News and Articles

Legal Update - November 2016 Newsletter

Yogi Patel - Friday, December 16, 2016

Dear valued clients and supporters: This month's newsletter will focus on significant and immediate changes to state and federal employment laws.

 

Update to Federal Law

Under the Fair Labor Standards Act (FLSA), significant changes to the Act were poised to go into effect in a matter of days (Dec 1, 2016). We covered these changes in detail in a previous article, but in short, unless an employee meets certain job performance requirements (the duties test) and earns at least $47,476.00 per year, that employee was going to be entitled to overtime pay for each week they worked in excess of 40 hours. The existing law sets that monetary threshold at $23,600 per year.

However, a federal court in Texas issued a nation-wide injunction yesterday that now temporarily prevents these changes from going into effect on December 1, 2016. Thus, for the time being, the threshold remains at $23,600. Notwithstanding this, employers are still advised to consider whether they are complying with the "duties" test under FLSA - irrespective of the uncertainty regarding the salary level. The "duties" test functionally looks at the day-to-day responsibilities given to an employee. As a general principal under FLSA, an employee who meets the salary level and the salary basis tests is exempt only if s/he also performs exempt job duties. Whether the duties of a particular job qualify as exempt depends on what they truly are - job titles or position descriptions are of limited usefulness in this determination. It is the actual job tasks that must be evaluated, along with how that particular job task "fits" into the employer's overall operations.

 

Update to State Law

As of December 31, 2016 the minimum wage in New York State is set to change. The changes vary depending on the industry, number of employees and location. For example, the minimum wage is different if you are in the fast food industry. It is different if you employee more than 11 people and different again depending on whether your business is located in NYC vs. Nassau/Suffolk County vs. Upstate NY - as in all three have different rates with different effective dates. We covered these changes in detail in a previous newsletter.

Employers should likewise be aware that the Wage Theft Prevention Act (WTPA) requires them to give employees written notification of these pay changes at least seven (7) days in advance of the effective date. Alternatively, an employer may issue a new paystub that contains the notice of wage increase. The written notice must be in English and also in the employee’s primary language if it is not English. Employers must obtain a signed and dated written acknowledgement of the pay change from the employee following the same language guidelines. Employers who violate these requirements may be subject to civil penalties of up to $50 per day, per employee.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

 

Legal Update - October 2016 Newsletter

Yogi Patel - Tuesday, October 18, 2016

Dear valued clients and supporters: This month's newsletter will focus on: (1) trademarking website domain names; (2) impact on a business in the event of a divorce; and (3) rethinking employment contracts in light of the recent award of the Nobel Prize in Economic Science.

Trademarks and Website Domain Names
Contrary to the assumption of many, simply registering the name of a business as a domain name does not give the same protections as trademarking the name itself. Domain name registrants lease, rather than own their website domain names, whereas a trademark grants exclusive use of a particular domain name in commerce nationwide. Thus, businesses who fail to trademark their domain names are much more susceptible to infringement and customer confusion due to another entity using the same or similar name. And many businesses that spend countless resources on their brand (often tied to their websites) could find themselves in a position where they lose their ability to use that domain name resulting from their failure to seek federal trademark protection. For further details on the differences between registering a domain name and a trademark and why businesses should strongly consider the latter, an in-depth article can be found here on our website.

Protecting a Business from Divorce (Updated)
In our newsletter last month, we briefly discussed the need for business owners to prepare themselves in the event of a divorce. A more in-depth article on what steps owners should take to protect their businesses from a divorce is now posted here on our website.

Rethinking Employment Contracts

The most recent Nobel Prize in Economic Science was awarded to two professors for their work on improving the design of employment contracts. At the core of Dr. Oliver Hart and Dr. Bengt Homstrom's study were findings that suggested new ways in which businesses should value their employees' contributions and provide incentives to maximize performance. By restructuring its contracts based upon the professors' research, business can more accurately measure and incentivize their employees' performance and provide compensation accordingly. A more in-depth article on this topic will be posted next month here on our website.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

Protecting Your Business in a Divorce

Yogi Patel - Tuesday, October 11, 2016

Approximately 50% of marriages do not end in a “happily ever after” and while the relationship is still civil, you should take steps to protect your business and prepare your finances in the case that your relationship ends in a divorce.

