, there are some real upsides to monitoring the hours worked by interns and junior professionals, trainees in your business as well.  

Let’s Review:

• Work-Life Balance – the overall thinking is that a well-rounded employee is a happier employee.  Happier employees are more productive and more likely to stay with their employers.
• Expand the Talent Pool - Attract Top (perhaps nontraditional) Talent – Many talented prospective employees might not want to work for a business where long work hours are regularly expected or required.  By establishing a culture that values leisure time, you might attract candidates with different backgrounds, experience and training to your organization.  That could lead to its own efficiency and innovation. 
• Control Overtime  costs – assuming that your interns are paid and nonexempt, you will pay overtime for those extensive hours in the office.  Limiting the hours, will limit your costs.
• Minimize Exposure to Wage/Hour Violations – Most interns, junior professional or training positions are non-exempt, i.e., entitled to overtime for weekly hours worked in excess of 40.  Monitoring these hours gives you the opportunity to review the classifications of these individuals and compensate appropriately.

Downsides (few but real)

The decision to control work hours speaks to the culture of the workplace.  The message has to be clear and consistently applied to the identified class of employees.  If managers haven’t bought in, aren’t good communicators or effective implementers, this well-intentioned position might have negative impact on the work environment.  

As you change expectations regarding hours, you should consider changing expectations of results and outputs.  Employees working fewer hours might be less productive.  If you expect employees to work fewer hours but still deliver the same results, you might be dealing with productivity issues not work-life balance and the other concerns mentioned above.  If that’s the case, a different conversation around these adjustments may be necessary.    

What to do

If you’re considering a similar change in work culture, communicate with your managers about your expectations and rationale for this change.  Your managers must communicate clearly with employees and apply these changes consistently.   

Need more information or guidance? Contact me or visit my website.

Religious Accommodations: A Tale of Two Cases

Claims of discrimination base on religion have risen significantly over the last decade. This is likely due to the aftermath of the September 11th attacks in addition to increased immigration as reflected in the workforce.   The EEOC has joined many employees (current and former) in bringing suit against their employers. 

The law requires that an employer or other covered entity must reasonably accommodate an employee’s religious beliefs or practices, unless doing so would cause more than a minimal burden on the operations of the employer's business.  In these cases, the employee must show that he or she:  (1) has a bona fide religious belief that conflicts with a job requirement, (2) notified the employer of the belief, and (3) was disciplined for failing to comply with the conflicting job requirement.  If the employee can show these elements, the employer may offer as a defense either that it offered a reasonable accommodation, or could not do so without undue hardship, i.e., more than a minimal burden on the operations of the employer's business.

A Tale of Two Cases

Time off for prayer
JBS USA, LLC recently prevailed against the EEOC in a religious accommodation case.  The EEOC filed a lawsuit in federal court against JBS, a meatpacking company, claiming that JBS failed to reasonably accommodate Muslim employees’ religious practices by denying them unscheduled prayer and meal breaks during Ramadan. The EEOC alleged that JBS’s failure to allow Muslim employees to take unscheduled breaks was unreasonable and discriminatory. 

However, court concluded that JBS had proven that the unscheduled prayer breaks would impose more than de minimus costs on the company.  The unscheduled absence of workers from their jobs would 1) adversely affect food safety and 2) cause an imposition on co-workers who would have to cover for the absent workers.   JBS showed that if a Muslim employee left a production line for an unscheduled prayer break, and the line was not stopped or slowed, the remaining workers on the line might not be able to keep up with required food safety practices. If the line was slowed or stopped, raw meat might be exposed to air and bacteria.   Also, when a Muslim employee took a prayer break, another employee would need to leave his or her own work aside to fill in. Non-Muslim employees would be required to work harder, and under potentially dangerous conditions, as a result of the prayer breaks.  

Based on this evidence, the court found in favor of the employer.


Dress Codes
A federal judge recently found clothing retailer Abercrombie & Fitch liable for religious discrimination when it fired a Muslim employee for wearing her hijab (religious headscarf). 

A&F stated that the employee was terminated for non-compliance with the company's Look Policy.  A&F argued that "its Look Policy goes to the 'very heart of [its] business model' and thus any requested accommodation to deviate from the Look Policy threatens the company's success." The court found that Abercrombie only offered “unsubstantiated opinion testimony of its own employees to support its claim of undue hardship” and that these opinions “were not linked to any credible evidence."

What caused the different outcomes?  
If you cannot demonstrate using objective data or evidence that accommodation will cause undue hardship, you should consider granting the accommodation.  

What can you do?
If an employee notifies you that s/he needs an accommodation for religious reasons, you and the employee should engage in an interactive process to discuss the request and determine possible accommodations   If it would not pose an undue hardship, it may be difficult for you to justify not granting an accommodation.  

You should consider seeking legal advice in evaluating whether an accommodation is reasonable and whether it might result in an undue hardship.  Please contact me with any questions or visit my website.  

Who is a Supervisor? The Supremes Have Spoken.

Good News For Employers - But Don’t Celebrate

Last week, the Supreme Court today made it more difficult for employees to establish employer liability doe harassment in the workplace by narrowing the definition of "supervisor."  Under Title VII of the Civil Rights Act of 1964, employers are liable for harassing conduct of their supervisors.  If the harassing employee is a co-worker rather than a supervisor, the employer is liable only if the employer was negligent in controlling working conditions.

In deciding Vance v. Ball State Univ., et al, the high Court made it clear that the defining characteristic
of a supervisor is the authority to take tangible employment actions and that without such authority an employee is not a supervisor for purposes of analyzing an employer's liability.

What is Tangible Employment Action?

A tangible employment action is defined by the courts as affecting a "significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits." This definition no longer includes the daily or routine monitoring or assigning projects, shifts, or the ability to exercise significant direction over another's daily work.  

