Many employers have had the unnerving experience of having an injured employee file for workers’ comp, only to learn that the employee was an illegal immigrant. Usually, the employee presented convincing fake documents at the time of hiring. However, often during the course of medical treatment or workers’ comp proceedings, the employee is revealed as an illegal immigrant who is not authorized to work in the U.S.
Under the federal Immigration Reform and Control Act or IRCA, it is a crime for the employer to knowingly hire anyone who cannot legally work in the U.S. However, many employers unintentionally violate the law by hiring an employee whose I-9 documents seem legitimate, only to discover months or years later that the documents were forged. Because it is also a crime for the employer to continue to employ undocumented workers, usually the employee is terminated.
However, the terminated employee may still qualify for workers’ comp in many case. State laws in Texas, New York, Florida and Utah specifically grant undocumented workers who are injured on the job the right to collect workers’ comp benefits. In Connecticut, Georgia, Nebraska, Louisiana, Ohio, Oklahoma, North Carolina, New Jersey and South Carolina, the courts have ruled that an employee cannot be denied workers’ comp solely because he or she was an undocumented worker who was illegally employed.
In other states, an illegal immigrant does not qualify for workers’ comp. Arizona and Wyoming courts have ruled that the illegal immigrant cannot legally enter into an employment contract, and therefore is not an employee. The same argument has failed in Georgia, Connecticut, Louisiana, Oklahoma, Texas and Ohio.
This is in contrast to court rulings on FLSA, which have held that the undocumented worker is entitled to back wages for overtime, even if he or she should not have been employed in the first place.
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In a landmark case involving the Frito-Lay plant in Dallas, Texas, the judge ruled that the OFCCP could not continue asking for more and more information to audit. Instead, the original audit scheduling letter set limits on the documents the government agency was allowed access to. Frito-Lay is the corporation headquartered in Dallas that produces potato chips, corn chips and other snack foods. They provide 59% of nationwide sales of snack chips.
Initially, in July 2007, the OFCCP requested applications, affirmative action plans and other documents related to hiring at the Dallas plant for 2006 through June 2007. According to OFCCP, those documents showed a pattern of adverse impact in the hiring of women. Later, the OFCCP requested info through December 2007 and from July 13, 2005 to December 31, 2005. Frito-Lay complied with the request.
Then on November 10, 2009, the OFCCP requested more records, from January 1, 2008 to October 31, 2009, and Frito-Lay refused to provide them. Attorneys for the snack-food company argued that the OFCCP was unlawfully extending the scope of its original investigation into hiring practices at the Dallas facility, past the date of the original letter.
The OFCCP argued that because they found evidence of disparate impact in hiring, they had the right and the duty to investigate the subsequent period.
The judge agreed with Frito-Lay. In his ruling, the judge for administrative law noted that the U.S. Department of Labor specifically provided assurances in comments to its regulations that compliance reviews would not be unending. Therefore, he reasoned, the agencies own regulations dictated that the OFCCP investigation launched in July 2007 could not extend beyond that date. In other words, the agency could not provide notice that they would audit events that had not yet occurred.
According to consultant David Cohen of DCI Consulting Group in D.C., “If the OFCCP drags the case on, it can’t ask for more data.”
This is good news for any federal contractor that would prefer not to be subject to unending audits.
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According to attorney Joan Gale and several other noted experts, the expansion of ADA under ADAAA will enable many more employees to take FMLA for adult children, even when those children are not members of the military or veterans.
An employee can take unpaid, job-protected leave of up to 12 weeks under the federal Family and Medical Leave Act when an immediate family member has a serious health condition. Originally, the FMLA was crafted so that immediate family members included parents, a spouse, and a son or daughter under the age of 18.
Sons and daughters over the age of 18 were included in an employee’s FMLA leave only if they had a disability under ADA and were incapable of self-care.
Essentially, the ADA extended the “son or daughter” status indefinitely, but only for individuals that met the narrow ADA standard for a disability. Generally, the ADA required that the disability interfere with basic life functions in three or more areas, such as being unable to bathe, dress or groom themselves, being unable to walk or use public transportation, and physically unable to shop or cook food. In many cases, a blind or deaf individual over 18 did not meet this very strict definition of disability, and his or her parent would not qualify for FMLA, even if the blind or deaf offspring also had a serious health condition such as cancer.