Equitable distribution is the process by which the court divides martial assets between spouses who are soon to be divorced. Generally, when you open a business before your marriage, the increase in value of your business during your marriage is considered marital asset and is subject to equitable distribution. If you opened a business during your marriage, the business is typically marital asset and subject to equitable distribution.

The key issues that arise are the valuation of the business and how much of the business your spouse is entitled to receive. The amount your spouse will receive is dependent on your circumstances. Even if your spouse had nothing to do with your business, the court will take into consideration numerous factors including how many children you have and who takes care of them. Your spouse may be the one who takes the children to school and attend all the student-teacher conferences so you could work extra hours at the office. The court will also consider who takes care of the home, does the grocery shopping, and ensures the bills are paid. Sometimes, marital responsibilities are distributed so that one partner could dedicate all their time to the business while the other takes care of essential home needs. Often times while a spouse runs the business and makes the big decisions, the other spouse supports the business through administrative work or financial contributions.

If your business existed before your marriage, the best course of action is to plan ahead with a prenuptial agreement. A prenuptial agreement is a contract between two people who are about to be married that addresses how assets owned and earned by each person will be distributed in the event of a divorce, whether alimony (maintenance support) will be required in the event of a divorce and how to calculate it, and how assets will be disposed of in the case of death.

If you’re already married, you can enter into a postnuptial agreement. This is a contract that addresses the same rights as the prenuptial agreement. However courts tend to view postnups less favorably. If a business was started during the marriage, the spouse that was not involved is less likely to want to exclude the business from equitable distribution.

You also have the option to place the business in a trust. Meaning you no longer personally own it, but the trust owns it. Generally, this will protect the value of the company and keep the business from being counted as a marital asset.

Dividing assets during a divorce becomes more complicated when there are numerous business partners involved or you are a shareholder of a corporation. Because a business is legally its own separate entity, the question is whether a court could compel your partners to hand over private business information for the purpose of valuation.

Several interests are at play such as the rights of the business entity, the rights of your business partners, and the rights of your spouse. It is a balancing act that will require legal strategies chosen by your attorney. To protect the interest of the business as a whole and the partners, the partnership or shareholder agreement should include a provision that would protect everyone’s rights in the event of a partner’s divorce. Specifically, the provision would appear in a buy-sell agreement between the partners and would address how each partners’ share of the company should be valued, and a requirement that partners either enter into a prenup before marriage or a postnup if already married and also include a waiver or limitation of the spouse’s interest in the business through a stock restriction agreement executed by the spouse.

It is essential to divorce-proof your business, whether you are about to get married or are already married. Because the valuation and distribution of a business depends on your personal situation, it is important to consult with an experienced attorney to ensure your business rights are protected.

This article was prepared with the assistance of Julie Lee, (J.D. Candidate, 2017, CUNY School of Law).

 

Trademark and Website Domain Names

Yogi Patel - Monday, October 10, 2016

Coming to America (1988)

Cleo McDowell:

“Look... me and the McDonald's people got this little misunderstanding. See, they're McDonald's... I'm McDowell's. They got the Golden Arches, mine is the Golden Arcs. They got the Big Mac, I got the Big Mick. We both got two all-beef patties, special sauce, lettuce, cheese, pickles and onions, but their buns have sesame seeds. My buns have no seeds.”

Most businesses, at some point or the other, hope to establish a unique brand with the aim of distinguishing themselves from others within their respective industries. Businesses spend countless resources to establish a brand and once they do, they should protect it at all costs. While only a parody, the scene from Coming to America quoted above illustrates the issue well: What if you managed to come up with something that catches on in the market place and becomes entrenched in your ability to generate business. What would you do to protect it? McDonald’s would likely go after McDowell’s to prevent him from creating confusion and diluting its brand.

The point of this article is to discuss how domain names, which should be thought of as your “brand” can be protected using trademark laws. There is little doubt that most businesses view online presence as essential. A website, is generally the portal through which the business makes its presence known. Whether it is marketing with the intention of providing business owners opportunities to expand their services or whether it is actually providing the service using the website itself – website are here to stay and are poised to become increasingly more essential to businesses.