Why This Matters - A Little Background

Simply put, Title VII of the 1964 Civil Rights Act makes it easier to hold an employer accountable for workplace harassment if the harasser is considered a supervisor.  If the wrongdoer is a supervisor and has taken a tangible employment action against the complainant, the employer is strictly/vicariously liable.  If there was no tangible employment action, the employer must establish the following in order to avoid liability: (1) the employer exercised reasonable care to prevent and correct any harassing behavior; and (2) that the plaintiff unreasonably failed to take advantage of the preventive/corrective opportunities that the employer provided.

Bottom Line


Employers can still be held liable for conduct that occurs in the workplace.  Employers should continue to provide routine and mandatory anti-harassment training for all employees, with additional training for managers.  Employers should have policies and procedures in place and in action that reflect the employer's efforts to exercise reasonable care to prevent and correct promptly any unlawfully harassing behavior.

Employers should establish and support an anti-harassment policy with a complaint procedure for victims and witnesses of harassment.


If you have any questions about these developments or would like assistance with anti-harassment training or establishing anti-harassment policies or complaint procedures, contact me or visit my website.

Can A British Pub Seek To Hire Brits?

Longbow Pub and Pantry is a British pub in Brooklyn.  But it’s not just a pub, it’s the real deal.  So when the owners needed a bartender they wanted someone as authentic as their establishment – a real Brit.  They placed an ad on Craigslist seeking “energetic and enthusiastic men and women with an appreciation of craft beer, good food, whisky and real football (a k a soccer).”  The ad also stated that “being British definitely works in your favor.”  That's when their problems started.

Is that legal?

The New York City Commission on Human Rights (NYCCHR) reviewed this ad and served Longbow with a legal notice stating that the bar had violated discrimination law “by giving a preference to employment applicants based on their national origin.”

The New York City Administrative Code provides that “it shall be an unlawful discriminatory practice (d) For any employer . . . to print or circulate any advertisement or publication, or to use any form of application for employment which expresses, directly or indirectly, any limitation, specification or discrimination as to age, race, creed, color, national origin, gender, disability, marital status, partnership status, sexual orientation or alienage or citizenship status, or any intent to make any such limitation, specification or discrimination.”

The commission offered to settle the matter for $2,500.

According to a recent New York Times article, Longbow’s owners say that they are “seeking the best applicants to help them cater to their ethnically specific audience.”  The owners are willing to hire qualified people who are not British.

Hooters to the Rescue - Really?

The bar owners have invoked the “Hooters defense. ”  This is a provision of the city law that provides leeway for employment policies that bear “significant relationship to a significant business objective.”  Hooters was able to defend discrimination suits from men claiming that being female is “reasonably necessary” to the performance of Hooters Girl’s job duties.

So far, the NYCCHR maintains that Longbow’s owners posted an ad that is discriminatory because [the ad] clearly expresses a preference for one group of people over another.

So what can employers do? A few tips

• Keep you advertisements based on qualifications.  
• Make sure that the stated qualifications are closely related to the duties, functions and responsibilities to be performed.  
• Stay away from language that favors or appears to favor a prospective applicant based on impermissible criteria such as age, race, creed, color, national origin, gender, disability, marital status, etc.

If you're facing this issue and have any questions, contact me or visit my website.  

IRS Investigating Self-Declared Exempt Organizations

The Internal Revenue Service, announced that they were investigating organizations that self-declare rather than apply to the IRS for recognition of tax-exempt status. To ensure that self-declared tax-exempt organizations are in compliance with IRS rules, the IRS's Exempt Organizations division has sent letters to more than 1,300 self-declaring social welfare organizations, labor unions, and trade associations, and has issued Form 14449, Self-Declarers Questionnaire to be completed and returned to the IRS.

Under the federal tax law, Section 501(c)(4) social welfare organizations; Section 501(c)(5) labor, agricultural, and horticultural groups; and Section 501(c)(6) business leagues, among others, are able to declare themselves tax-exempt without an official determination from the IRS.  Though not a formal audit, the Form 14449 focuses on various aspects of the self-declaring organizations' operations.

About Form 14449 - Areas of Inquiry

• General information about the self-declaring organization and asks the organization to describe the reason(s) for not applying for recognition of exemption.
• Information about certain activities of the self-declaring organization and its related organizations. The organization must list each of its activities and indicate the percentage of revenue, expenses, and time devoted to each. The organization must also report the portion of the income from each activity that is unrelated business income.
• Information about the organization's revenues and expenses.
• Information regarding the compensation of the organization's officers, directors, trustees, and key employees.

The questions are directed at the organization's tax-exempt status.  Form 14449 can also serve as a compliance planning resource for organizations that are not required to complete it.  Click here for a copy of Form 14449.

Contact me or visit my website if you have any questions about this IRS investigation or the Form 14449.

Tracking Overtime Hours? There's an App for That!

If it seems like everybody has an app, you're right. Even the Department of Labor (DOL) has one.  The DOL's free app, DOL-Timesheet, allows employees to record the time they spend working for you.  With tis app, employees can create a timesheet, enter a rate of pay, and record hours worked either contemporaneously with a  after the fact. 

Why This Matters
This DOL tool essentially enables employees to create a shadow set of timekeeping records that could be used to challenge your timekeeping records.  As you know, the Fair Labor Standards Act requires that non-exempt, covered employees be paid an overtime premium for hours worked in excess of 40 hours in a workweek.  As reported in previous blog posts, litigation for unpaid overtime is on the rise.  The Wage and Hour Division of DOL  explains that “instead of relying on their employers’ records, workers now can keep their own records.”  

What You Should Do 
If you want to prevent liability under state and federal wage and hour law, consider taking the following preliminary steps:

• Review your own timekeeping and payroll practices.  
• Ensure that you are properly tracking rest and meal breaks. 
• Have employees acknowledge/certify that their submitted timecards are accurate.
• Conduct periodic reviews of actual practices to determine compliance.

