With so much focus in Washington on stemming illegal immigration and the erosion of job opportunities for U.S. citizens, chances appear better than ever that the E-Verify system will become mandatory. President Trump’s 2018 budget proposal includes funds to upgrade the system so that it can handle greater capacity, that is, if Congress authorizes requiring businesses to use it.

California’s View of E-Verify

Often following the beat of a different drummer, the state of California has passed its own laws limiting the use of the federal immigration status verification system known as E-Verify.

In 2011, California passed the Employment Acceleration Act, which prohibits state agencies, cities, and counties from requiring private employers to use the federal system in most cases. Exceptions include where the use of E-Verify is mandatory by federal law, or when using the system is a condition necessary to receive federal funds. Previously, in some areas of California, city contractors and businesses within city limits were also required to use E-Verify. Voluntary use for private employers is permitted.

Effective January 1, 2016, Assembly Bill 622 set forth stiff civil penalties of up to $10,000 for each separate occurrence of misuse of the E-Verify system. Violations include actions such as:

• Using the system to verify the status of existing employees,
• Using the system to verify the status of job applicants before an offer of employment has been made, and
• Failing to give an individual a Tentative Nonconformation notice, as soon as reasonably possible, when such notice has been received after attempting to verify status.

Given the fact that violations can quickly result in significant penalties, California employers using the E-Verify system should review their practices to ensure compliance.

Background: E-Verify is currently a voluntary federally administered electronic system designed to help employers verify the work eligibility and citizenship status of job applicants and employees. Its purpose is to alert users when the Social Security number supplied by an individual is already in use by someone else. After an initial pilot phase that began in 1996, it became available to employers in all states in 2001.

Where Verification is Mandatory

Today, nine states — Alabama, Arizona, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and Utah — require that most employers use E-Verify. Federal contractors also must use the system. A handful of other states require that public employers or contractors doing business with state or local governments use E-Verify.

Even so, only about 10% of employers use the system. Of those, 60% do so because they are required to by law. Yet about 90% of employers recently polled by the Society for Human Resource Management (SHRM) said they would support a mandate to use E-Verify or a similar system, subject to certain changes in the existing program.

What Employers Want

High on employers’ wish list of possible changes to the E-Verify system is that using it would take the place of the Form I-9, “Employment Eligibility Verification,” the paper-based system created for the same purpose. Current users of E-Verify are still required to collect I-9s from employees, just like everyone else.

Additional changes sought by employers point to issues they would face now if E-Verify were made mandatory in its current form, including:

• A strong “safe harbor” protecting employers from accusations of wrongdoing if they use the system in good faith,
• Removal of any potential liability for employment-based discrimination charges in conjunction with its administration of E-Verify, and
• Provision of a set time period for resolving work authorization disputes.

Another concern with E-Verify in its present form is that its usefulness is limited. That is, it determines whether information entered into the system — such as name, date of birth and Social Security number — already exists in the government’s database and corresponds to someone who is eligible to work. “What it can’t do is give employers certainty that the people standing before HR are who they say they are,” according to SHRM.

Instead, SHRM proposes the use of a network of “identity verification centers.” These centers are similar to the ones companies use when individuals need to request a new password to gain access to their online accounts. The requester must provide personally identifiable information to prove who they are (such as answers to preset security questions). In an employment setting, employers would be told whether an employee or job applicant has cleared that hurdle.

Also, currently employers that use E-Verify must later verify that the person they just checked out is indeed employed by the company. One reform being proposed is that the system be streamlined by dropping this requirement.

Pending Legislation

The latest version of the “Accountability Through Electronic Verification Act,” was proposed by Senator Charles Grassley (R-Iowa and chairman of the Senate Judiciary Committee) and co-sponsored by nine other senators in January. If passed, it would make E-Verify permanent (though under current law, it must be reauthorized by Congress every two years). It would also address several of the concerns of groups like SHRM.

Here are several of the key provisions of the proposed measure, as described on Congress’ website.