To make the website more readily identifiable to their customer-base, business owners frequently use their business name as the domain name. A common assumption is that registering a domain name is enough to safeguard the name from being used by others. Simply put, signing up with a registrar and paying a small annual fee only gives the business a license to use the domain name for a certain period of time. Additionally, this right could be revoked at any time. So most domain names are not owned by the business, they are simply on lease. Imagine spending a significant amount of time and resources into building your website and driving traffic to it, only to have to start all over again because someone owns the trademark that is your domain name.

Registering or licensing a domain name will not protect business owners from others who actually trademark the same name or a similar domain name. This could lead to customer confusion, particularly where others with a similar domain name are also selling similar products. Online businesses are especially vulnerable to infringement, because the website is its sole identity. In most cases, trademarking the domain name is an important step towards protecting a business’ online identity and will provide business owners with legal recourse in the case of infringement. Trademarking a domain name essentially declares that the business owner has legal rights to that name.

A business owner who registers a trademark has an exclusive legal right to use the mark in commerce. For example, a business owner who trademarks a domain name will have the exclusive right to use that domain name in relation to its goods and services. Trademarking a domain name is subject to the same rules and standards as trademarking a business name or logo.

While choosing a domain name may be simple, not every word is protected by trademark law. A business owner who wants to trademark a domain name will have to consider a few factors. The name must identify products or services in that business, and it must be distinctive. For example, using common words such as coffee.com or juiceshop.com are most likely ineligible for trademark protection. The more unique the name is, the more likely it will qualify as a trademark. A diligent search should be performed to avoid the potential of any future legal liability as well as to ensure that an application for trademarking the domain name is not rejected.

This article was prepared with the help of Julie Lee, J.D. candidate (2017), CUNY School of Law.

 

Legal Update - September 2016 Newsletter

Yogi Patel - Monday, September 12, 2016

Dear valued clients and supporters: This month's newsletter will focus on: (1) graduate students' right to organize; (2) the Fair Pay and Safe Workplace Executive Order; and (3) how to protect a business in the event of a divorce.

Graduate Student Unions

In a recent ruling, the National Labor Relations Board determined that graduate student assistants working at private colleges and universities are "employees" as defined by the National Labor Relations Act. As "employees," graduate students will have the right to organize, form a union, and collectively bargain. This decision was an explicit reversal of an NLRB ruling from 12 years ago in which the Board found that graduate student assistants were not employees. For further details on the NLRB ruling and its potential impact, an in-depth article can be found here on our website.

Fair Pay and Safe Workplace

The final rules implementing the Fair Pay and Safe Workplace Executive Order have been issued and will go into effect starting October 25, 2016. Businesses that engage with the federal government through contracts are specifically advised to understand the requirements of the Order. The Order bars contractors and subcontractors with certain labor law violations from being eligible to receive federal contracts. A more in-depth article on the Order's requirements and implementation schedule is now posted here on our website.

Protecting a Business From Divorce

When starting a business or getting married, planning for the failure of either is often the last thing on anyone's mind. However, people inevitably change and so do many relationships, and an unprepared business owner who finds themselves in the middle of a divorce will be shocked to discover the impact it has on the company. Business owners are cautioned to carefully plan how a potential divorce, especially one involving multiple business partners, could impact the business. An in-depth article will be posted to our website next month on this issue.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

 

Fair Pay and Safe Workplace Executive Order to Impose Greater Scrutiny on Federal Contractors

Yogi Patel - Thursday, September 08, 2016

 

On August 25, 2016, the Department of Labor and the Federal Acquisition Regulatory Council issued the final rule implementing the Fair Pay and Safe Workplaces Executive Order (the “Order”). Initially signed by President Obama in July 2014, the Order will bar contractors that violate federal and state workplace protection laws from receiving federal contracts. Under the Order, contractors and subcontractors must disclose labor law violations that occurred within the last three years, information which will then be used in considering contract awards. Once a contract is awarded, contractors and subcontractors are required to provide updated information every six months, and the contracting officer will use the new information to determine whether to continue the contract or not.

The final rule will become effective on October 25, 2016, with certain provisions gradually phasing in over the next few years. Generally speaking, under the Order, contractors and subcontractors that bid on contracts with a value of $500,000 or more will be required to disclose labor violations relating to workplace safety, discrimination, labor organizing rights, minimum wage, and overtime hours, among others. Contracting officers, with the guidance of a Labor Compliance Advisor, will assess contractor’s violations to determine whether they rise to the level of a lack of integrity or business ethics. Depending on the circumstances, violations may result in penalties, including rejection of the bid, termination of existing contracts, referral to another agency, such as the Department of Labor or the Equal Employment Opportunity Commission for investigation, or referral for suspension and disbarment.

