• Skip to primary navigation
  • Skip to main content
  • Skip to footer

Launch to Thrive

Free Business & Legal Resources for Entrepreneurs and Startups

  • Launch
  • Grow
  • Thrive
  • Documents
  • Resources
  • Services
    • For Startups
    • For Incubators
    • General Counsel
  • Contact
  • Follow Us
  • English
    • Español
You are here: Home / Archives for All Resources / HR & Employment

HR & Employment Resources

Crowdfunding Cybersecurity Entrepreneurship HR & Employment Immigration Innovation Insurance Intellectual Property International Media & Entertainment Securities Work/Life Balance

U.S. Immigration Policy and Procedural Changes Impacting Foreign Students (Webinar)

All Resources// HR & Employment// Immigration// International

This presentation is a three-part series on the procedural and policy changes issued by the various U.S. agencies governing legal immigration, and the impact of these changes on foreign students in the U.S. with student, scholar or trainee visas such as F, M or J, as well as their spouses and dependents.

Immigration Senior Counsel Maria Mejia-Opaciuch provides practical tips and insight into how these changes could impact future green card or residence applications via family- or employment-based petitions.

View on YouTube

Employers Must Now Use New I-9 Employment Eligibility Verification Form

All Resources// HR & Employment

Beginning January 22, employers must only use the new I-9 Form dated November 14, 2016, which replaces the form dated March 8, 2013. The new I-9 Form is located on the U.S. Citizenship and Immigration Service website and has a new expiration date of August 31, 2019. Failure to use the new form may result in the assessment of penalties. The I-9 form has been required for all new hires after November 6, 1986.

The new form, which has “smart” error-checking features, is simpler to use. Its enhancements streamline certification for certain foreign nationals. The most prominent changes are:

  • The form can now be completed more easily on the computer with drop-down lists and calendars for filling in dates.
  • Each field has onscreen instructions.
  • The full instructions, which are no longer a page of the form but separate from it, are easily accessible. However, employers must still present the instructions to the employees completing the form.
  • There is a form option to clear and start over.
  • Prompts have been added to ensure information is entered correctly.
  • The preparer can enter multiple preparers and translators.
  • A dedicated area exists for additional information (no more margin annotations needed).
  • There is a supplemental page for the preparer/translator.
  • The requirement that immigrants authorized to work provide both their Form I-94 number and foreign passport information in Section 1 is removed.
  • A mechanism was added that prompts individuals about missing information and/or incomplete fields, highlighted in red, before moving from one section to another within the form.
  • A “Print” option enables individuals to print the Form I-9 once data is entered.
  • A quick-response matrix barcode, or QR code, that generates once the form is printed can be used to streamline enforcement audits.

This revised form with the above enhancements was designed to help human resource professionals and employers reduce the technical errors that have plagued this process for the past 30 years. It is important for employers to note that the new smart I-9 is not an electronic I-9 and that the form completed using Adobe Reader must still be printed, signed, and dated by the employee, and stored in a safe place. In addition, reverifications and updates must still be calendared. Where an employer uses E-Verify, the employer must retype I-9 information into E-Verify as was done with the old I-9 form.

Further, the U.S. Citizenship and Immigration Services (USCIS) amended the I-9 completion instructions, which now provide more detail and guidance in an effort to reduce errors during the I-9 completion process. Reducing errors is more important than ever as the USCIS has implemented higher civil fines against employers who commit immigration-related offenses, including I-9 paperwork violations like I-9 Form errors or omissions. The civil penalties rose from $110 to $1,110 per relevant I-9, to $216 to $2,156, representing an increase of nearly 100 percent.

Given that the Trump administration has emphasized immigration enforcement, employers would be prudent to review their I-9 compliance policy and perhaps conduct an internal audit of their I-9 records to ensure compliance with immigration rules, and that they are prepared for an audit in this new era of immigration enforcement.

If you have questions about the new I-9 Form or any general I-9 compliance issue, please contact Maria Mejia-Opaciuch, Carlton Fields senior counsel: mmejia-opaciuch@carltonfields.com or (305) 539-7319.

What will U.S. Business Immigration Look Like Under A Trump Administration?

HR & Employment// Immigration// International

More than 10 days have passed since the election results were revealed, and the United States now has a businessman as its president-elect ready to take office on January 20, 2017. However, despite his business background, it appears that the Trump administration will be equally hard on legal business immigration as on illegal immigration. President-elect Trump’s campaign speeches and his position paper on immigration shed light on how his vision regarding immigration will impact employers with a foreign national workforce. Below are some of the pertinent temporary work visas, inspections procedures and immigration control practices that may be impacted when the Trump administration is in place, as well as a brief discussion about the longer delays expected for foreign workers traveling to the United States for short-term business reasons or to work and study.

F-1 Students and Optional Practical Training (OPT)

President-elect Trump has called for more stringent vetting of foreign nationals seeking to enter on either temporary work or student visas, or those seeking green cards. In addition, he wants to suspend the issuance of visas from countries where there is no screening process until proven and effective vetting mechanisms are implemented, particularly from regions that export terrorism. Given this possible delay or suspension, it is key for foreigners seeking to work or study in the United States to apply for the F-1 student visa before the new administration is in place. Further, there is a strong possibility that the generous regulations extending OPT to students in the STEM (science, technology, engineering and mathematics) disciplines be repealed or scaled back considerably. This is due to the Trump administration’s call for new immigration controls that would boost wages and ensure open jobs are offered to Americans first. The STEM OPT program requires employers to participate in E-Verify, an internet-based system that compares information from an employee’s Form I-9 (Employment Eligibility Verification) to data from the U.S. Department of Homeland Security and Social Security Administration to confirm employment eligibility. President-elect Trump and his key immigration team advisors are proponents of E-Verify and support the program’s expansion to all employers. As such, STEM OPT may remain in effect for some time.