If you have questions or would like to discuss this topic in more detail, contact me or visit my website.

Is Telecommuting Right For Your Workplace? Read This

Best Buy and Yahoo recently made news with major overhauls of their telecommuting policies (i.e., reducing or eliminating them).   In telecommuting argument, two objectives seem to dominate: work/life balance on the employee side and productivity on the employer side.   In some instances, telecommuters are more productive than their in-office counterparts.  Sometimes the opposite is the case.  Much of this will depend on the industry, the management culture of the workforce and the employees themselves.  How can you decide if telecommuting will work for your business and for your workforce?  Here are a few things to consider:

Technology and Equipment.  If you’re providing the electronic equipment to your employees, have them sign documents acknowledging receipt of the equipment, requesting that they take appropriate action to prevent damage or theft of the equipment, and indicating who will maintain and replace damaged equipment.  It’s important to have written document of this arrangement.

Security.  Is your telecommuting employee taking home or accessing sensitive documents or electronic data? If so, you should consider taking steps to make sure that their work physical and virtual workspaces are secure.   If the documents are confidential or very sensitive, employers should have a secure Internet connection.

Wage and Hour/Compensation.  The Fair Labor Standards Act (FLSA) requires employers to pay employees for all hours worked and to keep accurate information regarding hours worked. The FLSA explicitly applies this rule “to work performed away from the premises or the job site, or even at home” and requires employers to count the time as hours worked “[i]f the employer knows or has reason to believe that the work is being performed.” (29 C.F.R §785.12)  Employers with non-exempt employee/telecommuters must track those hours and to ensure their accuracy in the absence of a supervisor to monitor the employee’s working hours.

The FLSA requires employers to compensate non-exempt employees for all hours worked and to pay employees overtime for all hours worked over 40 in a given workweek. The federal rules on overtime, waiting time, on-call time, and rest and meal breaks apply to telecommuters as much as they do to employees in the workplace.  Employers with non-exempt telecommuting employees must track employees’ working hours in order to minimize the risk of penalties, charges and lawsuits.

Safety.  Employers are responsible for maintaining a safe working environment for their employees while they are working - whether at home or in the office.   Since employers are responsible for the work, they should consider requiring employees to designate a specific area at home as an office. Employers might also want to perform a site check of the employee’s home, if possible office to ensure both that there are no potential hazards that could expose the employee to harm and the employer to liability.

Bottom Line:
If you’re thinking about establishing a telecommuting policy, consider a written agreement or written terms of employment that outline the telecommuting arrangement.  The agreement should address the issues discussed above.

Also keep in mind that telecommuting might work for your company, but might not be right for every employee.  You should consider outlining job responsibilities and performance criteria before allowing employees to telecommute.

If you have any questions about telecommuting policies, contact me or visit my website.

New York To Increase Minimum Wage Dec 31

Employers - mark your calendars!  New York Governor Andrew Cuomo approved the budget that included raising the state's minimum wage to $9.00 over the next three years.   The $7.25 New York minimum wage was previously the same as the federal minimum wage.  The increases are scheduled as follows:

December 31, 2013:  $8.00/hour
December 31, 2014:  $8.75/hour
December 31, 2015:  $9.00/hour

Employers in New York who pay minimum wage to employees (other than in tipped and other specified industry positions), or who are required to make certain payments that are tied to the minimum wage must make sure that the new obligations are met.  Please mark your calendars and have your payroll systems updated!

For more information contact me or visit my website.

Retaliation - A Primer

Retaliation is the most frequently filed charge with the Equal Employment Opportunity Commission (EEOC) and its easier to prove than the underlying discrimination. Even if the underlying claim of discrimination has no merit, retaliation remains a separate charge and can still expose your organization to liability.

What is Retaliation and Why is it So Easy to Prove?
Retaliation can be defined as the act of repaying an injury or offense with an injury or offense.  In order to establish a claim for retaliation, a plaintiff must have engaged in “statutorily protected activity” (such as complaining about or opposing an employment practice that plaintiff believes is unlawful), there must be an “adverse employment action” by the employer; and some relationship between the complaint and the adverse employment action.  An employer is not permitted to retaliate against an employee who has filed a claim or complaint of discrimination.  The courts will presume that post-complaint adverse actions are related to or motivated by the complaint.  Click here for EEOC's Facts About Retaliation.  

So what’s an Adverse Employment Action?
An adverse employment action is a decision that negatively affects an employee.  According to the EEOC, an adverse action is an action taken to try to keep someone from opposing a discriminatory practice, or from participating in an employment discrimination proceeding. Examples of adverse actions include: termination, refusal to hire, and denial of promotion, changes in compensation, threats, unjustified negative evaluations, unjustified negative references, or increased scrutiny or supervision, changing of work assignments or working conditions.  Adverse actions can also include ignoring or berating an employee, taking away work or responsibility, or giving too much work.

How Can You Avoid a Retaliation Charge?
As an employer, you can’t control the filing of discrimination or retaliation charges, but you can set standards for your workplace that might make exposure to these charges less likely.  As always, the first place to start is with regular EEO/anti-discrimination training of your managers, supervisors and staff.   Next, make sure that you have robust anti-discrimination policies in your employees handbooks.

In general, an employer’s best practice after a discrimination claim has been filed is to treat the employee like any other employee.  Continue to engage in open communication with the employee.  Do not treat the employee differently from others in the workplace and do not publicize the complaint.  Be sure to have legitimate business rationale for all decisions that might affect the employee and think twice before executing hat decision.

If you're facing with a discrimination charge or potential retaliation charge and need legal assistance, contact me or visit my website.