The Order also includes the Paycheck Transparency Clause, which requires contractors to provide accurate wage, hour, and other information relevant to workers’ paychecks. Contractors must also provide non-employees with written notice of their status as independent contractors. Finally, the Order prohibits contractors and subcontractors with bids exceeding $1 million from requiring workers to sign agreements to arbitrate Title VII claims or any tort related claim related to or arising out of sexual harassment or sexual assault.

Implementation will be carried out on a phased-in schedule based upon the size of a contract. As of October 25, 2016, disclosure and assessment of labor law compliance will be required for prime contractors with solicitations of $50 million or more. On April 25, 2017, the disclosure and assessment requirements will apply to contractors with a contract value of $500,000 and up. And by October 25, 2017, the requirements will also apply to subcontractors with a contract value of approximately $500,000.

The prohibition on mandatory arbitration for Title VII and sexual assault related claims will become effective October 25, 2016, however, the paycheck transparency requirements won’t be implemented until January 1, 2017.

The three-year look-back period for labor violations will also be implemented on a phased-in basis. Until October 25, 2017, contractors and subcontractors will only need to report labor violations that occurred within the preceding year. On October 25, 2017, the look-back period increases to two years, and then three years starting October 25, 2018.

Prior to offering a bid for a federal contract, contractors and subcontractors are advised to seek legal counsel to evaluate their current disclosure obligations and prepare for the Contracting Officer’s evaluation. Likewise, employers with federal contracts exceeding $1 million should review with an attorney any current arbitration agreements to ensure they are not in violation of the Order.

Overall, proponents of the Fair Pay and Safe Workplaces Executive Order hope that by rewarding businesses and individuals that comply with labor laws, there will be a significant improvement in workplace standards for the approximately 28 million employees and thousands of government contractors that the Order will affect.

This article is not intended to be nor should be construed as legal advice. As with any issue, business and individuals should seek the advice of counsel for their own particular needs.


 

In a Stark Reversal, the NLRB Rules Columbia University Graduate Students May Unionize

Yogi Patel - Wednesday, September 07, 2016

The National Labor Relations Board ruled late last month that student assistants working at private colleges and universities are “employees” under the National Labor Relations Act and can organize and form a union. This reverses the position of the Board, which ruled in 2004 that graduate teaching and research assistants were not employees, reasoning that the students’ relationship with the school was “primarily educational.”

In reversing its 12-year old position in the Brown University case, the NLRB wrote that it wrongly “deprived an entire category of workers the protections of the [National Labor Relations Act], without a convincing justification in either the statutory language or the policies” of the law.

The proper role of graduate students and their contributions outside the classroom has been a source of controversy and debate for nearly two decades, as both private and public institutions of higher education have grown more and more reliant on them for the institutions to operate. Many see increased use of graduate students and low-paid, temporary adjuncts as part of a movement away from full-time professors, a move that has been criticized by educators and students. Students also point out that such work is mandatory as part of many graduate programs, but the pay leaves some of them living in poverty while the time demands prevent them from obtaining other work to supplement their income without compromising their ability to fulfill academic needs.

Schools, on the other hand, argue that unionization could lead to negotiations about inherently educational factors, such as the length of classes, the content of curriculum, or the method or amount of grading.

The Columbia University ruling allows graduate and undergraduate teaching assistants, as well as graduate and departmental research assistants at Columbia University to join Graduate Workers of Columbia-GWC, UAW, but not before the case is reviewed again by an NLRB Manhattan regional director, who must still determine who is eligible to vote in the union election.

Legal Update - July 2016 Newsletter

Yogi Patel - Monday, July 11, 2016

Dear valued clients and supporters: This month's newsletter will focus on: (1) updates to federal overtime regulations; (2) the protocols and pitfalls of the I-9 verification process; and (3) common law and federal trademark protections.