TN, E-3, and H-1B1 Visas – Free Trade Agreement Visas

President-elect Trump has indicated he would seek to renegotiate or withdraw from the North American Free Trade Agreement (NAFTA) and similar trade agreements, many of which include streamlined immigration provisions allowing professionals to work in the United States under visa classifications defined in the agreements. Employers should review their foreign workforce and gather requisite data to possibly convert TNs (Canadian or Mexican), E-3s (Australian) and H-1B1s (Singaporean or Chilean) to either an H-1B visa or commence the permanent residence (green card) process. It is unlikely that the renegotiation of, or withdrawal from, any of the trade agreements will occur immediately after President-elect Trump assumes office. Employers will have time to review their workforce, consult with their immigration lawyers, and take necessary action to maintain their foreign workforce with little to no impact on the business.

H-1B Specialty Occupation Visas

President-elect Trump supports immigrants who are skilled, have merit and will succeed in the United States, and would favor reform of the H-1B program to eliminate “cheap labor.” He may seek, through legislation, a more active recruitment process built into the existing H-1B regulations. He may pursue changing rules on H-1B-dependent employers (those employing 15 percent or more H-1B visa workers) and impose more stringent regulations on wages and salaries paid to H-1B employees, possibly increasing them to as much as $100,000. As part of his vision to protect the American worker, President-elect Trump may also conduct more audits of H-1B employers. Increases in enforcement and H-1B salaries may encourage employers to ship offshore the IT and engineering work currently performed under H-1Bs, which would be counter-productive. H-1B visa reform will, in all likelihood, make certain IT projects too expensive to remain in the United States. If there are no U.S. workers available to handle the projects, the work may be outsourced overseas, or the industry may be forced to automate, as the auto industry did. This is an excellent time for employers to review their H-1B and public access files and ensure all is in order, as more audits of H-1B employers are anticipated.

Deferred Action on Childhood Arrival (DACA)

While the 725,000 or so DACA registrants in the United States may not be affected immediately when President-elect Trump takes office, it seems certain that the executive order implementing DACA will be terminated, and those with employment authorization document (EAD) cards will not have an opportunity to renew their work permits, which would impact employers. It is a good time for employers to review their foreign workforce and I-9 records to review who has time-limited EAD cards, and be prepared for the possibility that some EAD cards will not be renewed if DACA is terminated. Revocation of this program will likely take some time, but preparation is key to minimizing the disruption of the employer’s workflow.

Travel to the United States: A Fully Operational Biometric Entry-Exit Visa Tracking System

The Trump administration will implement a biometric entry and exit system at all land, air and sea ports. This system is No. eight on the president-elect’s 10-Point Plan to Put America First. Statistics show that approximately half of the new illegal immigrants enter the United States on a valid visa and then overstay. President-elect Trump plans to combat that practice by strictly enforcing visa expiration dates. It remains to be seen how this priority will be implemented (by legislation or regulation), but strict oversight on visa expirations are anticipated, given the advisors President-elect Trump has enlisted to develop his administration’s immigration policy.

Increased Worksite Enforcement, Mandatory E-Verify and Visa Compliance

President-elect Trump has clearly stated that his top priority is to build a wall on the southern border and keep illegal immigration to a minimum by immediately removing those who enter illegally or detaining them until removed. He wants to end the existing “catch and release” program in existence today. Such enforcement-centric policies may result in tangential worksite initiatives by the U.S. Immigration and Customs (ICE) resulting in increased onsite inspections of I-9 forms. President-elect Trump’s promise to deport millions suggests that employers should be proactive and review existing I-9 and E-Verify compliance programs, or implement I-9 and visa-related compliance initiatives, to ensure they are ready for any possible ICE investigations or audits. Further, it is likely that mandatory E-Verify participation by all employers will be proposed. Employers should consider conducting voluntary internal audits now to limit or eliminate potential fines in the event of an ICE investigation or audit.

It is important to note that the president-elect cannot change the existing immigration laws found in the Immigration and Nationality Act (INA) unless Congress amends the INA, and President-elect Trump signs it. This will take a considerable amount of time and cooperation between Congress and the president. He can, however, change policies or executive orders, such as the DACA program, without the involvement of Congress.

Many of these changes are speculative and yet, it is clear that changes in the above visa classes will take effect in 2017. Carlton Fields’ immigration practice group will monitor these upcoming changes. Please contact Maria Mejia-Opaciuch at mmejia-opaciuch@carltonfields.com or 305.539.7319 with any questions on the anticipated changes or other immigration-related inquiries.

Ivanka Trump Intern Controversy Offers Key Reminders for Businesses

All Resources// HR & Employment

A recent blog post by one of Ivanka Trump’s interns suggests the Presidential candidate’s daughter uses unpaid interns to help run her website, IvankaTrump.com.

The intern offered tips on staying financially afloat while living in New York and being paid in experiences, rather than wages. Ivanka Trump tweeted the blog post and criticism ensued.

Actual educational experiences can amount to a proper unpaid internship; but, the longstanding practice of using interns as free labor can be risky. For that reason, it is an increasingly unpopular practice. Only businesses with altruistic motives should seek out unpaid interns. That’s because most courts look to who receives the primary benefit of the working relationship, the business or the intern, when determining whether an intern should be paid. If you use interns as an “extra set of hands,” you may be violating the Fair Labor Standards Act (FLSA), the federal wage and hour law governing employment relationships.

An insufficiently structured internship program creates risks to your business, including reputational damage; investigations by the Department of Labor (DOL), which implements the FLSA regulations; and private lawsuits under the FLSA, some of which may be costly collective (class) actions.

The DOL has developed a six-factor test to analyze whether an employment relationship exists between a business and intern. Many courts find these factors too rigid and reject them, but they are helpful to illustrate the types of issues argued, and considered, by the DOL and private attorneys in internship litigation. The trend is for courts to analyze who received the primary benefit of the work, and no one factor is dispositive.

The best practices below draw on a combination of the more stringent DOL six-factor test factors, and consider internship programs that courts have found primarily benefit the interns and do not create an employer-employee relationship covered by the FLSA. When establishing and running your internship program, aim for a generous combination of the following best practices.

Best Practices for Your Internship Program

College credit. Work with schools to get interns college credit. This is listed first because it is strikingly persuasive evidence that the primary benefit of the relationship inures to the intern.

