On January 27, 2014, the U.S. Supreme Court issued a unanimous decision clarifying the meaning of "changing clothes" under the Fair Labor Standards Act ("FLSA"). In Sandifer v. United States Steel Corp., the Supreme Court adopted a fairly broad definition of the phrase "changing clothes," which should provide employers with some comfort that provisions of a collective bargaining agreement excluding clothes-changing time from compensable hours worked will likely be applied to time spent by employees donning and doffing most forms of protective gear. In general, the FLSA requires employers to pay employees for time spent donning and doffing protective clothing and equipment, if the employer requires employees to wear such protective clothing and equipment, and if the employee must change into and out of the protective clothing and equipment at the work site. However, Section 203(o) of the FLSA provides that such time is not compensable if the employer and the representative of the employer's employees have agreed to a provision in their collective bargaining agreement to exclude from hours worked "time spent in changing clothes or washing at the beginning or end of each workday." In Sandifer, a group of U.S. Steel employees contended that even though their collective bargaining agreement excluded time spent "changing clothes" from compensable work time, they should nevertheless be compensated for such time because many of the items they were required to wear were protective in nature. The employees argued that the items they were required to wear should not be considered "clothes" under the FLSA because those items are intended to protect against workplace hazards. The employees also argued that, by putting on those protective items over their own clothes (rather than substituting those protective items for their own clothes), they were not engaged in "changing" clothes under the FLSA. The Supreme Court refused to interpret the phrase "changing clothes" as narrowly as the employees urged. With respect to the definition of "clothes," the Supreme Court examined the dictionary definition of the term that existed at the time Section 203(o) of the FLSA was enacted, and held that the term includes all items that are designed to cover the body and are commonly regarded as articles of dress. The Supreme Court further held that the definition of "clothes" does not necessarily exclude items that are worn exclusively for protection, as long as those items are designed to cover the body and are regarded as articles of dress. With respect to the definition of "changing," the Supreme Court again examined the dictionary definition of the term that existed at the time Section 203(o) was enacted, and held that the term can mean either substituting or altering. Accordingly, the Supreme Court concluded that time spent by employees altering their garments by putting on and taking off articles of dress constituted "changing clothes" under the FLSA, and that the employees were not entitled to compensation for such time based on the exclusion set forth in the collective bargaining agreement. Applying these definitions, the Supreme Court considered 12 items of protective gear: a flame-retardant jacket, a pair of pants, and a hood; a hardhat; a snood (which is a hood that covers the neck and upper shoulder area); wristlets; work gloves; leggings; metatarsal boots; safety glasses; earplugs; and a respirator. The Supreme Court found that the first nine items qualified as "clothes," but the last three did not. Thus, the Supreme Court was left to consider the question of whether courts should tally the minutes spent donning and doffing each item, in order to deduct the time spent donning and doffing the non-clothing items from non-compensable time. Recognizing that "it is most unlikely Congress meant Section 203(o) to convert federal judges into time-study professionals," the Supreme Court stated that courts should analyze whether the time period at issue can, on the whole, be characterized as "time spent in changing clothes or washing." The Supreme Court articulated a "vast majority" standard for courts to use in their analysis:
If an employee devotes the vast majority of the time in question to putting on and off equipment or other non-clothes items (perhaps a diver's suit and tank) the entire period would not qualify as 'time spent in changing clothes' under Section 203(o), even if some clothes items were donned and doffed as well. But if the vast majority of the time is spent in donning and doffing 'clothes' as we have defined that term, the entire period qualifies, and the time spent putting on and off other items need not be subtracted.
The Supreme Court concluded that the employees of U.S. Steel spent a vast majority of the time in question donning and doffing items that fell within the definition of "clothes," and that their time was non-compensable under the terms of the collective bargaining agreement. Although courts addressing this issue in the future will be bound by the broad definition of the phrase "changing clothes" set forth in the Supreme Court's Sandifer decision, courts will be left to analyze on a case-by-case basis whether employees spend a "vast majority" of the time in question donning and doffing items that qualify as clothes or non-clothes items.