Employee, Intern, or Volunteer - Why This Matters

The signs of spring are upon us - the birds are chirping, flowers are starting to bloom and students are looking for work.  The job market is tight so many students and recent grads are willing to work for free.  Sounds great, right?  Not so fast. . .

Background
Under the Fair Labor Standards Act (FLSA), individuals who are “suffered or permitted” to work must be paid.  Internships in the “for-profit” private sector will most often be viewed as employment, unless the following criteria are met.  Interns in “for-profit” private sector entities, who do not meet these criteria typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.  NB: different standards apply for government and the non-profit sectors.

An Intern is an Intern If. . .
The following six criteria must be applied when determining if an intern is an intern:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the intern is an intern, there is no employment relationship and the intern would not be entitled to compensation or overtime.

Employers should be aware that simply labeling an employment relationship as an internship does not necessarily create an exemption from legal obligations to pay compensation for services performed.

Why This Matters
The accurate classification of individuals that regularly perform services for your organization is an important undertaking.  Misclassification can expose your businesses to costly litigation, penalties and damages.  Please contact me if you need assistance in this area or a more detailed discussion.

Special Treatment For Charitable Organizations
According to DOL, unpaid internships in the public sector and for non-profit charitable organizations, “where the intern volunteers without expectation of compensation, are generally permissible.”

So What’s The Difference Between An Intern And A Volunteer?
According to DOL, volunteer status is available only to individuals performing charitable activities for not-for-profit organizations.  Private sector, for-profit entities cannot engage volunteers.  Under the FLSA, a volunteer doesn’t receive compensation other than expenses and/or a nominal fee to perform services, and such services are not the same type of service for which the individual is employed.

Questions??  Contact me for a consultation or visit my website.

New I-9 Forms Available - All Employers Must Use Them

The U.S. Citizenship and Immigration Services (USCIS) recently announced that Employment Eligibility Verification Form I-9 (I-9) has been revised. Employers have until May 7, 2013 to begin using the new form, but employers should begin using the new forms as soon as possible.  Click here for a copy of the new I-9.

What is the purpose of the I-9?

The I-9 is used for verifying the identity individuals hired for employment in the U.S. and for confirming that all individuals hired are authorized to work in the U.S.  All employers must complete the I-9 for each individual they hire in the U.S. This includes citizens and noncitizens. On the form, an employee must attest to his or her employment authorization. The employee must also present his or her employer with acceptable documents confirming his/her identity and employment authorization.

Who Must Comply?

All employers (private, public, and nonprofit) must have a completed Form I-9 on file for each person on their payroll.  Employers must retained the I-9s for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials from the Department of Homeland Security, Department of Labor, or Department of Justice.  The new Form I-9 contains a revision date in the lower right hand corner denoted “Rev. 03/08/13.”

Next Steps


Since the new forms are available now, employers should download and use the new form as soon as they are able.  Although the existing form may be used until May 7, after May 7 failure to use the new I-9 will result in fines and civil penalties that can range from $100 to $1000 per violation.  Download the new form here.

If you have any questions about the new I-9, contact me or visit my website.  

Employee or Independent Contractor - A Few Guidelines

The Wall Street Journal recently reported something that most business owners already know or should know, that "there is a crackdown on businesses that treat some workers as independent contractors and its causing a stir in industries from trucking to exotic dancing.”  It’s not that the government has anything against exotic dancers or truckers.  The issue for the government is that when employees are misclassified, employees do not get the benefits and overtime to which they are otherwise entitled and the employers avoid paying payroll taxes, i.e., lower revenues for the government.  Independent contractors (ICs) can be referred to as freelancers, consultants, contractors, project workers, temps, specialists, etc.  They are in every industry because, at least on paper, they often make good business sense for many companies.  So how do you know if your workers, whether truckers, dancers, technicians, etc., are employees or independent contractors?

Fortunately, state governments (click here for New York), the Department of Labor (DOL) and the Internal Revenue Service (IRS) provide guidelines.  This might seem like a lot of factors to keep up with but these questions/factors really focus on the same few areas that are concentrated quite nicely in the IRS Three Prong Test.  The IRS divides its analysis into three areas: financial control, behavior control, and the type of relationship.  The analysis focuses on an overall review of the business/worker relationship, who controls the worker, and how the work is performed.

• Financial Control - Are the business aspects of the worker’s job controlled by the company (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc., the extent to which the worker can realize a profit or loss)?
• Behavioral Control - Does the company control or have the right to direct and control what the worker does and how the worker does his/her job through instructions, training, or other means?
• Type of Relationship - Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue, i.e., open-ended or project based and is the work performed a key aspect of the business?

The IRS provides more detail on behavioral control in its 20 Factor Right to Control Analysis. 

The Fair Labor Standards Act/DOL applies an "economic realities test" where the analysis, similar to the IRS seeks to determine the totality of the worker/company relationship.  

• Control of Work - The degree to which the company controls the manner in which the work is performed;
• Opportunity for Profit or Loss - The worker's opportunity for profit or loss depending upon the worker's managerial skills;
• Investment by Worker - The worker's investment in equipment or materials required for this project or the worker's employment of helpers;
• Use of Judgment - Whether the services being rendered require a special skill and use of initiative/judgment;
• Permanence of the Relationship - Work for fixed period of time or discrete project
• Integration into Company's Business - Whether the service rendered is an integral part of the alleged employer’s business.

Risks of Misclassification

Risks include liability for unpaid federal, state and local income tax withholdings and Social Security and Medicare contributions, unpaid workers’ compensation and unemployment insurance premiums, and even unpaid work-related expenses and overtime compensation. Any these types of liabilities (in addition to interest and penalties for non-compliance) can be devastating for most businesses. 

The better course is to avoid misclassification.  

Thinking about hiring Independent Contractors?