Make the internship educational. If the intern attends school, to the extent the school has internship requirements, be sure to tailor the program to meet them. You can also do this by: obtaining course materials and syllabi from a school so you know the interns educational training needs; speaking to school instructors about student tasks to ensure the school believes the assigned tasks have educational value; check in with the school and give updates on interns’ progress; provide student evaluations to the school; invite the school to visit your business to observe the students.

Take what you get. Avoid conducting interviews, which are an indicia of employment, to choose your interns. To the extent a school can send interns, without having your business interview them, this “take what you get” approach is helpful. Also, if interns can pick the hours and days they work, this also militates against a showing of employment, as most employers pick the dates and hours of work. Still, the internship should have fixed start and stop dates and not continue indefinitely. The longer the relationship lasts, the more likely it will be argued to be an employment relationship.

Hands-on training. Provide training that your interns will be able to use within your industry, not just training specific to your business. Focus on teaching and observing the interns. An employee should remain responsible for the tasks assigned to them, and should double-check their work.

Field Trips: Plan activities that offer no benefit to the business whatsoever. Take the interns on an educational field trip. Bring in a guest speaker. Think about what kind of educational activities would benefit interns in your industry. Consider the types of experiences you can offer that interns could not get in a classroom. Build on their classroom experiences.

Don’t displace any employees. Do not depend on an intern’s work to run the business. Be careful not to delegate significant duties to the interns while you or other employees devote time to other matters. You do not want it to appear that the interns have displaced any paid employees.

Provide supervision and feedback. The more supervision and feedback your company provides to interns from knowledgeable and experienced employees, the better. Monitor the interns. Let them shadow your employees. Although it may seem counterintuitive, your interns should actually slow down employee work. Answer interns’ questions, guide them, and give them written evaluations (ideally, daily). These evaluations need not be terribly time-consuming. You might create and use a standardized form. The students could evaluate their own work, detailing what they learned during the project.

No post-internship employment. Be sure the interns understand they are not guaranteed jobs after the internships. Consider including this reminder in a written form for them to sign at the start of the internship. Don’t make interns commit to employment should you make an offer at the end of the internship. And, don’t use the internship as a trial or probationary period.

No payment. Include in the form for the interns to sign their acknowledgment that the internship is unpaid and that they understand they are not entitled to minimum wage as non-employees. Don’t offer them benefits, that only aids in an employment relationship argument. Tout the educational worthiness of the non-employment program in any marketing pieces for the program.

These are aspirational goals, a combination of which will help you structure your internship program to maximize the chances of a favorable outcome should your business be charged with failing to pay an intern minimum wage and overtime.

How to Choose the Right Entertainment Industry Work Visa

All Resources// HR & Employment// Immigration// International// Media & Entertainment

As smartphone recording capabilities and the popularity of social media help entertainers reach wider audiences around the world, entertainers who wish to come to the United States to perform are, paradoxically, finding it increasingly difficult to meet stringent U.S. immigration requirements for temporary work visas. This makes it more important than ever to review the varied U.S. work visas in place for foreign talent, including crew members, writers, producers, editors, directors, makeup artists and costumers. It is also critical to understand the visa-approval process of the United States Citizenship and Immigration Services, the government agency responsible for reviewing work visa petitions; and the visa-stamping procedures of the overseas U.S. consulates, which dictate when visas will be issued to foreign entertainers seeking to enter the United States to entertain.

First, note that U.S. immigration rules make distinctions based on the media industry professional’s work purpose for entering the United States and the nature of their employer’s business. So, as discussed below, it is important to review the activities to be performed in the United States and assess the applicant’s employer or sponsor before applying for the work visa.

I Visa for Foreign Media Representatives

Permissible Activities for I Visa Applicants

The I visa is a temporary, nonimmigrant visa for print, radio, Internet and television journalists coming to the United States solely to work on news-gathering processes, (i.e., news shoots, informational or educational documentaries) with no intention of remaining indefinitely in the United States. Members of foreign production teams essential to the foreign media function, such as photojournalists, reporters, editors, film or technical crew, directors, producers and presenters also qualify for the I visa. Those indirectly involved in the news gathering function, like proofreaders, librarians or set designers, do not qualify for the I visa.

Typically, the I visa applicant must be engaged to work for a media organization based in a foreign country. Reporting on sports events qualifies as a “news gathering” activity pursuant to the I visa rules. Independent journalists under contract with a foreign media outlet coming to the United States to work on informational or news activities qualify for the I visa, as do foreign journalists of an American network, newspaper or other media outlet coming to the United States to report on news for a foreign audience.

Additionally, accredited representatives of tourist bureaus that are controlled, operated or subsidized completely or partly by a foreign government who come to the United States to disseminate factual tourist information about that country qualify for an I visa. Employees or accredited representatives of foreign trade promotional missions are not engaged in news reporting functions and so are not qualified for an I visa.

Finally, freelance media workers with a credential issued by a professional journalism organization who also have a contract with that organization to report on news abroad qualify for an I visa. In addition, I visas are available to employees in the U.S. offices of organizations that distribute technical industrial information.

I visas are issued for as little as six months, or for as long as the foreign media outlet can provide evidence of the news project’s duration. I visas cannot be used to take up U.S. residency. Further, I visas are company-specific, and do not allow their holders to perform freelance work while in the United States.

Impermissible Activities for I Visa Applicants

The I visa should not be used for those entering the United States to produce, make or report on commercial or entertainment programming that includes reality entertainment shows, scripted or contrived programs, the filming of staged or recreated events or documentary dramas. Foreign nationals coming to film or produce events for advertising purposes cannot use the I visa. Quiz show production crews are not entitled to the I visa either. Producing artistic media content will not qualify as I visa work and as such, the I visa is unavailable to those engaged in such productions.

O and P Visas for Entertainers or Personnel Associated with Entertainers

The USCIS has several different nonimmigrant visas available to entertainers, production team members, and those considered “essential support” for film or television productions.