• Employers must: (1) use E-Verify to check the identity and employment eligibility of any individual who hasn’t been previously vetted through E-Verify not later than three years after enactment of this Act (2) re-verify the work authorization of individuals not later than three days after their employment authorization is due to expire, and (3) terminate an employee following receipt of a final E-Verify nonconfirmation. The information provided by the employee must then be submitted to DHS, to assist in enforcing or administering U.S. immigration law.
• The system may be used to verify the identity of individuals before they are hired, recruited or referred if the individual so consents.
• The bill eliminates the Form I-9 process and sets forth the design and operation requirements of the E-Verify system.
• U.S. employers must begin to participate in E-Verify within one year of enactment of this Act; and employers using a contract, subcontract or exchange to obtain labor to certify that they use E-Verify.
• The failure of an employer to use E-Verify shall be treated as a violation of the Immigration and Naturalization Act requirement to verify employment eligibility. It also creates a rebuttable presumption that the employer knowingly hired, recruited or referred an illegal alien.
• The bill increases civil and criminal penalties for specified hiring-related violations, and establishes a good faith civil penalty exemption/reduction for certain hiring-related violations.
• State and local governments may not prohibit employers from using E-Verify to determine the employment eligibility of new hires or current employees.

There’s no guarantee that E-Verify will become the law of the land, and if it does, chances are there will be a lag time before it takes effect. Still, it’s a good idea for companies to review their work-status vetting procedures, as well as the possible implications of what a more foolproof E-Verify system might have for your workforce.

7It’s easy to spot underperformance, but correcting it is a different matter. The fact is, effectively managing your workforce, especially problem employees, just doesn’t come naturally to most people. Here’s some guidance to potentially help turn around an employee who is missing the performance mark.

Tackling the Problem

When an employee is underperforming, begin the performance management process with these two steps:

1. Clearly define the nature and degree of the underperformance.
2. Determine whether you’ve done the best job possible in helping the employee to be successful. For example, is the employee aware that you consider his or her work subpar? Have you put it in writing as well as had discussions with the employee?

Staff members who aren’t sure whether they’re on the right track often wait for feedback, rather than proactively seeking guidance. That means you need to act at the first sign an employee isn’t meeting expectations, rather than hoping the situation will remedy itself.

If the individual has worked under other supervisors in previous jobs within the company, a quick meeting could be productive, before talking with the employee. Describe the issues you’re having, and ask the previous supervisor whether the same type of problems were present in the past. If the answer is “no,” that may help set the agenda for your discussion with the worker. The conversation might proceed along these lines:

1. Clearly and specifically state your performance concerns. For example, in a manufacturing plant, you may need to advise an employee that he or she is habitually falling below the daily production goal.
2. Let the employee know that your objective is to work together to find a solution.
3. After discussing the specific performance issues, ask how you can help the employee turn around the situation, with some possible suggestions in mind. There may be issues you aren’t aware of, such as tools that are in disrepair or missing, or poor lighting in the employee’s workspace. So be open to his or her input.
4. Provide the employee with any written materials you may have — or can put together — about the employee’s tasks and expectations. For example, are there manuals, guides and checklists about how to do the job properly?

If the employee attributes the performance concerns to lack of clarity about expectations, or an inability to prioritize tasks, the remedy might be as simple as regular monthly, weekly or even more frequent meetings to go over what needs to be accomplished before the next meeting.

The discussion could also reveal that the employee, while generally qualified for the position, needs some training to fulfill all the requirements of the job.

Accepting Criticism

How well the worker responds to the initial part of the performance discussion will influence how you wrap it up. If he or she is concerned, cooperative and motivated to improve, you can end with the remedial plan you devise. If, instead, the employee is defensive and unrepentant, giving no indication of a willingness to change, it may be time to describe the consequences of a lack of improvement.

The outcome of the meeting needs to be a concrete and detailed performance improvement plan with milestones. The plan itself may be as simple as a schedule for check-ins and progress assessment meetings.

Job Descriptions

To determine the milestones, go back to the written job description to see if it’s clear enough. Depending on the job, measuring progress may be easy, such as by seeking a higher output rate for a standard unit of product or service. Of course, it’s not always that easy, and it may require some serious thought. Whatever you decide, don’t leave this unaddressed. It’s not enough to say “I’ll know good performance when I see it.”