• Prepare a written agreement for independent contractors addressing terms of the project/assignment.
• Set start and completion dates for the project.
• Make it clear that the worker is free to work for other companies.
• Compensate for the work performed, not the time required to do the job.
• Avoid providing office space, computers, tools and equipment.
• Have workers remain responsible for their own insurance and training.
• Don’t treat the workers as employees (i.e., don't provide business cards and employee perks).

If you think that you have misclassified workers or have any questions, contact me or visit my website.

For Nonprofits - IRS Released Results of its Governance Study

IRS Governance Study—Preliminary Results

The Internal Revenue Service Exempt Organizations Division ("EO") completed its analysis of 1,300 checksheets from 501(c)(3) organizations, and has produced preliminary findings. According to EO, this analysis included only public charities that already had been selected for examination, so the results are not statistically representative of the overall 501(c)(3) population. Nonetheless, this analysis offers some insight into which governance practices might be useful indicators to the IRS of tax compliance.

The presence of the following factors was associated with compliance for the group that were reviewed:
 Have a written mission statement
 Always use comparability data when making compensation decisions
 Have controls in place to ensure the proper use of charitable assets
 Provide for Form 990 review by the entire board of directors before filing

So what is associated with non-compliance?  According to the IRS, having control of the organization concentrated in one individual, or in a small, select group of individuals.  That's a red flag and will invite greater scrutiny.  Read the entire IRS EO 2012 Annual Report and FY 2013 Work Plan here.

Bottom Line
A few factors indicate compliance to the IRS.  If these factors are pretty straightforward and if in place, further inquiries or examinations might be avoided.

If you have any questions, contact me or visit my website.

Yahoo Says No to Telecommuting!

On Friday, Yahoo informed its workforce that effective June 2013, all employees would have to report to the office to work.  No more work from home – its work from work at Yahoo from now on.  Initial reactions ranged from anger and outrage to confusion: how/why does a tech company that presumably knows how to utilize its own superior resources and technology no longer allow employees to utilize that technology to be productive from other locations?

According to the memo from Human Resources to the Yahoo workforce, the reason for this policy change is that in order “to become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side . . . that is why it is critical that we are all present in our offices."  Read the memo here.

The reality is that at its core, and irrespective of industry, Yahoo is a company just like any company and struggles with issues of productivity and workforce management just like the millions of much smaller businesses in the US.  In general, employers are not legally required to allow employees to telecommute.  Therefore question for employers seems to be whether the ability to work from home leads to greater productivity or inhibits collaboration (which can affect productivity).

Keeping in mind that not all jobs lend themselves to telecommuting (neuro-surgeon leaps to mind), what are some advantages and disadvantages to employers for allowing employees to telecommute?

Advantages

• Higher productivity from employees due to fewer interruptions 
• Improved employee morale
• Improved retention and lower need to recruit and train new employees.
• Reduced need for actual square footage 
• Reduced relocation costs 

Disadvantages

• Need to have the appropriate technology (and related security) in place to handle telecommuters 
• Need to change methods of management 
• Managers have to find innovative ways to create a productive team environment that includes the physically absent employee(s)
• Tracking time worked, which is important an important FLSA issuer if the employee is non-exempt 

Bottom Line
Allowing employees to telecommute can affect your bottom line in direct and indirect ways.  If you're interested in providing a telecommuting option for your employees, you need to do a few things first:

• Decide which jobs are appropriate for telecommuting 
• Draft and communicate a telecommuting policy that outlines eligibility and terms of telecommuting in addition to performance expectations and how performance will be evaluated
• Be prepared to train supervisors on how to manage telecommuting employees

If you have any questions about telecommuting or other flexible work arrangements, contact me or visit my website.

Merrill Lynch Pays $12 Million to Settle OT Case

Merrill Lynch has agreed to settle with more than 5,000 broker assistants who filed a class action alleging that the brokerage firm failed to pay them overtime in violation of the Fair Labor Standards Act (FLSA).  The lawsuit alleged that the firm required associates, who assist brokers/financial advisors, to work more than 40 hours a week but failed to pay overtime.  Merrill Lynch did pay base salaries to these assistant and the assistants also earned commissions from their assigned brokers.

Merrill Lynch will create a $12 million fund to be used to pay wages, overtime, and attorney fees to the broker assistants.  The settlement is not final and must be approved by the court.

Bottom Line for Employers
This is another example of the costly consequence of failing to pay overtime.  The good news is that this liability can be avoided.  Here's how to start:

• Take time to review the job descriptions and exempt/non-exempt classification of each job category. 
• Make sure that the duties and responsibilities in the job description match the job functions that are being performed.
• Correct any classification errors

If you're not sure which job functions are exempt from overtime, check out the Department of Labor Fact Sheet here.  If you need assistance with any of these steps,  contact me or visit my website.

New FMLA Benefits For Military Effective March 8

On February 6, 2013, the Department of Labor ("DOL") issued its final regulations on Family and Medical Leave Act ("FMLA") relating to military leave.  These regulations will go into effect March 8, 2013.

According to the DOL, “providing job-protected leave for caregivers of covered veterans under the military caregiver provision is expected to increase family involvement in the veteran’s recovery, improve self-reliance and access to resources for caregivers, and reduce negative outcomes for covered veterans and their families.”

The Department of Labor estimates that as many as 381,000 employers and government agencies could be affected by new regulations.

Military Leave Under the FMLA

There are two categories of job-protected leave under the FMLA for eligible employees with military family members: (1) caregiver leave of up to 26 weeks for those employees who provide care for covered service members with a serious injury or illness; and (2) exigency leave of up to 12 weeks for qualifying exigencies arising out of the fact that a covered military member is on active duty or has been notified of an impending call or order to active duty in support of a contingency operation.  Click here to see a side-by-side comparison of of the current and final regulations.