O Visa for Entertainers in the Television and Film Industry

U.S. immigration rules allow foreign nationals to come to the United States under an O-1 temporary nonimmigrant work visa if they do so to work in motion picture and television productions; can demonstrate a record of “extraordinary achievement;” have a U.S. employer or sponsor; and if the length of the artistic event (i.e., the film or television production) can be verified. To meet the standard of “extraordinary achievement” in film or television, the person must be outstanding or noted. Typically, the O-1 is issued to accomplished members of a production team, such as the executive producer, lead actor or director. The threshold is high, requiring the applicant to show evidence such as newspaper clippings, awards, major award nominations (e.g., an Emmy or Academy Award), and a work history of prominent productions, commercial success, high salaries and testimonials of their achievements.

An O-2 visa is available to those in motion picture or television production who come to the United States to accompany and assist the O-1, and who are integral parts of the O-1’s actual performance. The O-2 must have skills and experience with the O-1 that are not general in nature and that are critical to the production’s successful completion. Their continuing participation must be essential. U.S. immigration rules recognize that the O-2 is critical because of a pre-existing, long-standing working relationship or, as to the specific production, because significant production (including pre- and post- production work) will occur both inside and outside the United States. As such, O-2 visas are issued to such television or motion picture production crew members. O-2s need not show a supporting role, but must prove they are an essential team member.

Both the O-1 and O-2 must include an advisory opinion from the appropriate union representing either the O-1’s or O-2’s occupational peers and a management organization in the area of either the O-1’s or O-2’s field.

P Visa for Individual Entertainers or Entertainment Groups

The P visa is for internationally recognized nonimmigrants seeking to enter the United States to perform either individually or as part of an entertainment group. Like the O visa, it requires a showing of a U.S. employer or sponsor. Further, the P visa applicant requires a contract detailing the length of the performance or entertainment event. For example, an entertainment event could include an entire performance season. A group of related activities will also be considered an event. The P-1 visa is for performers. The P-2 visa is for individuals who provide essential support — those who are highly skilled, essential personnel; and an integral part of the P-1’s performance because their support services cannot be readily performed by a U.S. worker and are essential to the P-1’s successful performance of services.

The standard of proof is lower than the one used in the O-1 context. Internationally recognized means a high level of achievement in a field as evidenced by a degree of skill and recognition substantially above what is ordinarily encountered, to the extent such achievement is renowned, leading or well-known in more than one country.

All the visas discussed above allow the spouse and children under 21 to come to the United States as dependents of the principal visa holder. The dependents cannot work in the United States, but they are allowed to study.

All these visas require advance planning, sound contracts showing how long the applicants are needed in the United States, and significant patience to gather the evidence needed to meet the visas’ standards. This is especially true for the O and P visas. Also, note that having the O and P visa petitions approved by the USCIS in the United States, will not always guarantee that the O and P visas will be issued by the U.S. Consulate officers. For this reason, it is critical to understand the process, find a sponsor or employer, and file the O and P petitions early, before arriving in the United States on the performance or production start date. Four months ahead of the event is recommended. The I visa is the only visa that can be presented directly at the U.S. Consulate without having a petition approval issued by the USCIS in the United States. However, the I visa application must be complete with evidence noted above.

To ensure a timely and successful outcome, it is always wise to consult an immigration attorney experienced in working with these visa types.

Republished with permission by Law360 (subscription required).

4 Reasons Why Companies Can Ask Exempt Employees to Work for ‘Free’

All Resources// HR & Employment

The leaked Urban Outfitters memo asking salaried employees to volunteer one or more weekend shifts at an Urban Outfitters fulfillment center to pick, pack and ship merchandise is really no story at all, despite Internet shaming and sensational claims that Urban Outfitters is making management employees work for “free.”  The request of Urban Outfitters is not unusual; it is just unusual that the request was leaked to the media.  Employers regularly require exempt employees to go over and above a 40-hour work week without additional pay, and this approach is appropriate under wage-hour laws.

And, while some media commentators have dubbed this as “working for free,” the reality is that the employees are not working for free.  They have agreed to work all required hours in exchange for a certain salary.  After all, remember that there are salary requirements for exempt employees, so those who are being asked to “volunteer” are being compensated at a higher pay grade, at or above a salary set by our federal and state governments pursuant to public policy considerations.  Therefore, it is in fact “fair” to ask exempt employees for the extra work—it is an implicit (or explicit) requirement incorporated into their typically larger salaries (right now the pay threshold for exempt status is $455 a week, but if the amendments to the federal Fair Labor Standards Act(FLSA) are implemented as proposed, the minimum will more than double to $970 a week).  The increased responsibility and salary levels of exempt employees also means they likely have more bargaining power in the marketplace and freedom to leave an oppressive employer, so government is less concerned about extra “unpaid” work in their case.

As such, a request for “volunteer” work, like the one made by Urban Outfitters to its exempt staff, is both appropriate and lawful under wage-hour laws.

 1. Employees who are exempt can work over 40 hours without additional compensation.

Here’s why: the FLSA and state fair labor standards legislation requires employees who work more than 40 hours in any work week to be paid time-and-a-half for those hours.  There is an exemption for certain employees, such as white-collar employees like administrative and executive professionals.  Assuming those employees receive at least certain pre-determined salaries and have certain significant and responsible job duties (aka, are classified correctly), the employers can ask (or even require) the employees to work more than 40 hours a week and do not have to pay any sort of extra compensation.  Exempt employees take customers to dinner after hours without additional compensation.  They answer after-hour calls and emails without additional compensation.  This happens all the time.  And, it’s legal.  Of course, the employer should be sure the employee is actually exempt before requesting additional work so as not to inadvertently violate wage-hour law.

2. Volunteering for additional work does not change the employee’s primary duty.

Exempt employees who “volunteer” for  production type duties (e.g. pick, pack, and ship merchandise) do not have their jobs transformed into hourly non-exempt jobs as long as their primary duty remains exempt.  Primary duty means the employee’s main or most important duty.  For the administrative exemption, the primary duty is non-manual work related to management where the employee exercises discretion with respect to matters of significance.  For the executive exemption, the primary duty is management, where the employee directs the work of others, has input into subordinates’ employment status, and has discretionary authority.  Yes, the Urban Outfitters exempt employees who volunteer for warehouse duties will not be exercising their exempt responsibilities while working on the production line, but that does not mean their overall jobs become non-exempt.  A manager at a fast food restaurant does not become non-exempt simply because he flips burgers during busy periods.  His primary duty remains management – that is his most important job.