On December 30, 2013, the New York State Department of Taxation and Finance issued a Technical Memorandum providing guidance on a new tax incentive for employers who employ students in New York and pay them the state minimum wage rate. This tax incentive coincides with the three-stage state minimum wage increase. The New York minimum wage rate increased to $8.00 per hour on December 31, 2013, and is scheduled to increase to $8.75 per hour on December 31, 2014, and $9.00 per hour on December 31, 2015.
The minimum wage reimbursement credit took effect on January 1, 2014, and will end on December 31, 2018. It allows eligible employers, or owners of eligible employers, to obtain a refundable tax credit equal to the total number of hours worked by certain students during the taxable year for which they are paid minimum wage, multiplied by the applicable tax credit rate for that year. The tax credit rate is $.75 for 2014, $1.31 for 2015, and $1.35 for 2016 through 2018. If during this time, the federal minimum wage is increased to more than 85% of New York’s minimum wage, the tax credit rates will be reduced to an amount equal to the difference between New York’s minimum wage and the federal minimum wage.
An eligible employer is a corporation, sole proprietorship, limited liability company, or a partnership that is subject to certain New York taxes (i.e., personal income tax, franchise tax, etc.). A student qualifies for the tax credit if the student is:
16-19 years old;
employed in New York State;
paid at the New York minimum wage rate during some part of the tax year; and
enrolled full-time or part-time in an eligible educational institution during the period he or she is paid the New York minimum wage rate.
The educational institution does not have to be located in New York State, but it must maintain a regular faculty and curriculum, and must have a regularly enrolled student body in attendance where its educational activities are regularly carried on. Examples of educational institutions include secondary schools, colleges, universities, and trade, technical, and vocational schools. Correspondence schools, on-the-job training courses, and schools only offering courses through the Internet do not qualify as educational institutions.
Employers must obtain documentation to verify that the individual is enrolled as a student at an eligible educational institution, and must make such documentation available to the Tax Department upon request. Examples of acceptable documentation include:
a student identification card;
a current or future course schedule issued by the school;
a letter from the school verifying the student’s current or future enrollment; or
working papers (a Student General Employment Certificate – AT-19).
Employers should familiarize themselves with this new tax incentive, as many may employ students who qualify for the credit. To the extent employers do employ such students, they should immediately verify the student’s status and obtain the appropriate documentation. It is important to note that employers are prohibited from discharging an employee and replacing that employee with an eligible student in order to qualify for the tax credit. Additionally, a student who is used as the basis for this tax credit may not be used by an employer as the basis for any other tax credit.
Employers who have employees in New York are required to issue annual notices under the Wage Theft Prevention Act ("WTPA") to all New York employees between January 1 and February 1, 2014. This is the third year that the WTPA annual notice requirement has been in effect.
As we have summarized in previous blog posts, the annual notice must contain the following information:
the employee's rate or rates of pay (for non-exempt employees, this must include both the regular and overtime rate)
the employee's basis of pay (e.g., hourly, shift, day, week, salary, piece, commission, or other)
allowances, if any, claimed as part of the minimum wage (e.g., tips, meals, lodging)
the regular pay day; and
the name (including any "doing business as" name), address, and telephone number of the employer.
The annual notice must be provided to each employee in English and in the primary language identified by each employee, if the New York State Department of Labor ("NYSDOL") has prepared a dual-language form for the language identified by the employee. At this point, the NYSDOL has prepared dual-language forms in Chinese, Haitian Creole, Korean, Polish, Russian, and Spanish. The English-only and dual language forms created by the NYSDOL are available on the NYSDOL's web site. If an employee identifies a primary language other than one of the six languages for which a dual-language form is available, the employer may provide the annual notice in English only. Employers are not required to use the NYSDOL's forms, but employers who create their own forms must be sure that all of the information required by the WTPA is included.
Employers are required to obtain a signed acknowledgment of receipt of the annual notice from each employee. The acknowledgment must include 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. Signed acknowledgments must be maintained for at least six years.