The “disability” designation is still a requirement, however, under ADAAA a new standard for disability has been introduced. The more liberal standard for disability includes many more conditions than in the past. Certain conditions including blindness, deafness and mental retardation are presumed to be disabilities under ADAAA. Other conditions are often disabilities, such as arthritis or diabetes. In addition, a condition such as cancer or rheumatoid arthritis is a disability, even if it is currently in remission. An employee can take FMLA to care for a son or daughter over the age of 18 with any of these conditions, who is also unable to care for themselves for any reason, including a serious health condition.
A 27-year-old blind son who is in traction with two broken legs, probably cannot care for himself. His mother or father would be entitled to take FMLA to care for him. If the son were not blind, the parents would not qualify for FMLA for his serious health condition, because he is over the age of 18.
The adult child must still require supervision or active assistance to complete self-care activities in three or more activities of daily living or instrumental activities such as paying bills, using a telephone and telephone directory or using a post office. A minor illness such as a cold, flu, ear infection or a broken arm not requiring traction would not interfere with the adult child’s ability to care for himself, and not trigger FMLA.
Many types of surgery do not render the adult child incapable of self-care, and therefore do not permit the employee to take FMLA. Brain damage, paralysis or other long-term illnesses or accidents may very well make the offspring incapable of self-care. When there is doubt, the FMLA certification form should be used for the physician to designate whether or not the patient is capable of self-care.
The ADAAA still does not permit a parent to take time off to care for a daughter over the age of 18 who has recently given birth. In the overwhelming majority of cases, the daughter is capable of self-care after normal childbirth.
Employers should remember that an employee can take leave for a child of any age who is in the military service, or who is a veteran injured on active duty.
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Since 2001, workers in Colorado who have a “debilitiating medical condition” can use marijuana when it is “medically necessary” to treat a condition. It is frequently prescribed to alleviate nausea during chemotherapy, as well as for other conditions.
The 2001 law also took the enormous leap of assuming that possession of less than two ounces of marijuana, or possession of up to three flowering plants, was presumed to be lawful. However, medical marijuana users must register with the state and obtain a medical marijuana card issued by the Colorado Department of Public Health to legally use the controlled substance.
Still, that law does not require the employer to accommodate the use of medical marijuana in the workplace. The new laws further clarifiy that requirement, and allow an employer to discipline an employee who is under the influence under certain circumstances.
Effective June 10, 2010, a registered marijuana user cannot:
Currently 14 states have laws that permit limited use of medical marijuana by a patient with a valid prescription for it. Those states include California, Alaska, Hawaii, Maine, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont and Washington. Several of the states have provided almost no guidance for employers on handling an employee whose off-duty consumption of cannabis creates performance or safety problems in the workplace.
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The 5th Circuit Court of Appeals recently ruled that virtually every payment made to an employee during the first 40 hours of work must be figured into the employee’s “regular hourly rate” for overtime. When a worker puts in more than 40 hours in the payroll week, he or she must be paid 1.5 times the “regular hourly rate.”
Recent court rulings show that state and federal agencies are getting tough with employers on wage and hour issues, including misclassifying employees as independent contractors, exempt status and now overtime.
In the most recent case, when United Technisource Inc. or UTI hired Timothy Gagnon, a highly skilled aircraft painter, the prevailing wage for that job was $18.00 per hour. Yet, UTI offered Gagnon just $5.50 per hour, with a $12.50 per hour per diem, up to $500 total. The per diem caps out at exactly 40 hours in the payroll week. UTI further offered Mr. Gagnon $20 per hour for hours in excess of 40 hours per week.
When Gagnon eventually filed a wage complaint for unpaid overtime, the company argued that the law required only $5.50 x 1.5 = $8.25 per hour overtime, and Gagnon was being paid almost three times that amount. A lower court found for the company.
However, the court of appeals disagreed. The judges found that if Mr. Gagnon worked 40 hours per week, his wages were $220 +$500 per diem = $720, or $18 per hour. Therefore, he was entitled to 1.5 times the “regular hourly rate” of $18, or $27 per hour for overtime.
In a similar suit in 2006, the court ruled that commissions and sales bonuses must be included in the “regular hourly rate” for Wal-Mart employees, resulting in a multi-million-dollar award.
In Gagnon v. United Technisource Inc, the judges ruled that, “The regular rate by its very nature must reflect all payments which the parties have agreed shall be received regularly during the workweek, exclusive of overtime payments. The ‘regular rate’ becomes a mathematical computation once the parties have decided on the amount of wages and the mode of payment, which is unaffected by any designation to the contrary in the wage contract.”
The court was especially suspicious of this pay arrangement because the per diem rate was capped.
Employers should note that Mr. Gagnon agreed to this compensation arrangement and worked under it for more than a year, before filing suit. An employee cannot bargain away or waive rights to minimum wage or overtime under the FLSA.