The clearer the job description, the easier it is to hold employees accountable for specific performance metrics. Take a look to see if it provides a framework you can use for measuring progress. If it doesn’t, it should be revised. An example of a metric for progress that’s harder to measure — let’s say, for an office assistant –— might be something like this: Within the first 90 days of employment, complete cross-training with the receptionist so you can efficiently fill that position as needed.

Follow-up discussions to look at performance improvement should be just that — discussions, not lectures. Before offering your assessments, seek the employee’s own opinion of his or her progress. You may see more improvement than the employee does, and that can give you an opportunity to encourage him or her with a little praise.

The worst mistake you can make in an employee turnaround effort is to lay out a detailed remediation plan, then neglect to follow up and review progress with the employee. That’s especially true if you promise adverse consequences for a lack of improvement and then nothing happens. Failing to follow up wastes everyone’s time, and the employee may either conclude you weren’t serious to begin with, or that he or she has improved enough.

When Your Best Efforts Fail

Doing all the right things to try to turn an underperforming employee into a valued worker is no guarantee of success, of course. After you’ve given it your best shot, you may decide the employee just isn’t right for his or her current role. Is there another area in the company that seems like a better fit? If so, explore the possibilities with other managers and then with the worker.

If the employee simply isn’t salvageable to work for your company at all, act promptly. The former employee will probably be better off finding a job that’s more suitable to his or her skills and interests. And in the end, your workforce will likely benefit by higher production and improved morale. Be sure to document all of the steps you took to try and turn the situation around, and consider consulting legal counsel to ensure you’re in compliance with all applicable laws.

The fate of overtime rules continues to remain uncertain.

The “final rule” that was slated to go into effect on December 1, 2016, was put on hold indefinitely after a district judge in Texas blocked its implementation (for details of the rule, see box below). The judge found it likely that the Obama administration overstepped its authority with that rule, which the Trump administration opposes.

In the meantime, the Republican-controlled House of Representatives passed legislation that would authorize time off in lieu of compensation for overtime. That bill has moved to the Senate. The White House has voiced support for it.

Background Information

Under the Fair Labor Standards Act (FLSA), unless exempted, eligible employees must be paid time-and-a-half their regular pay rate for time worked beyond 40 hours a week. The white collar exemptions exclude certain executive, administrative and professional (EAP) employees and outside salespeople.

To be exempt from the overtime rule, the Department of Labor (DOL) requires most employees to meet each of the following three tests:

1. Salary basis test. The employee must be paid a predetermined and fixed salary that isn’t subject to reduction because of variations in the quality or quantity of work performed.

2. Salary level test. The amount of salary must meet a minimum amount. Currently, this figure is $455 per week for EAP employees (the equivalent of $23,660 annually).

3. Duties test. The employee’s job duties must primarily involve executive, administrative or professional duties as defined by the DOL regulations.

In addition, there is a relaxed duties test for certain highly compensated employees who receive total annual compensation of $100,000 or more and are paid at least $455 a week.

The regulations on overtime pay date back to 1940. Although they have been updated periodically, the last time was in 2004. The DOL issued its latest revisions in 2015, after several years of lengthy discussions. Now it’s back to the drawing board (see What Was in the Final Rule? below).

Introduction to the Proposed Bill

Under the House-passed measure, employers may let workers opt to accept extra time off instead of receiving overtime pay. Employees could accrue up to 160 hours of comp time during a 12-month period in lieu of overtime wages. Any unused comp time at the end of that period would have to be converted to overtime pay within 31 days. Employees would have to be paid at the greater of:

1. Their regular pay rate when the time off was earned, or

2. Their final regular rate received.

The accrued comp time, titled the Working Families Flexibility Act, could be used within a “reasonable” period after making a request for time off provided it doesn’t unduly disrupt the employer’s operations. Employees must provide adequate notice and employers would make necessary accommodations.

Employers could elect to cash out comp time that exceeds 80 hours or discontinue the swap policy by giving 30-day notice. Similarly, employees could choose to end their participation after giving notice within 30 days.

Finally, if the rules in the proposed bill were violated, employers might have to pay affected employees the amount owed for each hour of accrued comp time plus an equal amount as damages, minus any compensatory time the workers used. These provisions are subject to change.