In collective bargaining, a “final” proposal is often a term of art, used to signal the end of a party’s willingness to move. However, negotiators frequently will continue to move even after a purportedly final offer. In the view of the National Labor Relations Board ("NLRB"), “final” does not always really mean final. Recently, the Fifth Circuit Court of Appeals agreed with the NLRB's view. In Carey Salt Co. v. NLRB, the Fifth Circuit Court of Appeals affirmed the NLRB's holding that labor negotiations had not reached impasse, even though the union had asked for the company’s “final” proposal, the company had provided it, the union had rejected it, and the parties had thereafter confirmed that they were far apart. These facts, on their face, would seem to suggest that the parties had reached impasse, and that the company was therefore entitled at that point to suspend negotiations and implement its final offer. However, the NLRB looked behind these facts, and concluded that the union, when it requested the company’s final offer, had not intended to bring negotiations to a halt. The NLRB credited the union’s testimony that the union had wished only to poll its membership on the company’s position and continue bargaining. The union’s negotiator testified – without significant rebuttal – that his request for a “final” offer had included the caveat that the parties negotiate further after receiving it. Under these circumstances, the NLRB held, and the Fifth Circuit affirmed, that the company had prematurely seized on the final offer phraseology to declare impasse and to decline to meaningfully negotiate thereafter. This strategy had disastrous consequences for the company, not the least of which was that it was ultimately responsible for wages lost during an ensuing strike, which – as a result of the company’s premature cessation of negotiations and implementation of its final offer – was held to constitute an “unfair labor practice strike.” Although the Fifth Circuit does not have jurisdiction over employers in New York, the Court's decision illustrates the treacherous waters that employers in any state must navigate when assessing whether impasse – always an evasive concept – has truly been reached. The Fifth Circuit's decision includes a particularly scholarly recitation on the subject of impasse in collective bargaining, recounting and discussing precedent on this difficult issue. A second issue addressed in the case is whether, and under what circumstances, purportedly “regressive” proposals – i.e., company proposals that reduce previous terms or concessions – can be a factor in assessing “bad faith” bargaining on the part of the company. The NLRB held that the company had bargained in bad faith by introducing so-called regressive proposals. However, the Fifth Circuit rejected the NLRB's position, clarifying that regressive proposals are lawful as long as they are not designed or intended to avoid or frustrate bargaining. The Fifth Circuit found no evidence that the regressive proposals had been deployed in a bad faith manner in this instance. Therefore, the Court rejected the NLRB’s sweeping conclusion of bad faith based on these proposals alone.
In D.R. Horton, Inc., the National Labor Relations Board ("NLRB") held that a mandatory arbitration agreement between an employer and an employee that included a class action waiver was unlawful under Section 8(a)(1) of the National Labor Relations Act ("NLRA") because it prohibited the employee from engaging in concerted activity with other employees. The NLRB's D.R. Horton ruling, which was the subject of a prior blog post, dealt a significant blow to employers who sought to manage their litigation risk by requiring employees to sign mandatory arbitration agreements and class action waivers as a condition of employment. The Second Circuit Court of Appeals, in a separate case decided on August 9, 2013, expressly declined to follow the NLRB's D.R. Horton ruling and held that a class action waiver in an arbitration agreement was enforceable under the Fair Labor Standards Act ("FLSA"). Recently, the Fifth Circuit Court of Appeals rejected the NLRB's D.R. Horton ruling, holding that class action waivers contained in mandatory arbitration agreements do not violate the NLRA and are enforceable under the Federal Arbitration Act ("FAA"). The Fifth Circuit began its analysis by noting that the FAA requires arbitration agreements to be enforced according to their terms, with two exceptions: (1) an arbitration agreement may be invalidated "upon such grounds as exist at law or in equity for the revocation of any contract" (commonly referred to as the FAA's "saving clause"); and (2) application of the FAA may be precluded by another statute's contrary congressional command. The Court concluded that neither of these exceptions applied to preclude the enforceability of the class action waiver contained in the mandatory arbitration agreement. The Court stated that the saving clause "is not a basis for invalidating the waiver of class procedures in the arbitration agreement." The Court then examined whether the NLRA contained a congressional command to override the provisions of the FAA, and found that it did not. The Court found that the "NLRA does not explicitly provide for such a collective action, much less the procedures such an action would employ," and concluded that "there is no basis on which to find that the text of the NLRA supports a congressional command to override the