Pennsylvania Employment Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Lancaster, York, Harrisburg

The economic downturn affects businesses but also impacts the daily lives of employees. An employee’s personal financial problems can lead to bankruptcy, foreclosure and even divorce, any of which may impact his or her job and job performance.

Businesses must be prepared to respond to employee performance issues created by financial problems. Employers should be aware of legal limitations placed on their actions with regard to an employee’s financial problems. In addition, human resource professionals should appreciate the relationship between their performance management program and other resources to address employee issues created by financial distress.

Pennsylvania and federal laws limit actions employers may take against employees that file for bankruptcy or are subject to wage attachments. Many employers, particularly those in the financial sector, face customer relation problems when one of their employees doesn’t pay his or her bills or files for bankruptcy. Legal limitations on employer responses are as follows:

• Garnishment/Attachment of Wages. Pennsylvania does not allow garnishment/attachment of wages for the repayment of personal debts, except in limited circumstances for child support, alimony or student loans.   Employees may not be disciplined, discriminated against or discharged because of wage garnishments.

• Employee Bankruptcy. Section 575 of the Bankruptcy Act protects employees and applicants from discrimination if an individual:
  • is or has been a debtor under this title or a debtor or bankrupt under the Act;
  • has been insolvent before the commencement of a case under the Act or during the case but before the grant or denial of a discharge; or
  • has not paid a debt that is dischargeable in a case under this title or that was discharged under the Act.

Courts have limited the reach of this provision by requiring that the discrimination be "solely because" of the individual's bankruptcy participation.

• Worries About Temptation for Theft. Businesses may become concerned that an employee in financial distress may be more likely to embezzle and react by trying to find out the scope of an employee’s credit problems. The Fair Credit Reporting Act limits an employers use of employee credit information. A business’ usual financial controls should be uniformly applied, but, if inadequate, should be revised for all employees.                                 

Financially distressed employees may exhibit other performance problems ranging from declining productivity to depression. The usual performance management system should be utilized to correct deficiencies; however, special attention should be paid to other resources like the EAP and  Debt/Credit counseling. Some businesses may wish to go further. Susan S. Windham believes that Financial Distress for Employees Means Lower Profits for Employers. She advocates workplace financial education as the answer.

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Microsoft Corp. tendered an unsolicited takeover offer of $44.6 billion for Yahoo, Inc. As with any acquisition/merger, both businesses need to calm the troops by making assurance of job security. In today’s world, every employee knows that the buzz words like “business synergies” and “market overlap” mean layoffs for employees whose jobs are “redundant”. As reported by MSNBC,  Microsoft said” it sees at least $1 billion in cost savings generated by the combination, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees.”

Retention Bonuses are an important talent management tool for all size companies when the organization faces uncertainty due to merger, bankruptcy or other business transition that creates uncertainty for employees. I have seen retention bonuses used successfully by businesses in financial hardship because of the loss of a large contract, exiting form bankruptcy protection, or to counter a competitors raiding of its talent. However, the communications and documentation of a bonus program must be carefully managed to avoid unintended consequences.

Kate DCamp takes the contrary view in her posting “Do Retention Bonuses Work? She believes that the money motivator almost never works:

In most situations, what works is specific to the problem diagnosed. In a business turnaround, tripling communications and sharing some of the "upside" can be very effective to keep critical talent. An opportunity to have more impact on the business and a chance to earn extra money by achieving business goals sends a clear signal about someone's importance to the company.

Dr. John Sullivan posting on “Retention Bonuses – Are they a good idea?” has a great laundry list of “unintended consequences” including:

• Creating uncertainty in those who are not offered the bonus
• Exacerbating a we verses them mentality in the case of a merger of two companies
• Having those employees who will depart anyway conduct their job search on your time
• Denigrating the principle that performance matters
• Creating job security for those who may not deserve it

From a legal point of view, any bonus plan should be in writing with specific eligibility and trigger requirements. Careful consideration must be given to selection criteria to defend against discrimination claims. Bonus payments are treated as wages and subject to payroll taxes.

