Open your wallet a little wider

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This article originally published in The Daily Record September 7, 2016. 

And in other news, effective August 1, 2016, fines and civil money penalties for violations of several federal laws and regulations increased significantly. I’ll bet you didn’t know anything about that did you? Possibly because the implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “IAA”) received less fanfare than a sale on Thanksgiving turkeys at Wegmans.

According to a memorandum from the director of the Office of Management and Budget, the IAA amends the Federal Civil Penalties Inflation Adjustment Act of 1990, “to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect.” Included in the updated IAA, signed into law in November 2015, is a requirement for an initial catch-up adjustment effective no later than August 1, 2016, followed by annual adjustments of the civil penalty amounts beginning in January 2017. Yes, you read that right, the “catch up” adjustment effective August 1, 2016, will then be adjusted for inflation less than six months later.

Also, in true bureaucratic fashion, there’s a formula to determine which penalties apply to which violations based on when the violation occurred, and when the penalty is being assessed:

  • Civil penalties assessed before August 1, 2016 were charged under the old schedule, regardless of when the violation occurred;
  • Civil penalties assessed after August 1, 2016, for violations that occurred on or before November 2, 2015, are likewise charged under the old schedule; and
  • Civil penalties assessed after August 1, 2016, for violations that occurred after November 2, 2015, are charged under the increased penalty schedule.

Here are just a few of the new and improved penalties that employers will now be paying.

Fair Labor Standards Act Penalties

Under the Fair Labor Standards Act (“FLSA”), the U.S Department of Labor’s Wage and Hour Division (“WHD”) is authorized to impose a monetary penalty of up to $1,894 (an increase of $794 from the previous maximum penalty of $1,100) for each repeated or willful violation of the FLSA’s minimum-wage or overtime requirements. Under most circumstances the assessment is a per-person penalty based on the number of employees paid in violation of the FLSA. As you might imagine, “willfulness” is subjective and based on the WHD investigator’s determination. The determination is based in whether the employer knew it was in violation, or acted with “reckless disregard” for its responsibilities under the FLSA. Further, a violation may be considered “repeated” for the purpose of assessing penalties even where it is not factually or legally the same as an earlier violation. For example, an employer’s minimum-wage violation in a previous WHD investigation may be the basis for assessing civil penalties in a later investigation where overtime violations are found. 

Also under the FLSA, an employer may be assessed a penalty of up to $12,080 (an increase of $1,080 from the previous maximum fine $11,000) for employing a minor under the age of 18 in an occupation that violates the FLSA’s child-labor restrictions. Child-labor violations resulting in a serious injury or death may be assessed a penalty of up to $54,910 (an increase of $4,910 from the previous maximum $50,000 penalty). Further, the FLSA calls for doubling the penalty for repeated or willful violations, meaning a potential assessment of up to $109,820.

Also important for employers to note, the WHD issued updated workplace posters under the FLSA and the Employee Polygraph Protection Act (“EPPA”). These revised posters, effective August 1, 2016, are a result of the IAA. Also, as a clear reflection of the WHD’s enforcement priorities, the updated FLSA poster includes a statement about properly classifying workers as independent contractors or employees, and it adds a section on the rights of nursing mothers to receive reasonable break time to express breast milk. If you haven’t updated the employment posters, or the all-in-one employment poster in your workplace within the last couple of months, you’re missing some required updates.

OSHA Penalties

Before I discuss the increased penalties implemented by the Occupational Safety and Health Administration (“OSHA”), let’s review some of the recent changes announced by the Agency. I know that many employers have not had the experience of being inspected by OSHA, or if inspected, have received relatively minor citations and penalties. For most, potential OSHA issues are not high on the list of immediate concerns. However, based on some recent changes announced by the Agency, it may be time to rethink both ongoing compliance efforts as well as the company’s policies and practices as they relate to safety and health.

Examples include OSHA’s recently announced Electronic Recordkeeping Rule. Effective in 2017, this rule requires many employers to electronically report injury and illness data. Once reported, the information will be available to the public on the OSHA website. In addition, with this Rule the Agency now considers several common employer policies and practices to be retaliatory, as they discourage employees from reporting injuries. Therefore, employers should no longer:

  • Establish or maintain incentive programs which reward employees for no recordable workplace injuries and illnesses;
  • Establish or maintain rules requiring employees who do not immediately report workplace injuries to be disciplined; or
  • Automatically conduct post-accident drug testing of injured employees.

Along with the changes discussed above, OSHA has increased its maximum penalties by 78 percent! The top penalty for serious violations has increased to $12,471 (up from $7,000), and the maximum penalty for willful or repeated violations is now $124,709 (up from $70,000).

Form I-9 and Immigration-Related Penalties

One change that has been on the horizon for some time is an update to the Form I-9. The expiration date on the I-9 currently in use has long past (March 31, 2016). Once again, with no updated form provided by U.S. Citizenship and Immigration Services (“USCIS”), employers are instructed to continue using the expired form until further notice.

Updated right on time were employer penalties for a number of immigration-related violations, and some of them are significant. 

Although most employers are not unlawfully employing undocumented immigrants, following unfair immigration-related employment practices, or committing document abuse or fraud, the penalty increases are worth noting. Depending on the circumstances, the minimum penalty for unlawfully employing undocumented immigrants is $539 (up from $375), with the more serious offenders facing a new maximum penalty of $21,563. Employers found to have unfair immigration-related employment practices now face penalties ranging from a minimum of $445 (up from $375), to a new maximum penalty of $17,816. Document abuse penalties now range from a minimum of $178 (up from $110) per violation, with the maximum now reaching $1,782 (up from $1,100) per violation. Employers committing document fraud face penalties ranging from the minimum of $445 (up from $375) for a first offense, with a maximum penalty of $8,908 for subsequent violations.