FAA." The Court also looked to the legislative history of the NLRA for evidence of a congressional command to override the FAA, and found no such evidence. Finally, the Court determined that no congressional command to override the FAA could be inferred from the underlying purpose of the NLRA. Accordingly, the Court held that the class action waiver in the mandatory arbitration agreement was valid and enforceable under the FAA. The Fifth Circuit recognized that every other Circuit Court of Appeals that considered the issue (including the Second Circuit, as noted above) either suggested or expressly stated that they would not defer to the NLRB's rationale, and held class action waivers in arbitration agreements to be enforceable. The Court stated that it did not want to create a split among the Circuit Courts by enforcing the NLRB's D.R. Horton decision. Although the Court refused to enforce the NLRB's ruling that the class action waiver violated the NLRA, the Court agreed with the NLRB that the mandatory arbitration agreement violated the NLRA to the extent that it would lead an employee to believe that the filing of unfair labor practice charges was prohibited. The employer argued that this was not the intent of the mandatory arbitration agreement, and that employees remained free to file unfair labor practice charges with the NLRB. However, the Court nevertheless enforced the portion of the NLRB's order requiring the employer to clarify the language of the mandatory arbitration agreement to permit the filing of unfair labor practice charges. It remains to be seen whether the NLRB will ask the U.S. Supreme Court to review the Fifth Circuit's decision. In the meantime, employers should consider whether arbitration agreements with employees containing class action waivers might be a useful tool to limit the risk and cost associated with employment-related litigation.
In a case dealing with the after-effects following the bankruptcy of clothing retailer Steve & Barry’s Industries, Inc., the Court of Appeals for the Second Circuit (which has jurisdiction over New York employers) has ruled, in Giuppone v. BH S&B Holdings LLC, on the analysis to be applied in determining whether nominally separate entities should be considered a single employer for purposes of coverage under the Worker Adjustment and Retraining Notification Act ("WARN").
The federal and state WARN laws generally require that employers provide employees with notice of employment losses due to a plant closing or mass layoff. In Guippone, the Court resolved an open question in the Circuit concerning the test to be applied when analyzing the single employer issue. The single employer issue is particularly important in the WARN context because an entity that is theoretically not the “employer” of the discharged employees – for example, an investment entity or corporate parent – may nevertheless become liable under WARN if a court determines that the “employer” and the related entity are a “single employer” for WARN purposes. The “single employer” theory also may entangle a larger, related entity, where the employer of record is too small for purposes of coverage under WARN.
In Guippone, the Court concluded that a five-factor test set forth in the regulations of the United States Department of Labor (“USDOL”) should be applied when analyzing the issue. Those five factors are: (1) common ownership; (2) common directors and/or officers; (3) de facto exercise of control; (4) unity of personnel policies emanating from a common source; and (5) the dependency of operations. The Court held that the five factors are non-exclusive, with no one factor controlling and the absence of any factor not dispositive on the question of WARN liability.
The Court largely affirmed the lower court’s ruling dismissing the case against certain related entities, based upon application of the USDOL factors. However, it concluded that a question of fact existed with regard to the de facto exercise of control factor as applied to another related entity. In particular, the Court focused on whether the evidence indicated that a related entity “was the decision-maker responsible for the employment practice giving rise to the litigation.” Among the evidence cited by the Court was:
the absence of a board of directors at the subsidiary;
selection by the parent of the subsidiary’s management team;
negotiation of the subsidiary’s financing by the parent’s board of directors; and
a resolution passed by the parent’s board of directors “authorizing” the subsidiary “to effectuate the reduction in force.”
An employer considering any type of reduction in force should properly assess its potential obligations under the federal and state WARN statutes before implementing the reduction in force. Furthermore, when assessing those obligations, an employer must consider whether it is a “single employer” along with other related entities to trigger coverage under WARN even if the employer by itself would not otherwise be covered under WARN. Finally, an employer should pay particular attention to the degree of control exercised by a related entity over the reduction in force decision.
Employers should be advised that the New York State Department of Labor ("NYSDOL") adopted new Regulations last week, amending the state’s Minimum Wage Orders. A Notice of Adoption of these changes was published in the State Register on December 11, 2013, and the corresponding amendments will take effect on December 31, 2013.