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A recent federal court of appeals decision in Simple v. Walgreens Company is a case study on two important points. First, how the pressures of marketing in a competitive retail environment can overtake the limits of discrimination laws. Second, how a supervisor’s communication with an employee can create an issue of discrimination.

Like many retailers, Walgreens tracks demographic data and relates it to each retail store. At issue in the case was whether the racial demographic data was used in promotion decisions to assign personnel to “black” or “white” stores depending on the race of the employee. The court noted as follows:

There is no evidence that [the successful white candidate] was more qualified to manage the store in Pontiac[, Michigan] than the plaintiff, who had twice her experience as an assistant manager, the mandatory stepping stone to store manager. But she is white, and the store is in a predominantly white neighborhood, while the plaintiff is black and so was twice offered a "black" store--and when the store manager's job at the "white" store fell vacant he was ignored.

The evidence of the company’s racial motivation was found in a supervisor’s comments to the plaintiff in an effort to make him feel better:

"I may have stated that Pontiac was possibly not ready to have a black manager. It is well known in this area that some of the smaller, outlying towns have some very racist tendencies, and I was simply trying to make [the plaintiff] feel better because my feeling was he may not have been very happy working there."

From this statement, the court concluded as follows:

The significance of [the supervisor's] remark about racism in Pontiac lies in the fact that as an experienced Walgreens store manager (it appears that she had been one for at least four years) she was undoubtedly aware of what [the district manager] was looking for in a store manager in Pontiac, and one interpretation of the remark is that the plaintiff's race would bar him from consideration…. The plaintiff would not feel "happy" among Pontiac's white racists, which is a standard euphemism for refusing a job to someone of a different race from the people he would be associating with. Racial segregation is obviously a form of racial discrimination.

The presumption underlying “customer preferences” is that people prefer to interact with those of the same race, gender, religion, or other characteristic. Employment decisions are justified by appealing to a target demographic group. Courts have universally rejected customer preference as a basis for employment decisions except in the narrow case where it is a Bona Fide Occupational Qualification (BFOQ).

The attorneys at Godfrey & Kahn have a great post analyzing the role of customer preference in health care marketing called Can We Use Gender in Our Hiring Decisions? The Discrimination Bona Fide Occupational Qualification (BFOQ) Applied to Health Care.  Fay Hansen’s post Recruiting on the Right Side of the Law describes the pressures of retail establishments to market an image through their sales associates and the resulting discrimination issues.

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Ford Motor Co., along with two related companies and a national union, will pay $1.6 million and provide other remedial relief to a class of nearly 700 African Americans to settle a major race discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC had charged in the litigation that a written test used by Ford and the UAW, Visteon and Automotive Components Holdings (ACH) to determine the eligibility of hourly employees for a skilled trades apprenticeship program had a disproportionately negative impact on African Americans.

The EEOC in its Press Release  touts two of its initiatives. First, the E-RACE Initiative (Eradicating Racism And Colorism from Employment), a national outreach, education, and enforcement campaign to raise public awareness about new and emerging race and color issues in the 21st century workplace. Further information about the E-RACE Initiative is available on the EEOC’s web site. Second, the EEOC issued a new Employment Testing Fact Sheet which cites the Ford case.   The Fact Sheet is not particularly illuminating from a legal or policy standpoint, but it does highlight the agency’s interest in employer testing practices.

There are general legal restrictions on the use of employment testing (whether pre or post employment) in addition to the general prohibitions on discrimination found in Title VII and the Pennsylvania Human Relations Act. The Uniform Guidelines on Employee Section Procedures prohibit the use of a test or selection process that has an adverse impact on individuals in a protected class unless the test has criterion-related, content and construction validation studies. The validation studies must consist of empirical data demonstrating that the test is (1) predictive of performance of important elements of job performance; (2) contains content which tests important aspects of performance on the job; and (3) consists of procedures that assess identifiable characteristics that have been determined to be important to job performance.