Proponents of the proposed bill claim the measure would provide employees with the flexibility they want without creating hardships for employers. They note that the policy would be strictly voluntary. In addition, allowing employees to defer payment of comp time is essentially like getting an interest-free loan.

“This bill is about freedom, flexibility and fairness,” said Rep. Virginia Foxx (R-NC), chairwoman of the House Committee on Education on the Workforce. “It gives workers the freedom to choose what is best for themselves and their families. For some workers, money in the bank may be the best choice for them, and nothing in the bill would take that away, but other workers would seize the opportunity for time off with their family.”

Employees’ Interests

However, detractors are concerned about the interests of employees. “The bill weakens protections under the Fair Labor Standards Act at the moment that we ought to be strengthening the law,” Rep. Robert C. Scott (D-VA) reportedly argued on the House floor. “Under the bill, employers could withhold overtime pay for a long time, which otherwise would be a violation of the FLSA, and it undermines the 40-hour workweek mechanism,” he added

Different proposals for revising the overtime rules have been tabled during the past two decades, but this effort has some momentum with the support of the White House behind it.

What Was In the Final Rule?

The final rule, which is now in limbo, makes several significant changes to the overtime rules, including:

• The standard salary level used to determine whether employees and computer professionals are eligible to receive overtime is increased from $455 a week ($23,660 a year) to $913 a week ($47,476 a year) for full-time workers.
• For the first time, employers would be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level.
• The total annual compensation threshold for a highly compensated employee would rise from $100,000 to $134,004 ($913 a week instead of the current $455 a week).

If new proposals emerge from the ruins, they may contain similar provisions or take a completely new approach.

Employers have many reasons to monitor employee communications from time to time, including staying out of legal trouble. For example, if any kind of illegal discrimination or employee harassment is going on, and you allow it to continue by ignoring possible evidence of its occurrence, you could lose a lawsuit.

Or if employees are defaming your company through public social media postings — or revealing proprietary information about your products, services or strategic plans — your business could sustain serious competitive injury.

The point is simple: There are times you need to keep tabs on what employees are communicating, and doing so doesn’t make you a sinister “big brother.” The fact that there are so many ways employees can abuse communication systems makes the task of staying on top of it a bit trickier. For instance, your right to monitor employee emails sent from company-owned computers via the company’s email system is fairly straightforward. But, of course, that’s only part of the problem.

What’s in Your Employee Handbook?

You may be concerned about messages an employee is sending using a personally owned smart phone. Can you monitor those messages?  The answer begins with the policy you lay out in your employee handbook. As noted, in deciding employee privacy cases, courts typically consider whether the employee had a reasonable expectation of privacy. Such an expectation disappears when you spell out your policies clearly and in detail, then secure an acknowledgement that the employee has read and understood them.

Among other provisions, these policies generally should:

• Explain their purpose in terms conveying that employees all ultimately benefit from the safeguards in place. That is, the policies are intended to protect the company (and, therefore, employee paychecks) and possibly to shield all concerned from defamatory communications that other employees could initiate.
• Articulate which modes of communications are subject to employer monitoring, including emails and other forms of electronic communication on company-owned devices, including cell phones, and
• Spell out the steps you might take pursuant to the policy.

Your rights to monitor employee communication, when employees have been put on notice that you’ll exercise them, might be greater than you expect. According to the Small Business Administration (SBA), “no specific laws govern the monitoring of an employee’s social media activity on a company’s computer” if you’re looking for unauthorized posting of company content.

The SBA cautions, however, that there have been rulings against employers who fired workers for complaining on social media sites about their workplace conditions. That is generally considered “protected speech” under the National Labor Relations Act. The SBA’s advice: “Provide employees with a social media policy and be sure to include information about what you consider confidential and proprietary company information that should not be shared.”

Employer Exemption

What about monitoring employee emails and telephone conversations? Although the Electronic Communications Privacy Act of 1986 (ECPA) prohibits the intentional interception of “any wire, oral or electronic communication,” it does include a business use exemption that permits monitoring of email and phone calls.