Federal Overtime Regulations Updates

Federal regulations were updated recently to greatly expand the number of employees who will be eligible for overtime as of December 1, 2016. The Fair Labor Standards Act (the FLSA) is the primary federal law that regulates the payment of overtime wages to employees. The recent updates to the federal regulations greatly raises the overtime salary threshold. This change is estimated to remove some 4.2 million employees from "exemption", thereby entitling them to overtime pay. For employees and businesses who want to learn more about these changes and the impact they changes will have, an in-depth article can be found here on our website.

The I-9 Verification Process

In our last newsletter, we covered some of the pitfalls and recommended practices for businesses, in particular, employers who have to comply with the I-9 employer verification process under Federal law. A more in-depth article on this topic is now posted here on our website.

Competing Trademark Rights

Business owners and other alike often wonder whether or not they need to register their trademarks. While using unique words, symbols, or phrases in connection with the sale of goods or services provides some legal protection under the common law, this protection can be somewhat limited. For example, common law trademark rights tend to be restricted to the geographical area and manner in which the mark is used. In contrast, registering with United States Patent and Trademark Office (USPTO) grants the owner exclusive use of the mark nationwide. Additionally, federal registration serves as constructive notice of ownership and use, and grants the holder the right to sue in federal court for trademark infringement. Still, federal trademark rights can, in certain circumstances, be restricted or even superseded by common law rights. To learn more about various types of trademark rights, infringement, and conflicts, an in-depth article will be posted next month on our website.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

 

Update to FLSA Will Make Millions More Eligible For Overtime Pay

Yogi Patel - Friday, July 08, 2016

As of December 1, 2016, the number of employees eligible for overtime will dramatically increase due to an update to the Federal Labor Standards Act (FLSA). Previously under the FLSA, employees who made over $23,600 per year and met certain other requirements were exempt from mandatory overtime compensation. Under the revised regulations, the threshold figure will jump to $47,476 per year. This increase is estimated to render an additional 4.2 million workers eligible for mandatory overtime. The stated purposes of the amendments were to: 1) update the salary threshold to match current economic realities and thereby bring the regulations in line with the original intent of the FLSA; and 2) to make the rules easier for workers and businesses to understand and apply. By increasing the number of workers eligible for overtime pay, employers will have significant decisions to make regarding their employees’ wages, hours, and duties.

What is the Fair Labor Standards Act?

The Fair Labor Standards Act is a federal law that governs the minimum wage, overtime pay, recordkeeping, and child labor standards for all full-time, and part-time workers in the private sector and in Federal, State, and local governments. One purpose of the FLSA is to ensure that all workers are fairly compensated. Generally speaking, the Act requires employees be paid at least the federal minimum wage for all hours worked, up to 40, in a given week. Any hours above 40 worked in a given week must be compensated as overtime pay at no less than one and one-half times the employee’s regular rate of pay.

While the rules apply to most employees, there are workers who are exempted from the FLSA’s protections. To be exempt, the employee’s specific job duties and salary must meet all the requirements of the regulations.

Currently, with few exceptions, employees who are paid a salary of at least $23,600 per year ($455 per week) and whose jobs can be described as executive, administrative, or professional are exempt from overtime pay – this is referred to as the white-collar exemption. Likewise, employees who are paid more than $100,000 per year and who regularly perform an executive, administrative, or professional duty (“highly compensated employees”) are exempt from the overtime requirement even where they might not otherwise meet all the specific requirements under a particular classification.

Job titles do not determine whether a job position will be exempt, rather, an examination must be made of the actual duties of an employee to determine if her position may be considered executive, administrative or professional under the law. Employers are advised to consult with their attorney to fully assess whether or not its employees’ duties fall under the exemptions.Generally speaking, the White Collar exemption recognizes that employees who reach a certain level or compensation do not need the same wage protections as lower-wage workers and seeks to avoid putting a substantial burden on employers. However, the salary threshold has been eroded by inflation and increases in costs of living through the years, and employees are not being compensated proportionately to the rising market. Therefore, advocates claim that the current overtime exemption threshold needs to be adjusted upward to update the law to fit its original purpose of ensuring adequate pay for workers.