We have previously blogged on the subject of Pre-employment testing at Employment Screening and Background Checks - Part III.

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Effective December 26, 2007, employers were required to use the new version of the I-9 Form. The new form and instructions are available on line. Highlights of the changes in acceptable documentation were previously posted: Revised I-9 Form Issued: Changes Acceptable Documentation.

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A revised I-9 Employment Verification Form was issued by the Homeland Security that includes the following changes to the Form I-9 process:

• Five documents have been removed from List A of the List of Acceptable
  • Documents:Certificate of U.S. Citizenship (Form N-560 or N-561)
  • Certificate of Naturalization (Form N-550 or N-570)
  • Alien Registration Receipt Card (I-151)
  • Unexpired Reentry Permit (Form I-327)
  • Unexpired Refugee Travel Document (Form I-571)
• One document was added to List A of the List of Acceptable Documents:
  • Unexpired Employment Authorization Document (I-766)
• All Employment Authorization Documents with photographs have been consolidated as one item on List A:
  • I-688, I-688A, I-688B, I-766
• Instructions regarding Section 1 of the Form I-9 now indicate that the employee is not obliged to provide his or her Social Security number in Section 1 of the Form I-9, unless he or she is employed by an employer who participates in E-Verify.
• Employers may now sign and retain Forms I-9 electronically. See instructions on page 2 of the Form I-9.

Note: The Spanish version of Form I-9 may be filled out by employers and employees in Puerto Rico ONLY. Spanish-speaking employers and employees in the 50 states and other U.S. territories may print this for their reference, but may only complete the form in English to meet employment eligibility verification requirements.

The electronic form is available for fill in and download.  The PDF versions in English and Spanish are also available.  Download I-9Download I-9 (Spanish version) 

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Many managers view the efforts of HR to bring order to the hiring process as meddlesome, bureaucratic and dilatory. “Just find me someone to fill this position” is the usual approach. There are several things that an HR generalist can bring to the table in terms of education and organization without slowing the process:

Uniformity of Process: Companies should develop an interview process and follow it. Haphazard hiring practices are difficult to defend from discrimination claims. Every interview process includes the following actions:

• Identify in writing the minimum qualifications of the position and review the job description.
• Establish criteria for an “applicant” including whether you will consider unsolicited resumes, internet inquiries, and recruiter referrals.
• Identify the qualified applicants and the process for selecting the most qualified.
• Develop a base set of job related questions for interviewers.
• Develop a simple applicant assessment form.
• Document the reasons for selection of the successful candidate.
• Make sure the process is followed.

Documentation:   In response to any government investigation or as part of discovery in litigation, an employer will be required to turn over its written documentation of the hiring and interview process. To the extent possible, I recommend controlling the documentation that is created so that there are no smoking guns. Many legitimate hiring selections are called into question because of things that are written by interviewers in the margins of resumes. Try to review the interview forms for inappropriate comments and send them back for revision, if necessary. Furthermore, an “institutional memory” is created by written documentation that survives the departure of interviewers and other personnel.

Prohibited Questions:   Many state anti-discrimination laws and regulations prohibit certain types of employment inquiries. For example, the Pennsylvania Human Relations Act (43 P.S. Section 955 (b) (1)) prohibits employers from eliciting information or using any form of application that contains questions or entries concerning race, color, religious creed, ancestry, age, sex, national origin, past handicap or disability. Federal law prohibits asking for disability information except as part of a voluntary questionnaire under an affirmative action plan for the purpose of applicant tracking.  Otherwise, it is unlawful to discriminate and ask for medical information prior to an offer of employment under federal law.  There is not an absolute prohibition on soliciting other protected class information, but it should be done only as to a bona fide occupational qualification.

