Author Archives: John Getty

Avoiding Errors in the Match Game: Responding to the Rising Number of “No-Match” Letters

Starting late last year and continuing on the heels of tax season, the Social Security Administration (SSA) has been sending employers Employer Correction Request Notices, also known as EDCOR notices or “no-match” letters. An example “no-match” letter is available at the SSA’s website. These “no-match” letters notify an employer that the information submitted on an employee’s W-2, such as the Social Security Number or SSN, does not match the SSA’s records. Even though it’s not conclusive evidence that an employee is not authorized to work in the United States, it can put an employer on notice of a possible issue, which can lead to potential compliance issues and liability under federal law. See our previous discussion here and here on recent Form I-9 compliance issues.

Of course, common discrepancies can also trigger a “no-match” letter, such as  unreported name changes, typos or input errors by the SSA, reporting errors by an employer or employee, errors in recognizing multiple last names or hyphenated last names, or identity theft.

In other words, “no-match” letters can arise because of simple administrative errors. Employers should not presume the “no-match” letter conveys information about an employee’s immigration status or authorization to work within the United States. Still, the “no-match” letters may also indicate that an individual provided false identification.

Employers must be cautious when dealing with a “no-match” letter. An overreaction—such as requesting excessive or unnecessary documentation from employees—can violate the anti-discrimination provisions in federal law, which generally prohibit discriminatory employment practices because an employee’s national origin, citizenship, or immigration status. Thus, an employer should not attempt to do any of the following after receiving a “no-match” letter:

  • Take any adverse employment action against an employee subject to a “no-match” letter, including—but not limited to—firing, demoting, cutting hours, reducing the wages of, or writing up such an employee;
  • Follow different procedures for different classes of employees based on the employees’ respective national origin or citizenship status;
  • Require the employee immediately provide a written report that the SSA verified the requisite information (primarily because the SSA may not ever provide such a report);
  • Immediately reverify the employee’s eligibility to work by requesting a new Form I-9 based solely on the “no-match” letter; or
  • Require an employee produce any specific I-9 documents, such as a Social Security card, to address the no-match issue.

The question then becomes: How should employer respond to a “no-match” letter?

Unfortunately, the letters usually do not identify the employees for whom the SSA finds there is a “no-match” issue. To determine which employees’ information is at issue, an employer must first register with the SSA’s Business Service Online website. Through that website, an employer can then compare the employee names and SSN information in its files against the SSA’s records to make sure the information was correctly submitted, and no typographical error occurred. If an employer determines it misreported the information, it can issue a correction through an updated IRS Form W-2C. An employer generally has 60 days from receipt of the “no-match” letter to issue a Form W-2C to make corrections if that is the cause of the “no-match.”

Should an employer determine that it properly reported the information, then the employer will need to further investigate and may want to seek guidance from counsel before taking further action.

John C. Getty
jgetty@williamsparker.com
(941) 329-6622

Once More, With Feeling: Proposed Increase to Minimum Salary for Highly Compensated Employees

As previously reported, the U.S. Department of Labor issued a proposed rule addressing exemptions for bona fide executive, administrative, professional, and outside sales employees (the “white-collar” exemptions”) under the Fair Labor Standards Act. Presuming the rule goes into effect, the new minimum salary threshold for these employees will be $35,308 per year (or $679 per week).

Beyond changing the minimum salary threshold for the “white-collar” exempt employees, the DOL also proposed increasing the exemption threshold for a smaller category of employees: “highly-compensated” employees. Previously, any employee whose primary duty was performing office or non-manual work and who customarily and regularly performed at least one duty or had at least responsibility of a bona fide executive, administrative, or professional employee could be exempt–if the employee made at least $100,000 a year and received at least $455 each week on a salary or fee basis. In essence, the “highly-compensated” employees exemption combines a high compensation requirement with a less-stringent, more-flexible duties test in comparison to those used under the “white-collar” exemptions.