Summary of Changes to the Military Family Leave
Effective March 8, 2013, FMLA regulations will:

• Expand exigency leave to include eligible employees with family members serving in the Regular Armed Forces, and further require that the military family member be deployed to a foreign country;
• Increase exigency leave for rest and recuperation from five days under previous regulations to a maximum of 15 days;
• Extend exigency leave to cover parental care;
• Expand the definition of serious injury or illness for caregiver leave to include pre-existing injuries or illnesses of current service members that were aggravated in the line of duty;
• Extend caregiver leave to include care for a covered veteran, defined as an individual who is undergoing medical treatment, recuperation or therapy for a serious injury or illness, and who was discharged or released under conditions other than dishonorable at any time during the five-year period prior to the first date the eligible employee takes FMLA leave to care for the covered veteran;
• Expand the definition of serious injury or illness of a covered veteran to include, among other things, a continuation of a serious injury or illness that was incurred or aggravated when the covered veteran was a member of the Armed Forces;
• Expand the list of authorized health care providers from whom an employee may obtain a certification to include those outside the military, and permit employees to request a second and third opinion from health care providers who are not affiliated with the military.

Bottom Line for Employers

• You have a few weeks to before these revisions take effect.  Use this time to become familiar with the revisions and their implications and to:
• Revise FMLA policies to reflect the expanded categories of caregiver and exigency leave reflected in the final regulations.
• Continue to train supervisors and human resource professionals on FMLA leave to insure that the requests are addressed and that necessary certification processes are followed.
• Replace your current FMLA posters with the revised poster (available on the DOL website). 

If you have any questions about these regulations or FMLA in general, contact me or visit my website.

Keep Cupid Under Control - Office Romance 911!

It's almost Valentine’s Day and love is in the air.  While co-workers might be struck by Cupid’s arrow, employers have to be mindful of the potential for those lovely unions to spark not just fireworks, but also possible harassment claims in the workplace.  Valentine’s Day may present an opportunity to re-educate employees about how to behave if they find themselves becoming involved in an office romance.  This should be part of the EEO/anti-harassment training that employees regularly receive.  Office hook-ups are rife with liability risks for employers.  Here’s how employers can manage them.

Be Proactive  – Continue to communicate workplace policies against sexual harassment.  These policies should also explain procedures for reporting a complaint and the consequences of prohibited behavior.

Problems can also arise when one employee’s affection is not returned. Employees should understand that it’s probably permissible to ask a co-worker on a date, but if the co-worker declines, leave him/her alone.  One person’s view of ardent courtship could be another person’s definition of stalking, i.e., harassment.  Training should address this scenario as well.

Be Aware of Relationships Between Supervisors and Subordinates - These relationships expose employers to great liability.  They can lead to resentment among co-workers who feel that the employee dating the manager gets favorable treatment.  If the relationship doesn’t end well, there may be claims from the subordinate that he or she was coerced or pressured into the relationship or otherwise sexually harassed.

Consider creating a policy that either prohibits these relationships or will modify reporting relationship between the supervisor and employee. If you can’t change the reporting structure, the employer should consider a “love contract” where the supervisor agrees not to be a part of any employment decisions affecting the subordinate.

Be Sensitive to What's Going on in Your Workplace – Even though you might not want to interfere with a personal issue, don’t hesitate to address that "personal issue" if it interferes with the professional environment.  If the effects of the relationship can be felt in the workplace, the relationship may no longer be a "personal issue." Even if the romance is going well, your employees should remain mindful to maintain standards of professional conduct at all times.

Bottom Line

You might be tempted to try to prevent potential problems arising from office romances by prohibiting office romances, but that won’t keep these relationships from happening.  You’ll just be stuck with having to enforce or ignore an unmanageable workplace policy. Also, you really don't want to be the Love Police!!  Remember these takeaways instead:

• Review your EEO/anti-harassment policies to insure that they are up to date.  
• Continue to train and educate your employees on appropriate workplace conduct and anti-harassment policies.  
• Make sure that you have informed your employees what to do if they or a co-worker feels harassed or if they have been subjected to or witnessed inappropriate behavior at work. 

Questions?? Contact me or visit my website.

Happy 20th Birthday FMLA!!

In 1993, President Bill Clinton signed the Family Medical Leave Act ("FMLA" or "the Act") into law. FMLA allows workers to take up to 12 weeks of unpaid leave to bond with a newborn, newly adopted or newly placed child; care for a seriously ill child, spouse or parent; or care for their own serious health condition without fear of losing their jobs.  With this legislation came the acknowledgement that the workforce was changing and therefore the needs of this changing workforce needed to be addressed.  In many ways, FMLA transformed the workplace and had a significant impact on families by helping millions of workers take job-protected leave to recuperate from a serious illness or take care of an ill family member, or give birth or adopt a new child.

Here are some key findings from the Department of Labor's 2012 FMLA Survey.