Applicant Communication:   Many organizations take a minimalist approach to communications with applicants foregoing acknowledgment of applications and rejection letters. While this correspondence may seem like a recruiting nicety, it serves a legal purpose by defining the applicant pool for a particular position.   If the parameters of consideration are not defined, enforcement agencies will look to all applicants to analyze discrimination claims.  At a minimum an employer should identify who was considered for a position and how long an individual’s application will remain active for future consideration. This exercise is very important for government contractors that may face OFCCP audits; particularly in light of the agency’s definition of “internet applicant”.

Training:   Very few managers and supervisors are good interviewers. Asking irrelevant questions, seeking unlawful information, or alienating good prospects are only some of the problems. Without training, many managers do not obtain enough information to critically evaluate the abilities of the applicants they have interviewed. Training on the interview process and techniques might prove invaluable to reducing turnover created by poor hiring decisions.

*Not meant to be an exhaustive list.

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Daniel Schwartz of the Connecticut Employment Law Blog reports that New Employment Verification Rules on Indefinite Hold After Court Ruling. The decision bars the Social Security Administration from sending out an estimated 114,000 no-match letters covering some 8 million employees. The primary basis for the judge’s opinion seems to be the likelihood that legally authorized workers might be fired because of their inability to resolve the discrepancies giving rise to the no-match notification. As the NY Times notes, government audits found significant problems with the data base:

In a December 2006 report cited in the court documents, the inspector general of the Social Security Administration estimated that 17.8 million of the agency’s 435 million individual records contained discrepancies that could result in a no-match letter being sent to a legally authorized worker. Of those records with errors, 12.7 million belonged to native-born Americans, the report found.

We have previously posted on the no match and other immigration issues as follows:

Four Reasons to take a "Wait and See" approach to using E-Verify

No-Match Letters Place Undue Burden on Employers

When is a "Safe Harbor" not so Safe: New Immigration Regulations for No-Match Letters

Reconciling Hazelton's Illegal Immigrant Ordinance and the Nation's Predicted Worker Shortage

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The Sunday News features an article In job searches, women take hit that discusses the gap in legal protections under federal and Pennsylvania law for women when it comes to prohibitions against discrimination based on marital status or family status. The article contains the following legal summary that screams out for context and clarification:

When you apply for a job in Pennsylvania, an employer is prohibited from asking you about, among other things, your age, race, religion or ancestry.

But he can ask you if you have children. He can ask you when and if you plan to have kids. He can ask if you're married, single, separated or divorced.

And he can refuse to hire you on the basis of your marital or familial status.

 

In Pennsylvania, there is nothing illegal about treating employees and prospective employees differently, based on marital or family status. You can be refused a job or refused a promotion simply because, for instance, you're a single parent.

While it is technically correct that it is not unlawful to discriminate based on marital or family status, there are legal prohibitions against employment practices that have a disparate impact against individuals based on their gender or disability.  Gender Stereotyping is a recognized and growing basis for discrimination claims.  An employer’s gender stereotyping can be demonstrated by interview questions, workplace comments and attitudes about a woman’s role in family matters.  For example, in Back v. Hastings on Hudson Union Free Sch. Dist., the court ruled that comments made about a woman's inability to combine work and motherhood -- in particular, that a woman cannot "be a good mother" and have a job that requires long hours or that a mother who received tenure "would not show the same level of commitment [she] had shown because [she] had little ones at home," constituted direct evidence of sex discrimination under a stereotyping theory. Other cases follow similar reasoning.