3. Production work doubles as leadership training for exempt workers.

In addition, non-exempt work, such as warehouse work, gives exempt workers an insight into what hourly employees do on a daily basis.  The exempt employees could very well be making decisions about non-exempt jobs.  Rolling up their sleeves to help might provide a real eye-opening education for how hard the hourly employees work and how decisions by exempt  personnel affect those hourly workers.  This could be valuable training for managers, administrators and professionals.  Also, isn’t rolling up your sleeves to perform “undesirable” tasks one definition of leadership?  Leaders should not be above any task, no matter how “menial.”

4. ‘Volunteer’ work can reduce overtime.

Reducing overtime of hourly workers by asking exempt employees to pitch in, as long as the company does it legally, is a perfectly legitimate business decision.  While adding white collar employees to production lines or requesting their assistance in warehouses may actually impede the pace of work, as the white collar employees might well require additional instruction and direction, a company could legally choose to ask for “volunteer” time even if the reason is to reduce the overtime costs associated with using hourly workers.  The employer would just need to be sure that it did not request so much “volunteer” non-exempt work so as to eviscerate an exemption, by turning production/warehouse work into a primary duty.

What Employers Must Know About Wage and Hour Law

All Resources// HR & Employment

This year, according to a recent Syracuse University study, federal courts are on track to handle a record number of wage-and-hour lawsuits stemming from violations of the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, and other employment standards that impact workers. Two common types of FLSA lawsuits relate to overtime pay owed to non-exempt employees, and to employees who are misclassified as independent contractors. The Department of Labor (DOL) addressed these issues, respectively, with a June 30 proposed rule that recommends changes to the “white collar” exemptions from overtime requirements, and a July 15 guidance on how to identify employees who are misclassified as independent contractors.

Still, for employers, the path to compliance isn’t always clear. To get a better understanding of how companies can avoid running afoul of the FLSA, I spoke with Carlton Fields labor and employment lawyer Cathleen Bell Bremmer.

What’s behind the increase in wage-and-hour lawsuits?

There are several possible reasons for the increase. These include changes in the way people work. For example, more people are working remotely and at all hours partly due to technology, and freelance and independent contractor work arrangements have become more common. The result is greater uncertainty about how the law applies. Additionally, the FLSA is almost a kind of strict liability statute in that the employer either does, or does not, classify workers properly. So, for plaintiffs’ attorneys, these lawsuits are easier to bring than employment bias suits. And, the Obama Administration has prioritized worker protection, as the DOL initiatives show.

How do worker misclassification claims arise?

There are a couple of different types. One is where a company improperly classifies employees as ‘exempt’ from the requirement that they be paid overtime for hours worked in excess of 40 per week. In these cases, the employer incorrectly considers the employees ‘exempt’ because their role is deemed to meet the regulations’ administrative, executive, professional, or highly compensated exemptions, or because the employers incorrectly classify outside sales or certain computer positions.

The other misclassification issue relates to employees who are improperly hired and paid as independent contractors. This issue gets lots of notice from the DOL because, when a worker is classified as an independent contractor, the employer pays no payroll taxes, and no social security or FICA contributions are made on the employee’s behalf. The loss of taxing revenue, in particular, is significant to government agencies.

What are the DOL’s proposed changes to the rule regarding exemptions from overtime requirements?

Currently, workers are exempt from overtime requirements if they otherwise meet the job duties specified in the regulations for the exemptions and

they make at least $455 per week—or an annualized salary of $23,660. The DOL wants to raise the minimum salary cap so that workers don’t become exempt unless they make at least $970 per week—or an annualized salary of $50,440. Basically, employers will have to pay overtime to any currently exempt employee who is not paid the proposed minimum salary, regardless of the employee’s job duties and responsibilities.

Do you expect any industries to be particularly hard hit by the change?

The retail and hospitality industries are expected to especially feel the impact. But regardless of industry, the change will generally affect mid-to-lower level supervisors, whose salaries don’t hit the DOL’s new ‘magic number.’

When is the rule expected to take effect?

Ambitiously, the DOL is looking at January 2016. Pursuant to the rulemaking process, the DOL’s wage and hour division proposed the rule, then opened it up for a 60-day notice and comment period, which closed in early September. Although proposed commenters petitioned for a longer period, the DOL refused to extend it. So now the DOL will review and consider—but not necessarily follow—all of the comments and issue a final rule. There’s an obvious push to get this done while the current Administration is still in office.

What kind of impact would this change have on employers?

It’s expected to affect some 4.6 million employees. So, for employers, that will mean increased wage costs as they will either have to increase the starting or minimum salary of their already-exempt employees, or employers will have to re-classify their employees as non-exempt if they decide, from a cost-benefit perspective, that it’s better to pay them on an hourly basis with overtime. There will also be increased record-keeping costs because employers will need to keep much more detailed records of the hours worked by non-exempt employees. On the other hand, the DOL said it expects related lawsuits to decrease because the increased salary level test will provide for less ambiguity as failure to meet the salary threshold will make any evaluation of the subjective duties requirements of the exemptions unnecessary.

Regarding the independent contractor issue, what does the DOL’s guidance deem important for employers to consider when classifying workers?

Independent contractors can be helpful for one-off or special projects that don’t relate to what your business does on a daily basis. For example, if you run a  computer programming or software design firm, you don’t hire independent contractors to do computer programming or software design. But if you are a catering company, you could hire a contractor to set up a billing system because  your business is preparing and delivering food, not billing. Overall, a key inquiry is whether the worker is economically dependent on the employer, and is therefore an employee, or is in business for him or herself, and therefore a contractor. There’s got to be a potential economic downside for the contractor, who could, conceivably lose money on the deal.

Which is a bigger issue for employers, exemptions from overtime requirements or the misclassification of employees as independent contractors?