Finally, one of my favorite areas, Form I-9 penalties. As a result of the IAA, the minimum penalty for Form I-9 “paperwork violations” (substantive or uncorrected technical violations) increased from $110 to $216 per form, with the maximum per-form penalty increasing from $1,100 to $2,156! As a reminder, penalties are normally assessed based on the percentage of I-9 forms with substantive errors, including the failure to prepare an I-9 form for an employee. For example, an employer with 100 employees, and an error rate of 9 percent may be assessed a minimum fine of $1,944. If the employer’s error rate is 50 percent, penalties may total $91,800. With a second or third offense, that same employer may face penalties of $107,800 or more! 

What can employers do?

Every employer should take the time to review areas of potential exposure and liability. For example, are any employees misclassified as exempt and paid a salary? Is every nonexempt employee paid overtime at 1½ times their regular rate of pay for all time worked over 40 hours each workweek? Are any employees working “off-the-clock,” including working through meal breaks, without pay? Does the organization have a policy of automatically conducting post-accident drug testing of injured employees? Are all I-9 forms free from errors? (Very unlikely, in my experience an average employer’s Form I-9 error rate exceeds 50 percent.)

If areas of concern are uncovered, work with an attorney or other qualified professional to correct the issues. Reclassify employees, correct overtime errors, prohibit off-the-clock work – disciplining employees if necessary, change inappropriate policies, and correct I-9 errors. A good faith effort can go a long way in limiting future exposure and penalties.


Posted by Frank CaniaPresident of driven HR A USA Payroll Company

Please feel free to contact me at frank@drivenhr.com, or 855-672-4142 with questions or for more information.


Disclaimer: This content is for informational purposes only, does not constitute a legal opinion, and is not legal advice. The facts of each situation should be considered and analyzed individually. Therefore, you should always consult with competent employment counsel regarding any issues discussed here. 

Click HERE to learn more about Frank Cania, author of Employers’ HR Advisor.

Compliance-side HR – a strong stomach required

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This article was originally published in The Daily Record April 5, 2016.

It’s a rough time to be on the compliance side of human resources, and the immediate future isn’t looking much brighter. Don’t get me wrong, short of selling t-shirts and drinks with interesting names on a tropical beach (alongside my wife, of course), there is nothing I would rather be doing. Let me explain… Continue reading

Employers should stop and look both ways at the intersection of FMLA and ADA

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This article was originally published in The Daily Record March 3, 2016. 

A couple of months ago a new client called wanting an explanation of the Family and Medical Leave Act (“FMLA”), did it applied to her small business, and if so, how to handle an employee’s request for leave. Knowing that the client has at least 50 employees all located within a 75 mile radius, I explained that the FMLA provides up to 12 workweeks of unpaid leave (26 weeks for military caregivers), benefits protection, and job reinstatement to eligible employees who experience an FMLA-qualifying event or condition. Based on the situation, the remainder of our discussion focused primarily on leave for an employee’s own serious health condition. Continue reading

Even Unpaid Interns May Be Your Employees

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This article was originally published in The Daily Record June 2, 2015.  


“Back in the day” – this phrase causes my 17-year-old daughter to roll her eyes, assume the “I don’t want to hear this” pose, and begin scrolling through the songs on her iPhone. Anyway, back in the day when I was in college, unpaid internships were plentiful and filled with hours of filing, running to the bank and post office, and other mundane tasks. As an immediate reward, I received a glowing reference letter, which I proudly included with countless job applications. Looking back, I realize there were a number of rewards: valuable life lessons like the importance of personal and professional responsibility, Continue reading

Are You A Little Fuzzy On NY Medical Marijuana Law? You’re Not Alone

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This article was originally published in The Daily Record July 7, 2015.  


Governor Cuomo signed the Compassionate Care Act into law on July 5, 2014, following weeks of closed-door negotiations between the Governor and a number of legislators. With the signing of the Act, New York became the 23rd state to enact a medical marijuana law. However, this is not your typical, “Dr. Dude…give me a prescription so I can light up” law. In fact, many are calling it one of the most complex and restrictive medical marijuana laws in the nation. From the beginning, it’s clear this law will have much broader implications for employers, and their covered employees, than merely legalizing a Continue reading

Workplace Investigations: Answering the Multimillion-Dollar Question

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This article was originally published in The Daily Record February 8, 2016. 


The concept of workplace investigations is nothing new to most employers. However, like so many other employer responsibilities, these investigations have become more complex and, if not handled correctly, filled with potential sources of significant liability.

Before we go too deeply into the investigations, let’s take a look at why they are more necessary than ever. According to the U.S. Equal Employment Opportunity Commission (“EEOC”), in fiscal year 2014 (the most recent statistics available), the Agency received 88,778 complaints of workplace discrimination. However, because individual complaints often charge multiple types of discrimination (for example sexual harassment and retaliation), this number is less than the total number of individual charges. Of the 88,778 complaints received by the EEOC, 42.8 percent included allegations of retaliation, 35 percent included allegations of race discrimination, and 29.3 percent included allegations Continue reading

Wait Until You Read the Chapter on I-9 Forms!

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This article was originally published in The Daily Record January 8, 2016


Someday I’m going to write a book about my experiences as an HR consultant. In fact, a quick glance at my ever-expanding notes would lead one to believe it’s more likely to be a novel. I’ve had several of those “I’m going to write a book” moments lately, predominantly because of a question I’ve been asked repeatedly: “What’s an I-9?”

Yes, I know that management at every level is barraged with legal and regulatory jargon, forms, and requirements on a daily basis. However, the I-9 form has been a federal regulatory requirement for every employee hired since November 6, 1986. That fact alone puts the I-9 form in the same category of recognition as the W-4, W-2, and the ever- Continue reading