These amendments follow enactment of recent state legislation to raise the minimum wage in New York to $8.00 per hour, also effective December 31, 2013. Accordingly, the new Minimum Wage Orders reflect this change, as well as future scheduled raises in the state minimum wage to $8.75 per hour as of December 31, 2014, and to $9.00 per hour as of December 31, 2015.
Notably, the new Minimum Wage Orders also increase the minimum salary basis amounts for employees to qualify for the executive and administrative exemptions to $600.00 per week (up from $543.75 per week), inclusive of board, lodging, and other allowances and facilities. This amount is also slated to increase to $656.25 as of December 31, 2014, and to $675.00 as of December 31, 2015.
Finally, employers should take note that the amended Minimum Wage Orders impose other pay-related changes for employees in certain industries, including changes to the amount of allowances that may be taken for the provision of meals, lodging, and (where applicable) tips.
The revised Regulations issued by the Department of Labor, Office of Federal Contract Compliance Programs (“OFCCP”), addressing affirmative action obligations applicable to disabled individuals under the Rehabilitation Act of 1973, as amended (“Section 503”), and to protected veterans pursuant to the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended (“VEVRAA”), become effective March 24, 2014. Due to the numerous requirements in these new Regulations, contractors should start reviewing and implementing procedures to ensure compliance. Ten steps that covered contractors should implement by March 24, 2014 include:
Review current electronic systems and databases to determine if there is capacity to capture protected veteran and disability status for both applicants and employees. If not, contractors will need to invest in new systems or methods to capture this required data.
Review current referral sources to determine if sources are providing qualified protected candidates; sources that are not should be eliminated and/or new ones should be added. This is a key component for meeting the 8% hiring benchmark under VEVRAA and the 7% utilization goal under Section 503.
Ensure all required notices are posted. Where notices are posted electronically, make sure they are accessible to all employees, including those with disabilities. For contractors who use electronic or internet-based application processes, an electronic notice must be posted and stored with the electronic application to inform job applicants of their EEO rights.
Review collective bargaining agreements to determine if the agreements include notice of the contractor’s affirmative action and non-discrimination policies and request for cooperation. If they do not, contractors should send annual letters to each union, notifying the union(s) of the policies and requesting cooperation.
Review and update the list of all existing subcontracts, including vendors and suppliers, who should be receiving the mandatory written notice to subcontractors of the contractor’s affirmative action efforts and request for cooperation.
Revise contracts and purchase orders to include the revised mandatory EEO language under both Section 503 and VEVRAA.
Make sure solicitations and advertisements include all the protected categories – minorities, females, disabled individuals, and veterans. OFCCP has indicated in recent FAQs that just using “D” and “V” is not adequate since abbreviations must be commonly understood by jobseekers.
Update recordkeeping procedures to incorporate the three-year retention requirement for specific records under Section 503 (documentation and assessment of external outreach and data collection analysis) and VEVRAA (documentation and assessment of external outreach, data collection analysis, and benchmarking records).
Revise self-identification forms inviting applicants to self-identify at both the pre-offer and post-offer stage of the selection process. All Section 503 invitations must use the new OFCCP form which will be posted on OFCCP’s website once approved. Under the Section 503 Regulations, employees must be invited to self-identify again every five years and reminded on an annual basis that they can voluntarily update their status at any time.
Adopt written reasonable accommodation procedures to ensure uniformity in processing requests. The OFCCP’s guidance for creating procedures (listed in Section 503 Regulations as Appendix B) can be used in developing such procedures.
On November 8, 2013, the Occupational Safety and Health Administration ("OSHA") released a proposed rule which would require many employers to submit injury and illness records -- such as the OSHA Forms 300, 300A, and 301 -- electronically. The proposed rule, along with the commentary, can be accessed here. The proposed rule -- which would amend 29 C.F.R. Section 1904.41 -- entails three significant provisions:
Establishments with 250 or more employees would be required to submit the OSHA Forms 300 and 301 electronically on a quarterly basis and the OSHA Form 300A summary electronically on an annual basis.