It’s very employer-specific, and really depends on your workforce. For example, some employers don’t even use independent contractors, so they don’t have that issue. However, the Administration isn’t really doing anything new when it comes to independent contractors. That issue will always exist. But the proposed new salary test for overtime will create an objective change that affects 4.6 workers. That’s a big deal.

When it comes to FLSA lawsuits in general, are any types of companies especially vulnerable?

While any size company can get hit with these lawsuits—Halliburton recently agreed to pay $18 million in overtime for workers who were misclassified as exempt—startups and smaller-to-midsized companies often face particular challenges.

For example, in a startup, an employee may wear many hats, handling their area of specialty, plus HR. But they may not know or understand the intricacies of the labor laws, which can get them into trouble. Smaller companies are also more inclined to ‘try before they buy,’ bringing on workers as so-called independent contractors when they are really working side-by-side with employees and should be classified as such.

9 Things Employees Should Do to Prevent Data Breaches

All Resources// Cybersecurity// HR & Employment

Businesses are facing increased financial burdens due to the rise in data breaches caused by malicious and criminal attacks. In addition to the obvious costs incurred to detect and fix the effects of a breach, lost business is potentially the most severe consequence. And lost business can translate into lost jobs. It is often said that it takes a village to defend against cyberattacks. Employees of every organization must realize that they are members of that village, and need to do their part to protect their employer. Avoiding employee mistakes that lead to inadvertent failures will free up valuable resources to fight the bad guys—and may save your job.

The sooner an incident response starts, the greater the chance of managing the incident successfully and minimizing any damage…

Employees should adopt the following “safe” practices to minimize their mistakes and help thwart criminals:

1. Avoid Password Re-Use

  • Use a different password for each system you access, and make it secure and complex—for example, don’t just increase a numeric value as you change systems.
  • Use a password manager (for example, LastPass, 1Password, or KeePass) to manage your passwords, and ensure you use a complex passphrase for the password manager.
  • Specifically, don’t use your work username/password combination for personal systems.

User awareness of the dangers of password re-use has evolved. For instance a 2003 report indicated 65 percent of users used the same password for different applications or services. By 2013, that figure reportedly fell to 55 percent. Password re-use is one of the single biggest threats to account security if two-factor authentication is not used. Consider the recent Ashley Madison data breach that allowed more than 11 million username and password combinations to be released into the wild. The threat, if those passwords and usernames were also used to access those users’ email, bank, or other system accounts, is obvious and far exceeds exposure and embarrassment.

The 2015 Verizon Data Breach Report, as quoted in an IT industry blog, said “… we find that most of the attacks make use of stolen credentials…” and “Over 95% of these incidents involve harvesting creds [sic] from customer devices, then logging in to web applications with them.”

2. Where Possible, Use Multi-Factor Authentication

Your employer may require this for your corporate systems, but increasingly it is also available for personal systems. Google Two-Step Verification is available for Android and Apple phones/tablets, and provides two-factor authentication to Google applications. For instance, increasingly, work and personal matters intermingle in electronic messages and documents. Multi-factor authentication provides another barrier against having one username and password provide access to multiple systems.

3. Don’t Click That Link!

Your bank will never email you a link that asks you to enter your name, social security number, and password into a form full of spelling mistakes. These requests are as suspect as pleas from Nigerian princes. In 2015, phishing, spear phishing, and ransomware attacks have been prevalent across all types of businesses and companies. Some look more real than ever.

Instead of following emailed instructions to call or click, you should generally go directly to your bank’s website or call from a number you have (perhaps found on the back of a credit or debit card). Phishing and spear phishing are used to collect data or propagate malware.

4. Change Your Passwords Regularly

Even with two-factor authentication, passwords remain the first line of defense. Use your password manager, and change your passwords every 90 days. Some password managers will automate this for you, going through all your saved sites and changing the current complex password to a new one, and storing that information for you in the password manager database. Why does this matter? Let’s consider the Ashley Madison breach again—the username and password combinations are available. The passwords are encrypted, but given enough time and computer power, they will be decrypted (more than 11 million have been so far, as noted earlier). If you use a complex password and change it regularly, you will ideally be using a new password by the time a breach occurs and your old password is broken.

5. Practice Safe Wi-Fi

If you use a computer, cellphone, or tablet on a public Wi-Fi, are you secure? Usually, perhaps. But cheap technology exists to create fake Wi-Fi hotspots that capture your network traffic, usernames, and passwords. Consider investing in a personal VPN, or ask your IS/IT department about access to a corporate one. This tool will encrypt your network traffic at its source, before pushing it out over an unencrypted, and potentially compromised, public Wi-Fi network. This guidance applies at coffee shops, train stations, airports, shopping malls, and anywhere else with “free” Wi-Fi. In these places, think carefully about transmitting a username and password without additional protection.

6. Keep Your Devices Close and Consider Their Contents

If you lose a cellphone, do you have the ability to wipe its contents? What if its data is compromised before you can do that? Always know the location of your phone, tablet, computer, etc. Know whether you’ve set up “Find My iPhone”—or a similar remote location tracking app or service—and how to use it. Your company may be able to lock or wipe your phone as well, you’ll have to ask. Similarly, while you probably do need to have all of your company contact details on your phone, consider whether you really need complete copies of all your corporate data. Perhaps you only need the information you’re currently working on. Consider using secure cloud storage services, or keeping your data on corporate servers, and accessing it remotely, rather than downloading it locally.

7. Patch Baby, Patch!

Your company is (hopefully) patching your computer regularly—you should do the same for your home computer(s)—and also do software updates for your cellphones and tablets. Undisclosed and uncorrected computer application vulnerabilities are an ever-present threat, and may involve additional patches out of sequence to the usual patch release cycle. This kind of threat is usually well publicized across the web. Turning on automatic updates and/or notifications on your computer and other devices may also help.

8. Remember the Physical World!

Walking away from your computer to get a cup of coffee? Lock the screen. Put a lock code on your cell phone. Don’t leave devices unattended in public spaces—you risk their physical theft, and exposing sensitive company information.