• Most Worksites Aren’t Covered By The FMLA -  but more than half of all employees are eligible. To be covered by the FMLA, a worksite must be part of a firm with at least 50 employees. Only about one in six worksites reports that it is covered by the FMLA (17%); another 30 percent are unsure. These uncovered and unsure worksites tend to be small; covered worksites tend to be larger.
• Not All Employees At Covered Worksites Are Eligible. To be eligible an employee must: (i) work for a firm with 50 employees within 75 miles of the worksite; (ii) have 12 months of tenure with this firm; and (iii) have worked 1,250 hours in the past year (about 24 hours per week). Only slightly more than half of all employees report meeting all three of these conditions to be eligible for the protections of the FMLA (59%).  
• Leave Is Not Uncommon.  Most leave taken is for the employee’s own illness (57%). Leave for pregnancy or a new child and illness of qualifying relative (spouse, child, or parent) is less common (22% and 19% respectively). Leave for other qualifying reasons, including military reasons is quite rare (2%).  Most leave is short. Nearly half of all leave events last 10 days or less (42%); less than a fifth (17%) last more than 60 days. 
• Most Employees Receive Some Pay While On Leave.  While the Act includes no requirement that employers provide any pay during the leave. Nevertheless, most employees receive some pay while on leave: 48 percent report receiving full pay and another 17 percent receive partial pay, usually, but not exclusively, through regular paid vacation leave, sick leave, or other “paid time off” hours. 
• Most Employers Report Little Negative Impact From The FMLA.   Most covered worksites that are large enough to have eligible employees (that is, 50 employees within 75 miles) report little difficulty complying with the FMLA (only 14% report “somewhat difficult”; only 1% report “very difficult; weighting by worksite). However, larger worksites are more likely to report difficulty complying, such that when weighting by employees, these figures increase to 3 percent for “very difficult” and 29 percent for “somewhat difficult”. In addition, 30 percent report that the cost of administering the FMLA is rising (50% when weighting by employees). Few worksites (less than 10 percent) perceive negative effects of complying with the FMLA on “employee productivity, absenteeism, turnover, career advancement, and morale...business profitability”. However, these negative reports are more common among large firms (29% when weighting by employees).

Want to Reduce Workplace Liability (And Be A Better Manager)? 5 Easy Steps

 EEOC released its year-end statistics for claims filed.  The bad news for employers is that claims have increased (surprise!!).  The good news is that avoiding claims and minimizing internal and external employee complaints is relatively simple and pretty straight-forward.  So let’s get started!  Here are my Fast Five:

1. Keep informed of relevant federal, state and local workplace laws and regulations (including regulations on harassment and retaliation, discrimination, and compensation); 
2. Maintain, update and distribute written policies on hiring, workplace behavior, time off, benefits, and termination;
3. Establish and communicate a confidential complaint procedure including designating an HR rep or other trained designee to assist with this procedure;
4. Conduct periodic training sessions for both managers and employees so that they are aware of workplace discrimination issues as well as conduct and language that might be considered inappropriate/unlawful;
5. Maintain up-to-date records for all employees, documenting performance evaluations, discipline, changes in compensation, attendance and other workplace events or changes.

This list is not exhaustive - but this fast five is a start.  If you're doing these things, you're in pretty good shape and have a solid foundation.  If you're doing some of the five - you're moving in the right direction, just keep going.  You'll notice that there are common threads with these steps - Document and Communicate.  In my experience, the best managers, not just the managers that avoid lawsuits, are managers that engage their workforce.  Communication is key: when employees know what is expected of them, they tend to work more effectively.  Having written policies, documents not only what the laws are, but also reinforces the communicated expectations.

If you have any questions or need help with any of these or other workplace issues, contact me or visit my website.

EEOC's Strategic Enforcement Plan and You - Pt 1

 At the end of 2012, the EEOC released its Strategic Enforcement Plan outlining its workplace priorities in enforcing employment laws for 2013-2016.  These employment laws include, Title VII anti-discrimination laws, the Americans with Disabilities Act, and the Family Medical Leave Act.  Read the full text of the plan here.  Employers should expect to see increased agency focus on these areas over the next 4 years:

• Eliminating Barriers in Recruitment and Hiring. The EEOC will target class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities.
• Protecting Immigrant, Migrant and Other Vulnerable Workers. The EEOC will target disparate pay, job segregation, harassment, trafficking and discriminatory policies affecting vulnerable workers who may be unaware of their rights under the equal employment laws, or reluctant or unable to exercise them.
• Addressing Emerging and Developing Issues. The EEOC will target emerging issues in equal employment law, including issues associated with significant events, demographic changes, developing theories, new legislation, judicial decisions and administrative interpretations.
• Enforcing Equal Pay Laws. The EEOC will target compensation systems and practices that discriminate based on gender.
• Preserving Access to the Legal System. The EEOC will target policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or that impede the EEOC's investigative or enforcement efforts.
• Preventing Harassment Through Systemic Enforcement and Targeted Outreach. The EEOC will pursue systemic investigations and litigation and conduct a targeted outreach campaign to deter harassment in the workplace.

What does this mean to you?  The Language of the SEP addresses both policies and practices.  Be sure to have updated and written policies addressing sexual harassment, discrimination, anti-retaliation, performance evaluation and compensation.  But beyond that, you must ensure that the policies are communicated and consistently applied and that the employment practices are consisted with your written policies.  

In Part 2, I will examine the enforcement areas more specifically, translate the EEOC jargon and let you know the impact of each area in your workplace.  Stay tuned.

In the meantime, feel free to contact me with any questions or visit my website.   

Employers Must Provide WTPA Notices By February 1

Its that time of year again!  Employers, you must notify your employees of their compensation and terms of employment by February 1st.  The New York Wage Theft Prevention Act (“WTPA”) requires employers to provide all New York employees with an annual notice regarding their compensation and other terms of employment. The notice must be provided to all employees between January 1 and February 1 of each year, regardless of length of employment or whether compensation has changed. Accordingly, all employees must receive a written WTPA notice on or before February 1.
The notice must include the following information:

• Rate or rates of pay, including overtime rate of pay and basis thereof;
• How the employee is paid, for example, whether the employee is paid by the hour, shift, day, week, salary, piece, commission, or another measure;
• Allowances, if any, claimed as part of the minimum wage, including tip, meal, or lodging allowances;
• Regular payday;
• Name of the employer and any DBA names used by the employer;
• Physical address of the employer’s main office or principal place of business and the mailing address if different; and
• Telephone number of the employer.

For exempt employees, you should list compensation as a weekly or bi-weekly amount, rather than as an annual salary.