Like the DOL’s proposed changes to the “white-collar” exemption, the DOL’s proposed changes to the “highly-compensated” exemption does not alter the duties requirements. Rather, the DOL proposes an increase to the annual and weekly salary thresholds. But in this instance, the increase is substantial. The proposed new threshold jumps from $100,000 under the current rules up to $147,414, of which $679 must be paid weekly on a salary or fee basis. That is an approximate 50 percent increase, and it is about $13,000 higher than what had been previously proposed when changes were considered in 2016.

Now, despite the change raising eyebrows, one could question whether it would have significant impacts because most workers paid $100,000 or more often already fall into one or more of the other exemptions. The DOL itself acknowledges in the proposed rulemaking that it estimates only about 201,100 workers nationwide would become eligible for overtime due to this salary increase. In comparison, the DOL expects the “white-collar” salary change will impact approximately 1.1 million workers nationwide.

The common view remains that the new minimum salary thresholds will likely go into place later this year (2019) but likely no later than January 1, 2020. Although that later date is almost seven months away, that deadline is rapidly approaching. Hence, it is worth reiterating that employers should begin evaluating their staff to determine who, if anyone, may be affected and determine how to proceed. Similarly, this rule change provides employers an opportunity to audit all of their employees (even those unaffected by the proposed rule changes) to make sure each one is properly classified. And if they are not, employers can time any reclassifications with those made to meet the new rule changes to possibly minimize bringing attention to and potential liability for any past misclassifications.

In the meantime, the DOL will accept comments from interested parties until May 21, 2019 at 11:59 PM ET. The public will be able to provide electronic comments at regulations.gov (after searching for RIN no. 1235-AA20) or via mail to the address below (identifying in the written comment (1) the Wage and Hour Division, United States Department of Labor; and (2) RIN no. 1235-AA20).

Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, D.C. 20210

John C. Getty
jgetty@williamsparker.com
(941) 329-6622

No Fooling: DOL Proposes New Rule to Determine Joint-Employer Status

As a rule of thumb, skepticism is in order for any news blasted out on April Fool’s Day. For that reason, you could easily believe that the U.S. Department of Labor (DOL) was joining in the tomfoolery this year when it issued a new Notice of Proposed Rulemaking on April 1, 2019 to address joint employment under the Fair Labor Standards Act (FLSA), but, that wasn’t the case.

Through its April 1, 2019 notice, the DOL seeks to revise regulations on joint employment issues. A joint employer is any additional individual or entity who is equally liable with the employer for the employee’s wages, including minimum wages and overtime. Presently, the regulations state that multiple persons or companies can be joint employers if they are “not completely disassociated” with respect to the employment of an employee. The phrase “not completely disassociated” is not clearly explained in the regulations, which has led to thorny issues when dealing with the employees of subcontractors, franchisees, and similar relationships.

To address such issues, the DOL proposes a four-factor analysis that considers whether the employer actually exercises the power to:

  • Hire and fire an employee;
  • supervise and control an employee’s work schedules or conditions of employment;
  • determine the employee’s rate and method of payment; and
  • maintain the employee’s employment records.

The DOL indicates that there are other factors that should and should not be considered. It also clarifies certain business models and practices or contractual language that does not make a joint employer status more or less likely. A Fact Sheet issued with this proposed rule does a fair job of summarizing the other factors. For example, the DOL indicates that just because a company reserves the right in a contract to exercise control over another company’s workers does not—by itself—make a company more or less likely to be considered a joint employer. Rather, a company must actually exercise the contractual control to become a joint employer. Likewise, the DOL notes that just because a company can require another contracting party to institute anti-harassment policies, workplace safety measures, or wage floors does not make it more or less likely the two companies are joint employers.

The April 1, 2019 notice began the notice-and-comment process. The DOL will accept comments from interested parties for 60 days. The public will be able to provide electronic comments at www.regulations.gov (after searching for RIN no. 1235-AA26) or via mail addressed to:

Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, D.C. 20210

(identifying in the written comment (1) the Wage and Hour Division, United States Department of Labor; and (2) RIN no. 1235-AA26).