Bank statements? Credit card bills? Utility bills? If you’re not keeping them, don’t just throw them away, shred them. At your office, don’t throw away anything that includes company information, such as sales figures, contact information, and marketing plans. Shredding should be your default option. Harvesting information from improperly disposed of paper is one form of information gathering used for identity theft or systems breaching.

9. Notify Early

If you think a breach or other failure has occurred, talk to somebody, such as your computer security officer or CIO, or call your bank’s fraud hotline. The sooner an incident response starts, the greater the chance of managing the incident successfully and minimizing any damage. The Verizon DBIR mentioned earlier also notes that attackers who get into a system can be there for up to 205 days on average before their presence is known. That number can be brought down through vigilance and reporting anything that appears unusual. Perhaps your user account was locked out when you got to work today. It may, or may not, mean something.

So, talk to your security team.

We all love being able to access the Internet during the work day. But as attacks continue and losses increase, employers may be forced to limit such access in ways that most employees will find inconvenient. Therefore, employees should take seriously the importance of their efforts in “cyberhygiene.”

Originally published by JD Supra Perspectives.

How a Monthly Lunch Can Protect Your Company in a Data Breach

All Resources// Cybersecurity// HR & Employment

After hackers steal customers’ credit card numbers or a company’s trade secrets, it is far too late for the corporate chiefs of public relations and information technology to learn one another’s names and responsibilities.

That’s why, based on our experience as legal counsel to companies in crisis, we recommend that a company’s senior PR person should have regular monthly lunches with its head of IT security.

Here, we explain why the IT-PR relationship is critical for an effective media response to a data breach.

A Careful Strategy

Without a careful PR strategy, even a routine data breach can morph into a consumer class action, a regulatory investigation and a two-hour CNN special. During a crisis, if the corporate spokesperson lacks a basic IT vocabulary or if IT staffers speak to the press without preparation from the PR department, then a company’s public statements will be uninformed, rambling or rogue — rather than accurate, on-message and approved. Soon, even a breach that a company’s IT professionals have already detected, assessed and remediated can morph into a disaster for the corporate reputation. And the PR department would bear the blame.

One example is the December 2013 data breach at Target, in which hackers accessed the credit card information of 40 million customers and the data files of 70 million customers during the holiday season by infiltrating checkout machines with malware.

Target, exhibiting signs of a brushfire mentality, had to correct various initial statements regarding the breach’s scope, duration and data types. In particular, Target did not clarify that different types of information were accessed for individual consumers over a period of time. Within six months, both the CEO and the chief information officer had resigned, and litigation had increased.

Home Depot disclosed a similar “point-of-sale” data breach in September 2014. The hack was similar in size and scope to Target’s, but lasted longer. Unlike Target, Home Depot initially disclosed limited information about the breach, by announcing that the company was investigating a data breach. Home Depot exhibited greater press discipline and didn’t make any outside communications until the company had a coordinated message. And when Home Depot updated the press on its investigation, it only announced solid information. This example reinforces the idea that waiting to say something meaningful beats  saying something wrong nine times out of 10.

A Focus on Education

One culprit behind poor data breach responses is a lack of effective communication between a company’s PR experts and its IT department. Their résumés, backgrounds and cultures differ. Public relations works with wire services, buzzing phones and need-it-yesterday requests for quotes. IT works with systems updates, multiple monitors and all-night coding sessions. But when a data breach engulfs a company, silos don’t serve anyone.

For these reasons, a company’s senior PR person — the person designated as communications lead during a data breach — should regularly connect with its head of IT security. Monthly lunches provide a great environment for these meetings, where there are several goals to keep in mind.

Educate the spokesperson about:

  • What data the company maintains
  • What steps the IT team has taken to safeguard against data loss
  • What the most likely threats are to that data and how the company would learn of an attack, if it occurred

Educate the IT chief about:

  • The responsibilities of the company’s PR professionals and the impact of the company’s public messaging on its bottom line
  • The types of media that cover the company
  • The company’s media strategy related to data breaches, how to direct media inquiries, who from IT will interface with PR and vice versa, and whether the company will use an outside agency

The paramount goal is to build “top-to-top” trust and rapport between the two departments.

An Improved Relationship

There are also several benefits of this improved relationship:

  • Avoids a situation where the IT head has to contain a data breach in real time, while explaining the company’s sensitive network infrastructure to a stranger, who must then transform that explanation into an educated public message
  • Allows the spokesperson to ask follow-up questions in a non-crisis environment, translate the tech language into effective sound bites and draft a better PR strategy for data-loss events
  • Ensures that IT deploys its finite budget to protect against the types of data breaches that would most impact the company’s reputation
  • Builds a confident, knowledgeable spokesperson — arguably one of the most effective ways to fortify the confidence of a company’s customers and investors after a data loss, and reverses or blunts a negative news cycle

Mindful planning cannot stop a breach, but it can result in a well-managed one. The short-term impact of an individual company’s media response to a data breach can make the difference in consumers’ confidence in that company in the long term.

Copyright 2015 by Public Relations Tactics. Reprinted with permission from the Public Relations Society of America (PRSA.org).

Unpaid Internships: Tips for Avoiding Legal Liability

All Resources// HR & Employment

Unpaid internships present companies with potential legal exposure, as shown by several recent, well-publicized legal victories for interns, including one against NBC, which ultimately paid out millions of dollars. To help avoid liability, companies must comply with the Fair Labor Standards Act (FLSA), which permits unpaid internships under certain limited circumstances. While the FLSA applies to both for-profit and non-profit entities, it only becomes relevant if an employment relationship (between an employer and an employee) exists.

To determine whether an employment relationship exists for FLSA purposes, courts look at the ‘economic realities’ of the individual case (i.e., worker’s economic dependence on the alleged employer). The U.S. Supreme Court has not addressed whether student interns are ‘employees’ for purposes of the FLSA. However, the Supreme Court has considered a related question—in the context of trainees in a company’s own training program—and determined that the FLSA does not define the employment relationship so broadly as to render all who provide any kind of service employees. See Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947). Since then, courts have applied thePortland Terminal holding in the student intern context.

