Tread Carefully on Independent Contractor Classifications

Employers should carefully review their practice of classifying a worker as an independent contractor. The increased scrutiny over worker misclassifications is spreading across the country, as states are grappling with how to attract a modern workforce and prevent employers from misclassifying workers to avoid some of the burdens of conventional employment.

California is a stark example. Earlier this month, the 9th Circuit Court of Appeals ruled that California’s stringent test adopted in 2018 for determining whether a worker is appropriately classified as an independent contractor applies retroactively. This means that employers may be forced to pay for lost wages and other benefits that were not paid to an independent contractor who should have been classified as an employee under the new law even if the employer fixed the misclassification after the new law was adopted. This has serious implications for a business with independent contractors in California.

Here at home, the law has not changed, at least not yet. But Wisconsin Governor Evers recently created the Joint Enforcement Task Force on Payroll Fraud and Worker Misclassification. Its stated purpose is to address the purported problem of employers classifying workers as independent contractors when they should be employees. Among other things, the Task Force will facilitate the coordination of state agencies involved in investigations and enforcement activities and recommend any necessary changes to current state law.

Wisconsin employers should expect a potential increase in investigations and enforcement actions as a result of the work by the Task Force. The state agencies involved are interested not only in recoupment of wages to workers but also in unpaid taxes to the state.

The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to assist and advise if you have questions related to independent contractors and other worker classification matters. Contact us at info@le-hrlaw.com or 1-844-333-5253.

U.S. Supreme Court to Rule on LGBTQIA Workplace Protections

The United States Supreme Court recently announced that it will hear three cases that address whether Title VII of the Civil Rights Act applies to workplace discrimination claims based on sexual orientation and gender identity. Two consolidated cases from the 2nd Circuit (CT, NY, and VT) and 11th Circuit (AL, FL, and GA) involve discrimination claims based on sexual orientation and transgender issues. In Zarda v. Altitude Express, Inc., the Second Circuit held that sexual orientation discrimination is motivated by sex and thus is a form of sex discrimination under Title VII. In Bostock v. Clayton County Board of Commissioners, the Eleventh Circuit reached the opposite conclusion, ruling that “[d]ischarge for homosexuality is not prohibited by Title VII.” Bostock, 723 F. App’x 964, 965 (11th Cir. 2018).

The third case that will be heard by the Supreme Court comes out of the Sixth Circuit. In Equal Employment Opportunity Comm’n v. R.G. &. G.R. Harris Funeral Homes, Inc., 884 F.3d 560 (6th Cir. 2018), the court ruled that Title VII bars discrimination based on a person being transgender. The court explained, “It is analytically impossible to fire an employee based on that employee’s status as a transgender person without being motivated, at least in part, by the employee’s sex.” Equal Employment Opportunity Comm’n, 884 F.3d 560, 575 (6th Cir. 2018).

According to recent polling by PRRI, 69% of Americans favor anti-discrimination laws that protect LGBTQIA employees from discrimination in the workplace. The current administration, however, opposes any such protection. In the face of this tension, the Supreme Court’s upcoming decisions in these cases will be closely watched. They will likewise have sweeping impact across the county, much like Obergefell v. Hodges, the landmark civil rights case in which the U.S. Supreme Court ruled that the fundamental right to marry extends to same-sex couples.

Employers in Madison will likely welcome greater certainty on this issue at the federal level. The Wisconsin Fair Employment Act, which is the state-wide statute covering workplace discrimination and harassment, considers discrimination based on sexual orientation to be a form of sexual discrimination, but does not yet prohibit discrimination based on gender identity. The Madison Equal Opportunities Ordinance is more expansive and expressly prohibits discrimination on the basis of sexual orientation and gender identity.

The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to assist and advise if you have questions related to workplace discrimination, or you want assistance with professional development or respectful workplace training. Contact us here or call 844-333-5253 (LAKE).

You’ve Got Mail… Gulp!

This March, employers around the country began receiving letters, the likes of which they have not seen in 7 years. These letters are not so affectionately known as “Social Security No Match Letters,” but are officially referred to as “Employer Correction Request Notices (EDCOR)” by the Social Security Administration. A sample can be found here.

In a significant departure from past practice, the letters do not include the names or social security numbers of employees with a mismatched SSN. To obtain this information, employers must register with the SSA’s Business Services Online (BSO).

Employers should be proactive if they receive a no match letter and promptly contact a trusted legal or HR advisor about the appropriate next steps. Those next steps should include:

  • Registering with the SSA’s BSO;
  • Checking the employer’s records for a clerical mistake;
  • Notifying the employee of the mismatch (a sample letter can be found here) and working with the employee to resolve the mismatch

Employees should be given a reasonable amount of time to resolve the mismatch. There is no law or regulation that defines what constitutes a “reasonable” amount of time. However, the U.S. Department of Justice has acknowledged that resolving a mismatched SSN may take some time.

Employers should also be cautious about jumping to conclusions and taking any adverse action against an employee subject to a no match letter. Keep in mind that the mismatch may not always be an indicator that the employee has provided fraudulent social security information. The mismatch may be innocuous, and the result of a data entry error, a change of name due to marriage or divorce, or even the employee’s identity being stolen. Employers may be subject to liability based on employment discrimination for adverse action taken against an employee if that is action is solely based on a no match letter. Employers should wait for the final results of its investigation into the mismatch and hope for the best resolution: correction of the error. If there is a legitimate mismatch, then the employer should consult with HR and employment law advisors to develop a plan of action.

The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to assist and advise if you receive a no match letter, or have questions related to compliance with Social Security Administration laws and regulations. Contact us at www.LE-hrlaw.com or 1-844-333-5253.