The court followed the U.S. Department of Labor regulations, which require any per diem rate to be included in the “regular hourly rate” to calculate overtime.
This case also underscores just how expensive even a relatively minor overtime miscalculation can be for an employer. The court awarded Mr. Gagnon $9,500 in unpaid overtime plus damages, and more than $55,000 in attorney’s fees, meaning the company paid almost $65,000 for its illegal attempt to avoid about $8,000 in overtime payments.
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In the June 17, 2010 ruling, the Supreme Court determined that the Ontario, California police department did not violate the Fourth Amendment rights of SWAT Sergeant Jeff Quon when the employer read his explicit text messages to his girlfriend, estranged wife and a male coworker.
In the majority opinion, the court reasoned that the California employer was within their rights to audit text messages in an attempt to determine if the city’s contract with the company providing the pagers was sufficient.
When the city provided pagers to team members, it introduced a computer policy that allowed the city to monitor all network activity including Internet use and email, “with or without notice.” The pager plan included 25,000 characters of free text messages per month. However, Sgt. Quon’s supervisor told team members they could use the pagers for personal messages, as long as the team member paid any overage fees. The supervisor implied that as long as the team member paid the additional charges, texts would remain private. Sgt. Quon did pay overage fees on his pager several times.
Eventually, the city conducted an audit to determine if the pager contract provided a sufficient number of text messages per month. During the course of the audit, the employer learned that Sgt. Quon had sent many sexually explicit messages, often while he was on duty. The employee argued that this was a violation of his Fourth Amendment rights to privacy, but the Supreme Court disagreed.
In the unanimous opinion, Justice Anthony Kennedy noted that because the search was due to a legitimate work-related purpose, not excessive in scope, it was legal. The employer’s policy gave Sgt. Quon no reasonable expectation of privacy in this situation.
Employers should note that this case has limited applications to other situations. The case does not give the employer the right to read every text message sent by every employee, or to use the text messages as a way to monitor employee performance. However, it found that the employer can enforce a written company policy that provides access to employee texts, even if enforcement has been inconsistent.
Even Justice Kennedy noted that the court must proceed with care in infringing on an individual’s rights to privacy of electronic communications via equipment owned by the employer, or a government agency.
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Speaking to SHRM, the Society for Human Resource Management, attorney Frank Connolly said,” When it comes to a lot of start-ups or small businesses that don’t have a lot of assets, a lot of it is naïveté and a lot of it is convenience. I don’t have the money to pay a lot of people a lot of cash. I can avoid it by calling these people independent contractors.” Connolly, with the firm of Jackson Lewis in Washington, D.C. adds, “These employers probably don’t realize that they are violating the law.”
In most cases, if the employer controls when, where or how work is performed, the worker is an employee, not an independent contractor. There are a number of dangers in classifying a worker as an independent contractor when he or she should be an employee:
The U.S. Department of Labor recently announced increased enforcement against employers who misclassify workers.
In addition, several states have implemented new laws that increase penalties for employers who make this mistake. In Massachusetts, a worker is considered an employee unless the service is performed outside the usual course of business of the employer. In California, the law goes one step further. An independent contractor cannot be delivering the business’s primary service or product. A messenger service, for example, cannot employ messengers as independent contractors – they must be employees.
Connecticut recently passed a bill that would make misclassifying workers a felony, and require the employer to immediate stop work. Each day the independent contractor works is a separate violation subject to a $300 fine. That law is expected to be signed by Governor Jodi Rell in the near future.
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The California Department of Fair Employment and Housing or DFEH announced that it will pursue large cases on behalf of a group of class of workers. The agency’s Special Investigations Unit or SIU will conduct the investigations.
This is important news for smaller employers because it means that the agency will no longer investigate every complaint in the order in which it is received. Instead, complaints will be graded based on their merits. For example, a large company that has several claims that appear to be based in fact and indicate a pattern of discrimination will be investigated first. A small business with a single claim of dubious merit would be given a lower priority and investigated later, if at all.
However, the agency will also focus on cases involving smaller firms if they involve legal issues that have not yet been tried in court.
While the press release from DFEH did not specifically cite budgetary considerations, many observers believe that the agency simply has more complaints than they have the staff or budget to investigate. As a result, the agency will focus on high-profile cases involving large employers.
Under the current statutes, the DFEH has two years to investigate a discrimination complaint. After that time, the agency cannot investigate a complaint.
Small employers in California should still be vigilant about avoiding discrimination and have a clear anti-discrimination policy in place, including sexual harassment prevention training for supervisors. However, this new focus makes it less likely that a small employer will be sued by the state for a minor, one-time violation by a supervisor. However, employees will still have the right to sue the employer for such actions.