John Getty
jgetty@williamsparker.com
(941) 329-6622

Let’s Try this Again: Department of Labor Proposes Salary Increases for White-Collar Exemptions

Please note: This post has been updated to reflect a corrected annual minimum salary threshold of $35,308 which represents a nearly $12,000 per year increase from the current salary requirement of $23,660.

The U.S. Department of Labor issued a much-anticipated proposed rule addressing the “white-collar” exemptions for the Fair Labor Standards Act. If the proposed rule is enacted later this year, the new minimum salary threshold will be $35,308 per year (or $679 per week). This represents nearly a $12,000 per year increase from the current salary requirement of $23,660 (or $455 per week). Thus, once this new rule goes into effect, for an employee to be exempt from the FLSA’s minimum wage and overtime rules, the employee’s salary will need to meet the new threshold.

Importantly though, the DOL will not be altering any other aspects of the “white-collar” exemption tests. It won’t be changing the various tests for executives, administrative staff, or professionals. Nor does the DOL’s new rule include periodic automatic increases to the minimum salary threshold as the Obama-era DOL had proposed before a district court stopped it in 2016.

Depending on how quickly the DOL moves through the rule-making process and issues the new rule, the new minimum salary threshold will likely go into place late summer or early fall of this year. For that reason, as they did in 2016 in response to the prior proposed increases, employers will want to begin evaluating their staff to determine who may be affected and determine how they want to proceed.  Additionally, because of this rule change, employers will also want to audit all of their employees to make sure each one is properly classified, and if not, take this opportunity to reclassify employees in a manner that tries to minimize liability for any past misclassifications.

John Getty
jgetty@williamsparker.com
(941) 329-6622

A Clue to the NLRB’s Future Focus?

In regulatory action last week, the current board of the National Labor Relations Board not-so-subtly identified several areas where the Board wants to reverse course. Specifically, on October 16, 2018, the Board’s General Counsel released four advice memorandums issued during the Obama administration addressing several topics, including dress codes, replacement of striking employees, and video recordings of workplace strikes.

It is uncommon for advice memos to be released, especially those from prior administrations.  Most times, such releases happen after a matter has been resolved or the General Counsel has directed a region to dismiss a case. When memos are released, it is because the Board wants to draw attention to a trending topic or point of emphasis. In this instance, the Board released advice memos that were quite favorable to labor unions and workers:

  • In two advice memos involving Walmart dating to 2013, the Board’s General Counsel at that time recommended that the regional director bring unfair labor practices when the retailer (1) told a plainclothes security guard that he could not wear union clothing while undercover; and (2) prohibited workers from wearing union insignia shirts and then disciplined them for engaging in a work stoppage (which the General Counsel opined was not an unprotected sit-in strike);
  • In a different 2013 memo, the General Counsel found that Boeing acted unlawfully when it recorded union solidarity marches that happened on its property while it also had a rule in its employee handbook that blocked employees from using cameras on its property; and
  • In another advice memo issued in early 2017, the then-General Counsel concluded a California fishery committed an unfair labor practice when it unlawfully replaced striking employees by giving temporary employees permanent positions.

These memos are noteworthy since the current General Counsel, Peter Robb, and the Board at large are unlikely to support the positions espoused in the Obama era memos. For instance, in December 2017, the Board has changed course in the Boeing matter, concluding that the Board’s previous edicts on handbooks gave too much credence to employees’ rights and too little to employers’ interests.

Considering the reversal in Boeing matter, the fact that the General Counsel released the other advice memos on the same day potentially signals those advice memos do not reflect the Trump-era General Counsel or Board’s position. For that reason, employers may wish to challenge similar unfair labor practice findings in other settings.

Still, although these advice memos may be a relic of the Obama-era Board, another administration’s Board could renew the legal theories and positions contained in the advice memos. Thus, at the very least, employers should remain mindful of the views taken in the advice memos and consider potential protective steps.

John Getty*
jgetty@williamsparker.com
(941) 329-6622
*Admitted in Louisiana and Georgia