Portland Terminal

In Portland Terminal, a railroad gave prospective brakemen a seven- or eight-day preliminary training course. There were no classrooms. Under a yard crew’s supervision, the trainees first observed the work and then performed it. Those who successfully completed the course formed a pool of workers available to the railroad as openings occurred. The trainees were not paid for the training period.

The Supreme Court found that, because the trainees were not employees under the FLSA, they were not entitled to compensation for their training. Although the trainees performed “work in the kind of activities covered by the [FLSA],” they still had to prove they were “employees.” In that regard, the court looked at the relative benefits of the training program to the trainees and the railroad. Id. at 150.

The court found that the trainees’ “work does not expedite the company business, but may, and sometimes does, actually impede it.” Id. at 150. Clearly, there is no employment relationship if the business “receive[s] no ‘immediate advantage’ from any work done by the trainees,” or if the trainees are “work[ing] for their own advantage.” Id. at 152-53. That is because the FLSA “was not intended to penalize [businesses] for providing, free of charge, the same kind of instruction [as a school] at a place and in a manner which would most greatly benefit the trainees.” Id. at 153. Otherwise, “all students would be employees of the school or college they attended,” and everyone who performed work for others (but for their own personal purposes) would be entitled to wages. Id. at 152. So, although the trainees performed hands-on work during the training period, and the railroad created a pool of trained brakemen from which it could hire as openings arose, the Supreme Court held the trainees were not “employees.”

Applying Portland Terminal, courts have found that no employment relationship exists for students where: the work is an extension of studies and the intern received course credit and a grade for the work; the intern’s performance of actual work at the facility is the central purpose of the internship; no compensation was contemplated or paid; the facility received very little benefit from the intern’s work in that the intern did not displace a paid worker and did not lighten the workload for other workers; and the business had to supervise the intern’s work, provide feedback and training as needed; and answer the intern’s questions. Some courts, including appellate courts in the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee) and Second Circuit (Connecticut, New York, and Vermont), have said this analysis, and Portland Terminal, create a “primary benefit” test: Whether the primary benefit of the internship was to the student or the business. See e.g., Solis v. Laurelbrook Sanitarium & School, Inc., 642 F.3d 525, 526, 528-29 (6th Cir. 2011); Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376, 383 (2d Cir. 2015).

The DOL’s Position on Unpaid Student Internships

The DOL, the agency tasked with implementing regulations for the FLSA, has stated in the context of student interns, that no employment relationship should be found where the student receives credit toward graduation for the internship and the internship provides real life experiences unobtainable in the classroom setting. To analyze the student intern relationship, it also developed a six-factor test, which is intended to evaluate the relationship’s economic realities consistent with Portland Terminal.

Some courts use the DOL factors as a guide in evaluating whether an employment relationship has been formed. Others do not use them at all, finding them overly rigid and inconsistent with Portland Terminal.

The factors are:

  1. the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
  2. the training is for the benefit of the trainees or students;
  3. the trainees or students do not displace regular employees, but work under their close observation;
  4. the employer that provides the training derives no immediate advantage from the activities of the trainees or students; and on occasion its operations may actually be impeded;
  5. the trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
  6. the employer and the trainees or students understand that the trainees are not entitled to wages for the time spent in training.

Student Intern Programs: Best Practices

While there is no sure way to prove that an employment relationship does not exist, the court will weigh the following factors in the event of a lawsuit:

  • College credit. If student interns receive college credit, that will be enormously helpful to a company’s position that no employment relationship exists. In fact, the DOL has stated that if the intern receives college credit, the primary benefit inures to the student thereby satisfying factor No. 2 of its test.
  • Educational experience. Ensuring that the internship is an educational experience will also help a company’s case. For example, obtain course materials and a syllabus from the student’s school; speak to school instructors about the intern’s assigned tasks to ensure that the school believes the tasks have educational value; and maintain contact with the school, providing updates on the interns’ work and evaluations of their projects. Consider inviting school representatives to visit your premises to observe the students at work and get the representatives’ feedback on the interns’ assignments. Also, to the extent the school has internship requirements, be sure the program meets them. If the dates of work correspond to the academic calendar, that is helpful. The internship should not last so long that the work becomes overly repetitive and lacking in further educational advancement.
  • Indicia of employment. To the extent the school can select your company’s interns, this “take what you get” approach is beneficial because your interviews of students would be classic indicia of employment. Also, allowing students to choose their own work hours and days militates against a finding of employment because most employers establish an employee’s dates and hours of work.
  • Hands-on Training. Keep the focus on skills that are transferable within the applicable industry, not just on those solely related to your company’s operation. The key is to emphasize teaching and observing the students. Make an employee responsible for the students’ tasks and require the employee to double-check their work. Field trips and guest speakers may be appropriate.
  • Displacement. Be careful not to delegate duties to students that would allow your employees to devote time to other matters. It must not appear that students have displaced any employee.
  • Supervision and Feedback. The more supervision and feedback your company can provide, the better. Monitor the students, answer their questions, provide guidance, and give them frequent written evaluations. These evaluations need not be time-consuming. Work with your lawyer to create a standardized form. Students could evaluate their own work, detailing what they learned during the project and internship.
  • No post-internship employment. Explain to the students that they are not guaranteed a job after the internship. Your lawyer can help you draft a form that students sign upon starting the internship.
  • No payment. The form should include the student’s signed acknowledgment that the internship is unpaid.

To the extent a company can show that its internship program is consistent with these factors, it will have a strong—albeit not risk-free—defense to any FLSA claim.

  • Go to page 1
  • Go to page 2
  • Next Page →

Footer

The Latest Documents & Resources Straight to your Inbox!

Expand your knowledge with documents, articles, interviews, and updates that impact your startup company.
Sending

© 2016–2021 Carlton Fields, P.A. · Carlton Fields practices law in California as Carlton Fields, LLP · All Rights Reserved · Privacy Policy · Disclaimer · Contact

Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please contact us. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites. This site may be considered attorney advertising in some jurisdictions.

  • English
  • Español