Trump Era Proposed Overtime Rule: Hurry Up and Wait

On March 7, 2019, the Department of Labor released a Proposed Overtime Rule that would increase the salary level threshold for positions that are exempt from the overtime provisions of the FLSA from the current $23,660 per year ($455 per week) to $35,308 ($679 per week). While this may seem like a big leap, recall that under President Obama, the proposed increase was even greater, to $47,476 per year ($913 per week).

Rest assured, there is no danger that this change will be implemented tomorrow or anytime in the near future. Procedurally, the Proposed Rule will be published in the Federal Register, and there will be a 60-day period for public comment. After that, the DOL will review the comments, which could take several months. Following DOL’s review, there is likely to be litigation that will also impact the review and implementation of this Proposed Rule. At the conclusion of that entire process, the DOL will develop a Proposed Final Rule and submit its Proposed Final Rule to the White House Office of Management and Budget (OMB) for still more review. As a point of reference, in 2016, the OMB’s review of the Obama era Proposed Final Rule took nearly 2 months. Even after a proposed Final Rule is released, the DOL will likely give employers 120 to 180 days before the Final Rule becomes effective. All of this means that we are months and months away from a Final Overtime Rule implementing a salary level threshold increase. Keep in mind, we will also have a federal election in the fall of 2020. Certainly, the Trump Administration will want its Final Rule in place before then, but it could run into the same problem as the Obama era Final Rule – a change of administration may derail its plans.

What does this potential salary level threshold increase mean for employers and employees? It means that any employees who earn below the $35,308 per year threshold will be reclassified as non-exempt and eligible to receive overtime pay for hours worked in excess of 40 hours per work week. Unlike the Obama era Final Rule, the Proposed Rule does not call for automatic and regular increases to the salary threshold on an ongoing basis. Also, keep in mind that simply increasing an employee’s pay to at or aboe the $35,308 threshold does not automatically mean the employee or position is exempt from overtime pay requirements. To be exempt, the employee's job duties also must satisfy one of the duties tests set forth in the Fair Labor Standards Act and/or your state wage and hour laws.

Given the uncertainty of the landscape relating to yesterday’s proposed Final Overtime Rule, what should employers do to prepare?

  • Conduct an internal audit to gain a sense of how many employees’ annual salaries fall between $23,660 and $35,308. This will identify the pool of potentially affected employees and the possible financial impact to the organization in the event you decide to increase salaries to satisfy the proposed new threshold.
  • Remember the second prong of federal exemption testing: duties. Work with your in-house HR Department or external HR and employment law advisors to assess the duties of the employees in the pool to determine if their duties satisfy any of the FLSA exemptions. If they do not, the organization may need to reclassify the position as non-exempt and start paying those employees overtime – if and when the Final Rule is implemented and effective.
  • Sit tight and wait to see what the Proposed Final Rule is after the comment period and likely litigation. Lake Effect will continue to keep you apprised on the status of a Final Rule.

The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to assist and advise as your organization conducts its exemption audit. Contact us or 1-844-333-5253.

It’s Not Exactly a Snow Day

Here in Wisconsin, the USPS is not delivering mail, schools, government offices, malls and restaurants are closed, and UW has cancelled classes…Nobody is going outside to work or play in -50° F wind chills, except for those who are keeping us warm and safe! If we aren’t going to work or playing outside, how many of us are working remotely today?

If many of your employees are taking advantage of remote work today, this may be a great time to create or update your Inclement Weather Policy. Over the years, we have been very fortunate in Wisconsin to have not had many reasons to close our offices other than snow, until last year when we saw state-wide flooding. Consider expanding your inclement weather policy to involve other emergency closings, an explanation of how employees will be paid and factors to consider when working remotely.

The Lake Effect team is here to help you draft a compliant inclement weather policy and other employment-related policies aligned with your organization’s culture, concern for employees’ safety, and your operational productivity goals. When reviewing your policy consider the following:

  • Parameters to determine when the office will be closed
  • Mechanisms to communicate office closures, keeping in mind possible power outages at home
  • Determination of which employees will have the ability to work remotely
  • Consideration of Wage and Hour laws and regulations
  • Compensation of employees for working remotely -- or not working
  • Employee use of paid time off
  • Impact of weather-related absences on attendance records

Contact the attorneys or HR professionals at Lake Effect HR & Law to help guide you through the storm.

New Year’s Resolutions

As we turn the calendar page to January 2019, it's the perfect time to review your company's HR policies and practices to make sure this year is an even better one for your employees and your organization as a whole. Lake Effect HR Advisors and Employment Lawyers are here to support and advise your team and you throughout the year!

Here are our recommended HR Resolutions for 2019:

  1. Annual Employee Handbook Update – Make those changes you have been mulling over for the past few years. While you are at it, have an HR and legal review to:
    1. ensure compliance with all states in which you now have employees;
    2. incorporate current trends that fit your organization;
    3. bring new life to your handbook so that it reflects your organizational culture, voice, mission and strategic vision.
  2. Anti-Harassment & Respectful Workplace Training - Review your anti-harassment policy and procedures and educate your team on the updated policy, including reporting procedures, possible outcomes, the pitfalls of retaliation, acceptable workplace conduct, appreciation, and respect.
  3. Personal Professional Development - Develop a coaching & development process that supports your culture, mission, vision and organizational goals. This investment benefits the employee, the team and the entire organization in the short and long term.
  4. Group Professional Development - Develop a training curriculum that strengthens your team’s people skills; develops their management skills; and reflects your policies, procedures and expectations.
  5. Employee Engagement – Strengthen communication in your workplace using myEverything DiSC to create a common language your team members can use to understand one-another's motivators, priorities and reactions to conflict in the workplace.

For more information or to set up an appointment, contact us today.

Lake Effect HR & Law, LLC
(844) 333-5253 (LAKE)
info@le-hrlaw.com

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