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In City of Ontario [California] v. Quon, the employer had a clear policy in place that devices issued by the employer, including computers and cell phones, were to be used for business communication only. The policy also stated that email and similar communications were not confidential. However, that policy did not specifically mention pagers or text messages.
Sgt. Jeff Quon, a member of the Ontario SWAT team, was issued a pager with texting capabilities. He used the pager regularly to send sexually graphic texts to his wife, girlfriend and a male co-worker, who responded in kind. Apparently, a number of these messages were sent when Sgt. Quon was supposed to be working.
Many employers would assume that this was clearly a violation of the employer’s policies, and that Sgt. Quon had no reasonable expectation of privacy when sending and receiving text messages on the employer’s pager – but they would be wrong. A lower court ruled that even though the employer owned the pager, they violated Quon’s Fourth Amendment right to privacy in reading the texts. The same court found that the company supplying the pager should not have provided the Ontario Police Department with transcripts of the text messages, unless Sgt. Quon and the other senders agreed.
The Ninth Circuit Court of Appeals ruled that since the employer’s computer and Internet policy did not specifically mention pagers, the employee may have had a reasonable expectation of privacy in using them. Lesson #1 for employers: Be sure that the Internet policy specifically mentions every device issued to employees, and states that text messages, as well as emails, are not confidential. The wisest policy is to prohibit the personal use of electronic devices and to state specifically that sending sexually explicit messages using company property is grounds for termination.
The problem was compounded by the fact that Sgt. Quon’s immediate supervisor, Lt. Steve Duke, failed to enforce the employer’s policy on personal use of the pagers. Instead, Lt. Duke implemented an informal policy allowing employees to send and receive personal texts on the pagers, as long as the employee paid any overage charges for excessive texts.
According to testimony, Lt. Duke specifically told employees that their texts would not be monitored, as long as they paid any overage charges. In this case, the contract for the pagers specified that overage charges applied after 25,000 characters of text. Lesson #2 for employers: Ensure that every supervisor enforces the company policy every time. Informal arrangements can override written company policy.
The federal court ruled that Duke’s informal policy of allowing employees to use the pagers for personal use invalidated the formal, written policy. The court also found that when Jeff Quon paid the additional fees every three or four months, that converted the electronic device from business use to part business, part personal use. It also conferred the reasonable expectation of privacy regarding the use of the pager. Lesson #3 for employers: Realize that employees who pay a portion of the cost of an electronic device may have a reasonable expectation of privacy. When in doubt, do not allow the employee to pay any portion of the cost of a company device.
Stay tuned – this case has been referred to the U.S. Supreme Court and may be updated soon.
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Beginning in 2014, the Patient Protection and Affordable Care Act or PPACA will require employers with 50 or more full-time workers to pay a penalty if they do not provide a group health insurance plan. Under this law, a full time employee is defined as one who works 30 or more hours per week. Under this regulation, two employees who each work 15 hours per week count as one FTE, or the equivalent of one full-time employee. An employer who had 100 employees each working 15 hours per week would be covered under the PPACA, even though the employer did not have even one full-time employee.
The second major announcement regards taxation for parents who include their adult son or daughter on their group health insurance. The Internal Revenue Service recently released the first new guidelines under Health Care Reform. The initial regulations under the Affordable Care Act clarify that employees are entitled to cover children up to the age of 27, and that employers need not withhold taxes on those premiums – an issue that had been a concern for many employers.
This is only the first in what is sure to be a massive wave of regulations regarding President Obama’s healthcare reform law.
Beginning January 1, 2011 group health insurance plans that are run on a calendar year basis must allow parents to continue to cover their sons and daughters to the age of 26.
Under Health Care Reform, parents can continue to include their children on the employer’s group health insurance until the age of 27, even if the son or daughter is self-supporting. The young adult does not have to be a dependent on the parent’s income tax, to be covered under the parent’s group health insurance. In fact, this regulation applies even if the young adult is married.
These regulations apply to group health coverage that began on March 30, 2010 or later. Prior to that date, only coverage for a young adult who qualified as a dependent on the parent’s income taxes was tax free.
The exclusion will apply every year until the year in which the young adult turns 27. If Andrew’s 27th birthday is on December 1, 2012, his parents need not pay tax on his healthcare premium in 2011. However, in 2012, the year that Andrew turns 27, that premium is taxable for the entire year.
There are sure to be dozens of additional regulations under health care reform in the next few months, so check back often for updates.
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