Although you can use any form that includes this required information, the New York State Department of Labor (“NY DOL”) has published template notices on its website. You get get templates and additional information from the NY DOL website.

The WTPA notice must be provided both in English and the employee’s primary language (if the NY DOL offers a translation). The NY DOL currently provides template notices in Spanish, Chinese, Haitian Creole, Korean, Polish and Russian on its website.

You must get a signed acknowledgement of receipt of the annual notice from each employee, including an affirmation by the employee that the employee accurately identified to the employer his/her primary language, and that the notice was in the language so identified. You must also provide employees with a signed copy. The signed acknowledgments must be retained for at least six years.

In addition to annual notices, WTPA notices must be provided at the time of hire and to current employees in advance of a reduction in pay. A new notice is not required for pay increases if the new rate is shown on the wage statement accompanying the next payment of wages, except for employers in the hospitality industry who must provide new notice upon any compensation change.

If you need any help with this or have any questions, please contact me or visit my website.

An Ounce of Prevention – Small Steps to Avoid Big Problems

Every year thousands of complaints are filed against employers by current, former and prospective employees (applicants) alleging discrimination.  In turn, employers spend thousands of dollars (if they’re lucky) responding to and defending these claims.  How can you avoid these expenses?  By avoiding these claims.  A little background:

The EEOC sued a Burger King franchisee in 1998 on behalf of a group of female employees who alleged sexual harassment.  The case has been pending for 14 years and is one of the EEOC’s most extensive sexual harassment cases ever.

While not admitting liability or any wrongdoing, Burger King recently decided to settle this matter for $2.5 million (!) because, according to company executives, the settlement would cost less than continuing this litigation.  "It has cost the company an enormous amount of money to defend itself up to this point … It would have cost many more millions of dollars in legal fees. "

Remember those New Year’s resolutions you made for your workplace (if you still haven’t made any, see my previous blog post)? This is another good reason to implement them.  Although you can't predict if you’ll be sued, who will file the complaint or when, you do have control over your exposure and can take steps to minimize the likelihood of a complaint and minimize your risks.  Even if you get sued, you can minimize the damages by taking preventive action.  Also, by taking action, your work environment will likely be more positive and productive.  Here’s how you can start:

• update your employee handbook and your employment policies;
• communicate workplace policies and expectations of workplace conduct consistently; 
• conduct regular training for your managers and employees on EEO  and anti-discrimination policies; and 
• document all disciplinary infractions and performance issues.

Remember, an ounce of prevention. . . 

If you have any questions or would like guidance in this area, contact me or visit my website.  
   

Workplace Resolutions for 2013!!

2013 is still new,  so you still have time to implement the New Year’s resolutions you made for your workplace.  The new year is time to start fresh, so take a look at your policies.  Are they up to date?  Are they effective?  Have they been communicated to the workforce?  If you haven’t made any resolutions yet, don’t worry.  I have a few suggestions. 

Review Your Employee Handbook   Has it been updated to include changes in the law?  Does it reflect changes in company policies?  The handbook is a powerful document.  It helps establish and therefore should be consistent with the culture of your workplace.  Any disparities between the handbook and workplace practices may be held against the employer.  

Review Job Descriptions  Do they still accurately describe the essential job functions and reasonable expectations for the relevant position?  Updated and accurate job descriptions can be critical when facing Americans with Disabilities Act (ADA), Fair Labor Standards Act (FLSA) or other discrimination claims.  

Review Employee Classifications  Make sure that all employees are treated as non-exempt for overtime purposes unless they fit into a recognized exemption.   Lawsuits alleging employees are being misclassified as exempt or as independent contractors remain a source of litigation for plaintiff attorneys. 

Review Your Social Media and Electronic Communications Policies  Make sure your policy addresses your company’s expectations regarding how employees participate in social media.  In addition, make sure your policies reflect your expectations and policies regarding harassment, confidential information and other acceptable communications. 

Review Attendance And Leave Policies  The ADA and FMLA are implicated by seemingly innocuous language regarding leave, leave without pay, medical documentation and accommodations.  The Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL) and plaintiffs’ attorneys will pursue claims of discrimination or failure to accommodate.  

These a just a few resolutions to help get 2013 off to a good start.  If you have any questions or would like assistance with your review, contact me or visit my website.  

IRS Expands Eligibility for Voluntary Classification Settlement Program

Last year, the Internal Revenue Service ("IRS") announced a settlement program for employers with misclassified workers: the Voluntary Classification Settlement Program (“VCSP”).  Under VCSP, employers can get a reduction in their federal employment tax liability (that would have been assessed based on past nonemployment treatment of workers) by agreeing to properly classify their workers for future tax periods.  This program encourages employers to treat these workers correctly going forward by limiting exposure to penalties for prior misclassification.  In December 2012, the IRS expanded this program so that more employers will be eligible to participate.  Read the IRS announcement here.

To be eligible to participate in VCSP, employers must not be under current employment tax audit by the IRS or current audit of worker classification by the Department of Labor or any state government. A prior audit will not disqualify an employer that complied with the results of the prior audit.  But here’s the good news for employers: the IRS announced that the program will be available through June 30, 2013 for taxpayers who are ineligible under the general criteria because they did not provide the required Forms 1099 to the affected workers for the prior three years.

Bottom Line:  Employers who haven't provided 1099s to your workers, still might be eligible to participate in VCSP until June 13, 2013.  Enforcement activity and audits will continue to be a priority for the Department of Labor and the IRS. Fair Labor Standards Act (FLSA) litigation has also proven to be a lucrative area for plaintiff/employee attorneys and class action attorneys.  Audits and lawsuits can be costly for employers.  Employers should take special care to insure that their workforce is properly classified and take advantage of this program if eligible.  

Not sure if your workers are classified correctly? Not sure if you're eligible to participate in VCSP?  Contact me or visit my website.