The Overtime Rule Update

With the need to increase the salary threshold to keep up with economic realities, the overtime rules are being amended. The revised regulations are expected to extend overtime eligibility to an estimated 4.2 million full-time workers and are intended to make the rules more clear for workers and employers. Specifically, as of December 1, 2016, the updated regulations will:

  • •  Raise the eligibility requirement for overtime pay from $455 per week ($23,600 per year) to $913 per week ($47,476 per year). This means that 35% of full-time salaried workers will be automatically entitled to overtime based solely on their salary.
  • •  Raise the eligibility requirement for those exempt as “highly compensated employees” to the 90th percentile of full-time salaried workers nationally, or from $100,000 to $134,004 per year.
  • •  Automatically update the salary threshold every three years, starting January 1, 2020, based on wage growth over time. Each update will increase the standard threshold to the 40th percentile of full-time salaried workers in the lowest-wage Census region, estimated to be $51,168 in 2020. For “highly compensated employees,” the threshold will increase to the 90th percentile of full-time salaried workers nationally, estimated to be $147,524 in 2020.
  • • Allow up to 10% of the salary threshold to be met by non-discretionary bonuses, incentive pay, or commissions, provided they are made on at least a quarterly basis.

Employers are not required to convert a salaried employee who gets paid less than the salary threshold to an hourly status. Employers can continue to pay the nonexempt employee on a salary basis and pay overtime for all hours worked over 40 in a workweek.

Employer compliance with the Overtime Rule

The Department of Labor does not dictate any method of compliance and employers have the discretion to decide how they will comply with the revised regulations. There are numerous options for compliance including:

  • •  Continue paying the employee’s current salary in addition to paying overtime. This option is most viable where the employee occasionally works overtime due to spikes in the workload. Employers can more carefully budget and plan for the increased pay during those periods.
  • •  Raise the employee’s salary to maintain their exempt status. If the employee’s salary is above $47,476 per year and his or her duties meet the duties test (described as executive, administrative or professional), the employee is exempt. This option is practical if the employee who works 40 hours per week is already being paid close to the $47,476 salary requirement.
  • •  Evaluate and modify the employee’s workload. The need for overtime could be eliminated where employers appropriately distribute the workload and allow for adequate staffing levels.
  • •  Adjust employee wages. Employee’s earnings can be adjusted to reallocate it between regular wages and overtime so the total amount paid remains roughly the same. This option is preferred where employees work a consistent and a small number of overtime hours. Note that employers are prohibited from reducing an employee’s hourly wage below the federal or applicable state-level minimum wage (whichever is higher).
  •  
  • The method an employer chooses will be dependent on its particular circumstances with particular consideration given to the number of employees, how much employees currently earn, and how often employees work overtime. Additionally, employers and employees should be aware that while federal law sets minimum national standards, states may impose heightened requirements under their own laws, so it is essential to understand any applicable local rules and regulations. Compliance with the FLSA does not guarantee compliance with state or local laws. And finally, as every employer has its own unique situation, it is always advised to consult with an attorney to discuss a business’s particular needs.
  •  

This information is not intended to provide or be construed as legal advice. Before taking steps to comply with the new overtime regulations, please consult with an attorney to fully assess your unique situation.


 

Recommended Business Practices for I-9 Compliance

Yogi Patel - Friday, July 08, 2016

 

Under the Immigration Reform and Control Act of 1986 (“IRCA”), employers may only hire people who are authorized to work in the United States. To this end, employers have the burden of verifying that their prospective employees are authorized to work before they commence employment. However, as an individual’s work authorization is inextricably linked with their immigration status, federal law also requires that the work verification process must not discriminate against workers on the basis of immigration status, nationality, accent, or appearance.

To comply with the law, employers must verify the identity and employment eligibility of employees by completing the I-9 Employment Eligibility Verification Form (“Form I-9”). The I-9 must be completed for all prospective employees, not just those that the employer believes to be unauthorized workers. In conjunction with the I-9 form, employers must collect certain documents for the purposes of verifying a prospective employee’s identification and work status. Employers must follow strict guidelines in requesting these forms of identification and may not reject reasonably genuine-looking documents. Violations of these requirements under IRCA can subject an employer to allegations of discrimination, months of federal investigations, loss of government contracts, large fines, and negative publicity.

 

Filling out the I-9 Form

Because of federal discrimination laws under IRCA, employers cannot just ask prospective employees to fill out a Form I-9. The form must be incorporated into a hiring process that ensures equal treatment of everyone.