The SBA states, “Generally, if an employee is using a company-owned computer or phone system, and an employer can show a valid business reason for monitoring that employee’s email or phone conversations, then the employer is well within his or her rights to do so.” And as noted, if employees have been given a heads up and demonstrated they understand the policy, you’re in a strong position.

However, the SBA advises employers to be aware that the ECPA “draws a line between business and personal email content you can monitor – business content is OK, but personal emails are private.”

“BYOD” Policies

The latest frontier in discriminating between legitimately personal communications and employment related ones involves employees using their own laptops and smart phones pursuant to a “bring your own device” (BYOD) policy. There are practical advantages to BYOD policies, including employee convenience and also savings in the company’s IT budget. On the other side of the equation, employees using their personal devices can give them a false sense of impunity with respect to what company-related sensitive or offensive information they convey on them.

If you do have a BYOD policy, consider expanding the scope of your privacy policies to accommodate it. The policy could:

•  State that you reserve the right to access, monitor and delete information from personally owned devices under specified circumstances,
•  Stipulate which employee-owned devices can be used for work purposes and are eligible for tech support,
•  Require the use of “mobile device management technology” to create an electronic barrier between personal and business-related data,
•  Limit employee job categories eligible for using personal devices,
•  Establish data security protocols, including standards for passwords, and
•  Set a schedule for deleting business-related data maintained on personally owned devices.

The law governing employee privacy at a time of rapid evolution of communication technology isn’t entirely clear on all counts, can vary by jurisdiction, and is constantly changing. That’s why it’s prudent to consult with an attorney with relevant expertise as you develop your policies to balance your legitimate interests with those of employees.

Last year, the Equal Employment Opportunity Commission (EEOC) filed its first two cases in federal court charging employers with failing to protect employees from discrimination and harassment based on their homosexuality. The federal agency has already received more than a thousand complaints of this nature, but only recently has the agency taken employers to court. Other cases have been settled, or simply not pursued.

Although the EEOC’s position can be overruled by federal courts, several trial courts have accepted the proposition that “sexual orientation discrimination is, by its very nature, discrimination because of sex.”

And recently, the U.S. Court of Appeals for the Seventh Circuit (which covers Wisconsin, Illinois and Indiana) upheld that view. It did so in an 8 to 3 “en banc” ruling — all of the court’s judges weighed in — after a smaller three-judge panel had taken the opposite point of view.

Whether or not discrimination had occurred wasn’t in question, but merely whether it was illegal.

Key Ruling

In the en banc decision, the court noted that while the U.S. Supreme Court has not yet explicitly ruled on this question, it has “over the years issued several opinions that are relevant to the issue,” including its 2015 decision to prevent states from banning gay marriage. The Supreme Court has also upheld rulings prohibiting discrimination against people on the basis of their failure to conform to gender stereotypes.

“It creates a paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act,” the appeals court observed.

The Seventh Circuit case involved a part-time professor at a community college who had been with the school for 14 years in that capacity, and never had a negative review. Although she was qualified for several full-time positions that were open, she was consistently turned down, without even being granted an interview. She attributed the college’s refusal to hire her for any of the full-time positions to discrimination based on her sexual orientation.

Note: An executive order signed by President Clinton in 1998 expanded the scope of an earlier anti-discrimination executive order. That order prohibited companies that work under federal contracts from employment discrimination based on sexual orientation. President Obama broadened it again in 2014 to include gender identity.

Two Federal Court Cases

In 2016, when the EEOC announced its first two sexual orientation discrimination federal court cases, it described them as follows:

In one, the supervisor of a gay male employee “repeatedly referred to him using various anti-gay epithets and made other highly offensive comments.” When the employee complained to a more senior manager, he was told that the supervisor “was just doing his job” and failed to take any steps to stop the harassment. The employee resigned. The employer filed a motion to dismiss the EEOC case but the U.S. District Court denied it and agreed with the EEOC that sexual orientation discrimination is a type of sex discrimination.

In the other case, involving similar harassment of a gay female employee, the employee was terminated in what the EEOC alleged was retaliation after she had complained about the harassment and called an employee hotline. That case was settled after the employer agreed to pay $202,200 and provide significant equitable relief.