Establishments with 20 or more employees in several specific industries would be required to submit the OSHA Form 300A summary electronically on an annual basis. The specifically-referenced industries in the proposed rule include the following general NAICS classifications: construction, manufacturing, agriculture, utilities, hospitals, and nursing homes.
Employers would have to submit electronic injury and illness records "upon notification" by the agency.
OSHA's stated reason for the proposal is that the agency presently has limited access to establishment-specific injury and illness records (i.e., the most common way it acquires this information is through inspections). According to the agency, the on-line submission of the information will make it easier for OSHA to identify and address recurring health hazards in the workplace. The proposed rule provides that OSHA will be responsible for creating a secure website for affected employers to submit the required information, including log-in IDs and passwords. While the agency has made it clear that it intends to make information submitted by employers public, the commentary to the rule makes it clear that no employee-specific information would be released (e.g., names, personal identifying information, etc.). Comments to the proposed rule must be received by February 6, 2014.
Next year, most employers with employees working in New York City will be required to provide reasonable accommodations for pregnant employees. The new requirement is an amendment to the New York City Human Rights Law and takes effect on January 30, 2014.
Under the new law, employers in New York City with four or more employees will be required to provide reasonable accommodations needed due to pregnancy, childbirth, or related medical conditions, provided that the pregnancy or condition “is known or should have been known” to the employer. The law states that accommodations may include, “bathroom breaks, leave for a period of disability arising from childbirth, breaks to facilitate increased water intake, periodic rest for those who stand for long periods of time, and assistance with manual labor, among other things.”
Accommodations need not be provided if they would pose an “undue hardship." Factors in determining undue hardship include the nature and cost of the accommodation, the nature of the facility, and the finances of the business.
The law also contains a notice requirement. Covered employers must notify employees of the right to be free from pregnancy discrimination. The notice must be given to all new employees and existing employees. The New York City Commission on Human Rights is expected to issue more specific guidance on the notice requirements. The new law allows employees to file complaints with the Commission or proceed directly to court.
It is fair to say that the New York City law broadens protections for pregnant workers beyond the scope of the Pregnancy Discrimination Act, the Americans with Disabilities Act, and the New York Human Rights Law. Typically, those other laws have not been interpreted to require that employers accommodate a normal, healthy pregnancy. Instead, the right to an accommodation is usually triggered only upon the showing of a particularized need or complicating medical condition, or at the point when the pregnancy becomes disabling (e.g., immediately before and after the birth). The effect of the New York City law is to put a normal, healthy pregnancy on par with a disability for the purpose of workplace accommodations.
Employers with employees in New York City are advised to review their policies and procedures concerning pregnancy and to educate supervisors and managers regarding the scope of these new protections.
As previously reported, the elimination of barriers in recruitment and hiring was identified as one of the Equal Employment Opportunity Commission’s six priorities in its 2013-2016 Strategic Enforcement Plan (“SEP”). Accordingly, the EEOC is focusing its enforcement efforts and resources on eradicating both class-based intentional discrimination, as well as facially-neutral recruitment and hiring practices that have a discriminatory effect on particular groups. To this end, the EEOC has been aggressively challenging employers’ use of criminal and credit background checks in recruitment and hiring, alleging that such practices have a disparate impact on certain applicants in protected classes. However, in a significant victory for employers, the EEOC’s efforts were recently thwarted in a decision issued by the United States District Court for the District of Maryland.
In EEOC v. Freeman, the EEOC challenged the defendant’s use of criminal background and credit checks, alleging that, although facially-neutral, the practice had a discriminatory effect on African-American and male applicants. In granting the defendant’s summary judgment motion dismissing the complaint, the court held that the EEOC and their experts failed to identify a specific policy causing an alleged disparate impact and “something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks.” The court further admonished the EEOC’s lack of factual support, stating that:
[b]y bringing actions of this nature, the EEOC has placed many employers in the "Hobson’s choice" of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.
To further underscore the importance of background checks to employers, the court pointed out that ironically, even the EEOC conducts criminal background investigations as a condition of employment for all employees, and conducts credit background checks on approximately 90% of its positions.