Employers can only present the I-9 Form after an offer of employment and an acceptance from the employee have been made. Once the offer of employment is accepted, the employee must complete Section 1 of the I-9 Form on or before the first day of work. The employee is required to provide her full legal name, current address, and date of birth. The employee is only required to provide a social security number if the employer uses E-Verify (which is not mandatory but has benefits for employers). In addition, the employee must attest under the penalty of perjury her citizenship status or employment-authorized immigration status. If applicable, the employee must also provide her Alien or Admission Number along with the employment authorization expiration date. Finally, the employee must sign and date Section 1 certifying the information is true. Any translator or preparer who assisted must also provide their name, address, and signature. The employer must review the information to ensure completeness of all required fields.

Within three business days of the employee’s first day of work, the employer must complete Section 2, which requires the employee to present acceptable documents to verify the employee’s identity and eligibility for work. Acceptable documents are divided up into three categories: A, B, and C. List A consists of documents that verify both identity and work eligibility; List B contains documents that verify only identity; and List C contains documents that verify only employment authorization. The employee may either present one document from List A only, or a combination of one document from List B and one from List C. The employee has the right to choose which documents to present - the employer is strictly prohibited from specifying any particular documents it will accept. Once the employee presents the required document(s), the employer then determines whether the document(s) appear to be genuine and related to the individual. Thereafter, the employer can record the document information on the Form I-9.

The employer or an authorized representative must record the title, issuing authority, number and expiration date, if any, of the document, fill in the employment date, and sign and the Form I-9. Employers who complete the form early or improperly, ask the wrong questions, or who require or refuse to accept a particular document could be found liable for discrimination and be subjected to significant penalties.

Employers must complete an I-9 Form for all employees, and keep the original forms for three years after the date of hire or one year after the date the employment ends, whichever is later. Employers may choose to make copies of the employment eligibility verification documents, and if so, must make copies for all employees and retain those copies with the I-9 Forms.

 

I-9 re-verification requirements

  • An employee who is not a U.S. citizen or a permanent resident is likely working based on a work authorization status with an expiration date. The employer must record the expiration date on the employee’s I-9 Form and in Section 3 of the form and re-verify the employee’s work authorization document before the expiration date. Employers should establish a reliable system for prompt re-verification; thereby reducing the risk employers could face of employing someone no longer eligible to work and to appropriately alert employees that they need a work visa extension to remain in legal status.

 

Some examples of discrimination

•  Employers are cautioned from engaging in the following practices:

•  Requesting to see employment eligibility verification documents before hiring an individual because that person has a foreign accent or someone said that person is from a different country.

Refusing to accept a particular employment eligibility verification document or refusing to hire someone, because that person presented a document with an expiration date.

•  Refusing to accept a particular employment eligibility verification document that is acceptable by law and that appears to be reasonably genuine.

•  Requesting to see a specific document for the completion of the Form I-9. Employers should only accept the documents that are required for verification (one from List A or one from List B and List C). For example, an employee who already presented a document from List B and List C does not need to also present one from List A. An employer who then asks for a document from List A is subject to an allegation of discrimination.

•  For recordkeeping purposes, making copies of employment eligibility verification documents only for non-U.S. citizens but not making copies for U.S. citizens. Employers are not required to make copies of the verification documents. If an employer chooses to make copies, copies should be made for all employees.

•  Setting different employment eligibility verification standards for different individuals or requiring that employees provide different documents, based upon national origin or citizenship status. All employees should be treated the same and should go through the same process.

•  Adopting a policy that the employer will only hire U.S. citizens. Note that some jobs do require U.S. citizenship by law, regulation, executive order, or federal, state, or local government contract.

•  Requesting during re-verification that an employee presents a new unexpired employment authorization document if one was already presented during the initial verification.

•  Engaging in threats, intimidation, retaliation, or discharge against an employee who exercises their rights under the anti-discrimination law.

 

Penalties for I-9 violations

Employers that hire unauthorized workers can be fined anywhere from $250 up to $5,500 per worker depending on their prior history of violation. Additionally, employers can be barred from competing for government contracts if they knowingly hire or continue to employ unauthorized workers. Mistakes or missing items on required forms can result in a $100 up to $1,000 fine per form. Moreover, employers who miss a form could be fined up to $1,000. For example, an employer who does not complete the I-9 Form for 100 employees could face a $100,000 fine.