EEOC Stance

Even before President Obama signed the executive order which banned gender identity discrimination by federal contractors, the EEOC was pursuing such cases. For example, it supported the discrimination case of a transgender federal employee in 2012. On its website, the EEOC lists examples of discrimination allegations it has received that it considers unlawful.

Here are four involving gender identity:

• Failing to hire an applicant because she’s a transgender woman;
• Firing an employee because he’s planning or has made a gender transition;
• Denying an employee equal access to a common restroom corresponding to the employee’s gender identity; and
• Harassing an employee because of a gender transition. For example, by intentionally and persistently failing to use the name and gender pronoun that corresponds to the gender identity with which the employee identifies, and that the employee has communicated to management and employees.

For many employers, it might not even matter how the EEOC could respond to an employee’s allegation of gender identity or sexual orientation discrimination. That’s because about 22 states have their own sexual orientation anti-discrimination laws on the books.

Practical Pointers

Meanwhile, here are four employment practices to consider in light of the evolving legal landscape:

• • If you already conduct — or plan to conduct — anti-discrimination and anti-harassment training, don’t neglect to include sexual orientation and gender identity as examples of discrimination or harassment categories.

• • Be aware that the Occupational Safety and Health Administration (OSHA) has published a “Guide to Restroom Access for Transgender Workers.” This guide states that “all employees, including transgender employees, should have access to restrooms that correspond to their gender identity.”

• • Be cautious about imposing gender-based dress codes that could impact transgender employees, especially when the nature of the job makes such a dress code essential. In a case like this, it’s generally a good idea to apply the dress code of the gender that a transgender employee is transitioning to, for that employee, even before the transition is complete.

• Along similar lines, use names and pronouns for transgender employees suitable for the gender they’re transitioning to.

Obviously these employment issues are complex and the legal sands are shifting. It’s prudent, therefore, to consult with a labor attorney with expertise in these issues when formulating policies or taking actions involving lesbian, gay, bisexual and transgender employees and job applicants.

With Health Savings Accounts (HSAs), individuals and businesses buy less expensive health insurance policies with high deductibles. Contributions to the accounts are made on a pre-tax basis. The money can accumulate year after year tax free, and be withdrawn tax free to pay for a variety of medical expenses such as doctor visits, prescriptions, chiropractic care and premiums for long-term-care insurance.

Participating employers can also contribute to accounts, on behalf of their employees.

Here are the 2018 limits for individual and family coverage, which were announced by the IRS in Revenue Procedure 2017-37. They are determined after the IRS applies cost-of-living adjustment rules, and the changes in the Consumer Price Index for the relevant period.

• HSA Contribution Limits. The 2018 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,450 (up from $3,400 for 2017), and the limit for individuals with family HDHP coverage is $6,900 (up from $6,750 for 2017).
• High-Deductible Health Plan (HDHP) Minimum Required Deductibles. The 2018 minimum annual deductible for self-only HDHP coverage is $1,350 (up from $1,300 for 2017) and the minimum annual deductible for family HDHP coverage is $2,700 (up from $2,600 for 2017).
• HDHP Out-of-Pocket Maximums. The 2018 maximum limit on out-of-pocket expenses (including items such as deductibles, co-payments and other amounts, but not premiums) for self-only HDHP coverage is $6,650 (up from $6,550 for 2017), and the limit for family HDHP coverage is $13,300 (up from $13,100 for 2017).

For more information about HSAs, contact your employee benefits and tax advisor.

The Benefits of an HSA

• You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you don’t itemize your deductions on Form 1040.
• Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
• The contributions remain in your account until you use them.
• The interest or other earnings on the assets in the account are tax free.
• Distributions may be tax free if you pay qualified medical expenses.
• An HSA is “portable.” It stays with you if you change employers or leave the work force.

Qualifying for an HSA

To be an eligible individual and qualify for an HSA, you must meet the following requirements:

• You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
• You generally have no other health coverage except what is permitted under regulations. (Exceptions include dental, vision, long-term care, accident and specific disease insurance.)
• You aren’t enrolled in Medicare.
• You cannot be claimed as a dependent on another person’s tax return.

— Source: The IRS