The Freeman court explained that it is not the “mere use” of background checks that presents Title VII concerns, but rather “what specific information is used and how it is used.” Here, Freeman’s use of criminal and credit checks were not used as automatic exclusions and were conducted only for specific types of jobs. The Freeman court held that the use of these screening tools is a “rational and legitimate component of a reasonable hiring process.”
Although this decision is an important victory for employers defending their right to refuse to hire applicants whose backgrounds call into question their character and qualifications for employment, it is unlikely to stop the EEOC’s enforcement efforts completely. The SEP, together with the EEOC’s April 2012 Enforcement Guidance on criminal background checks, make clear that the EEOC is determined to seriously limit the use of background checks, if not prohibit their use altogether. Therefore, employers should consult with legal counsel to ensure that any use of background checks is both job-related and consistent with business necessity, and that such use does not result in automatic exclusions. Background checks should also be limited only to those positions where there is a direct correlation between the background check and the job involved.
After a brief hiatus prompted by the Federal Government shutdown, employers regained access to and use of the federal E-Verify system on October 17, 2013. E-Verify is an Internet-based employment eligibility verification system administered by the U.S. Citizenship and Immigration Services (“USCIS”). The E-Verify system does not serve as a replacement for the I-9 employment verification process, but rather serves as an additional method by which employers may confirm employee I-9 information against certain government databases (e.g., Department of Homeland Security and the Social Security Administration).
Beginning on October 1, 2013, employers were denied access to the E-Verify system for the duration of the government shutdown. Under normal circumstances, those employers enrolled in the E-Verify program – either voluntarily or involuntarily (e.g., mandatory for those federal contractors with a FAR E-Verify contract clause and employers in certain states such as Arizona and Mississippi) – are required to create a verification case in the E-Verify system for any newly-hired employee by no later than three business days after the employee starts to work for pay. During the government shutdown, however, the USCIS suspended the “three-day rule” in which enrolled employers are mandated to create a case in the E-Verify system. Now that E-Verify is once again operational, the USCIS has afforded employers a grace period in which to address E-Verify issues impacted by the government shutdown. Specifically, the USCIS has issued guidance indicating that employers have until no later than November 5, 2013, to create E-Verify cases that could not be created for those employees due to the unavailability of the system.
In its recent guidance, the USCIS also addressed how employers should properly enter a case in E-Verify now that access to the system has been restored. Generally, when an E-Verify query is made more than three days after the date of hire, the E-Verify system will require the employer to provide an explanation for the delayed entry. In its October 17 guidance, the USCIS advised that when an employer is prompted to provide a reason for a delayed case creation which was caused by the government shutdown, the employer should select “Other” from the drop-down list and enter the phrase “federal government shutdown" in the field.
In addition, the USCIS noted in its October 17 guidance that federal contractors should follow the same instructions. If a federal contractor was unable to comply with certain E-Verify deadlines due to the government shutdown, the federal contractor should contact its contracting officer and reference the instructions provided by the USCIS in its guidance.
Additionally, the USCIS offered the following guidance on other tangential E-Verify issues that may have been impacted as a result of the government shutdown:
Employees will be given an extension of 12 federal business days in order to contact the DHS or the SSA to resolve any Tentative Non-Confirmation (TNC) notice received or referred between September 17, 2013, and September 30, 2013, that the employee was unable to resolve due to the government shutdown. Employers may add 12 business days to the date printed on either the Referral Letter or the Referral Date Confirmation.
Employers are instructed to now initiate referral processing in E-Verify for employees who decide to contest any TNC issued during the unavailability period of E-Verify.
Employers must close E-Verify cases for those employees who received a Final Nonconfirmation (FNC) or No Show due to the federal government shutdown by selecting one of the following options from the drop-down menu: (1) “The employee continues to work for the employer after receiving a Final Non-Confirmation result”; or (2) “The employee continues to work for the employer after receiving a No Show result.” The employer must then create a new E-Verify case for the employee.
Finally, employers should be aware that the USCIS’ suspension of the “three-day rule” during the government shutdown period did not extend or otherwise impact employers’ obligations regarding the timely completion of the Form I-9 or any other Form I-9 requirements. Employers should also be mindful that the “three-day rule” for E-Verify cases is once again in effect for all newly-hired employees.