 

Recommended business practices to avoid allegations of I-9 discrimination

•  Employers are at risk of severe penalties for failure to comply with the anti-discrimination provisions of the IRCA. The risk could be minimized by undertaking several steps, including:

  • Establishing a regular training program, conducted by an attorney familiar with IRCA rules, regarding I-9 compliance for employers or representatives authorized to fill out the Form I-9 - i.e. Human Resource professionals.

•  Establishing a system to re-verify employment authorization documents in a timely manner. This will reduce the risk employers face of employing an individual with expired documents and will also help ensure the employee’s documents are up to date.

•  Conducting an internal audit of the I-9 files to disclose any pattern of violation requiring remediation. An attorney familiar with the IRCA should supervise this audit.

•  Establishing a quick process in which employers or human resource professionals can check in with an attorney regarding I-9 verification questions.

Overall, while the I-9 process can seem straightforward on the surface, it can be incredibly easy for the most well-intentioned employers to unwittingly commit IRCA violations. Rather than risk being subjected to an audit by the Department of Justice and substantial penalties, employers should consult with an attorney to review their employment verification process and ensure that everyone involved is in strict compliance with IRCA’s requirements.

 

 


Recent Posts


Tags

Selling Business Paid Family Leave Start-up Ventures Sexual Harassment policy Postnup entrepreneur Trademark licensing NQSO $15 Minimum Wage NYC Human Right's Law's marijuana usage Illegal rentals Employment Law Unions Freelance Isn't Free Apple vs. FBI Right to Unionize Glatt v. Fox Searchlight Pictures Interns as Employees Human Rights Law Hairstyle Discrimination graduate students Business Trade Secrets Act Web Domains Sexual Harassment Fair Chance Act Real Estate Law Nanny Audit Fair Labor Standards Act #meToo Employer Mandate Facebook Privacy and Litigation Overtime Rules Household Employees U.S. Department of Labor Fair Workweek Law Browning-Ferris Case Interview Series Executive Severance Nobel Prize Minimum wage Unionization Employment Contracts workplace discrimination New York City Human Rights Law Attracting Investment Immigration Status Transgender protections Ban the Box Employee Salary Histories Womens Rights NY payroll law NYC Sexual harrassment law Divorce Prenup Affordable Care Act ACA LinkedIn Mandatory Class Action Waivers Trade Secrets Federal Contractors AirBnB drug testing sexual harassment training Credit History commuter benefits Trademark Law Westchester Safe and Sick Time Laws Lactation Law Wage Theft Protection Act Payroll Scams Security National Labor Relations Act Credit Checks Glatt v. Fox Searchlight Pictures, Inc. Criminal Record Negotiating Business Law Intellectual Property employment discrimination lawsuits Non-Qualified Stock Options Privacy Public-Sector Union Fees stocks NYC Salary History Law National Labor Relations Board Technology Worker's Rights Housing Law Federal Acquisition Regulatory Council Independent Contractor Employment Offer/Agreement Alter-Ego Doctrine New York Earned Sick Time Act Workplace Requirements New Address I-9 Verification Westchester County implementing new leave laws Joint-Employer Relationship EEOC Filing Requirement Arbitration Agreements Pregnancy Internet Law Fair Work Week Legislation Interns Firm Announcements Credit Domain Name Department of Labor Health Care Fair Pay and Safe Workplace Executive Order Overtime Exemptions Corporate Law NLRB Newsletter Executive Negotiation

Archive

EDIT - blog-container - This controls the styles for the headings

EDIT - BlogTagCloud - Font style

description

  • EDIT  - post-body - Font style

EDIT - side-panel - This is the colour of the sidebar headings

Snap | BC Module - Blog - Blog Description

Snap | BC Module - Blog - Blog Title

EDIT - Snap | BC Module - Blog - Date - This is the date box style

EDIT - Snap | BC Module - Blog - Post Content - Font style

EDIT - Snap | BC Module - Blog - Post Title - Heading style

EDIT  - Snap | BC Module - Blog - Sidebar Content - Font style

EDIT - Snap | BC Module - Blog - Sidebar Title - Heading style

latest blog title snap text

 

Disclaimer: Nothing on this website is or should be construed as legal advice.
An attorney-client relationship does not exist with our firm unless a signed
retainer agreement is executed, and we do not offer legal advice through
this site or any of the content located on it. For legal advice for your
particular circumstances, please contact us directly.