The EEOC is also seeking to fill this void with its recently published Enforcement Guidance on Unlawful Disparate Treatment of Workers with Caregiving Responsibilities in which the agency acknowledges that there are no express protections from discrimination based solely on parental or caregiver status. However, unlawful disparate treatment may arise when a caregiver is subject to discrimination based on sex and/or race or because of his or her association with an individual with a disability. The Guidance highlights some common circumstances that the EEOC believes might constitute unlawful disparate treatment:

• Treating male caregivers more favorably than female caregivers: Denying women with young children an employment opportunity that is available to men with young children.
•  Sex-based stereotyping of working women:
  • Reassigning a woman to less desirable projects based on the assumption that, as a new mother, she will be less committed to her job.
  • Reducing a female employee’s workload after she assumes full-time care of her niece and nephew based on the assumption that, as a female caregiver, she will not want to work overtime.
• Subjective decisionmaking: Lowering subjective evaluations of a female employee’s work performance after she becomes the primary caregiver of her grandchildren, despite the absence of an actual decline in work performance.
• Assumptions about pregnant workers: Limiting a pregnant worker’s job duties based on pregnancy-related stereotypes.
• Discrimination against working fathers: Denying a male caregiver leave to care for an infant under circumstances where such leave would be granted to a female caregiver.
• Stereotyping based on association with an individual with a disability: Refusing to hire a worker who is a single parent of a child with a disability based on the assumption that caregiving responsibilities will make the worker unreliable.

The EEOC is serious about its enforcement actions.  On September 27, 2007,  the EEOC announced that it has filed suit against Bloomberg L.P. for demoting a class of women and reducing their pay after they announce pregnancies and after they took pregnancy leave.  An EEOC trial attorney is quoted in the announcement  concerning sexual stereotyping:  "This case exemplifies an increasing trend where employers engage in stereotyping of female caregivers and act to limit their employment opportunities.  Pregnant women and mothers who work hard and perform well should be valued for their work, not penalized for their gender."

Employers should ask only job related interview questions, treating male and female applicants identically. Avoid stereotyping the roles of men and women in your interview, evaluation and promotion procedures. Don’t get caught off guard with a claim of family responsibility discrimination.

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Frank Roche of the KnowHR Blog posits his ultimate interview question: “Do you recline your airplane seat? Explain.”  While not listed as one of the top 15 interview questions, I found his inquiry rather interesting.  I followed the links to find that there are a number of interview chat forums that highlight the off-beat interview questions of companies like Google, Microsoft and eBay. These job applicants face question like how many golf balls can fit inside a school bus. Or how much you would charge for washing all the windows in Seattle. Or why, exactly, manhole covers are round and not, say, square.

I wondered if this was the product of a slow day in the recruiting department or if there was some method to this madness. According to a CNNMoney.com article Want a job at Google? Try these brainteasers first, there is a rationale:

Seemingly random questions like these have become commonplace in Silicon Valley and other tech outposts, where companies aren't as interested in the correct answer to a tough question as they are in how a prospective employee might try to solve it. Since businesses today have to be able to react quickly to shifting market dynamics, they want more than engineers with high IQs and good college transcripts. They want people who can think on their feet.

Most behavioral based interviewing techniques are not quite as far out, but they still ring of subjectivity in assessing an applicant’s fitness for a particular job. How do these far out interview questions bode from a legal perspective?

Commentaries on Best Practices for Interviewing identify both job relatedness and uniformity as hallmarks of an appropriate process. These are also paramount in defending legal claims arising from a selection process. The key for employers is to demonstrate that the questions are accurate predictors of job performance and that all applicants had the same chance to succeed. Obviously, the more preposterous the question, the more a judge or jury might question a company’s hiring practices and infer discrimination.

Unsuccessful applicants often point to the subjectivity in an interview process as a basis of discriminatory treatment. Courts note that subjective considerations are not unlawful per se, but obviously subjective decision making provides an opportunity for unlawful discrimination.  See, e.g., Santana v. City and County of Denver. Furthermore, the OFCCP and EEOC abhor subjectivity as a basis for employment decisions because of its potential to have a disparate impact on a protected class. This has been noted in previous postings. Systemic Discrimination: EEOC's Latest Tactic to Redress Discrimination and OFCCP Audits Focus on Systemic Discrimination.

So, if you are an interviewer who wants to find out whether an applicant reclines his or her airplane seat and why, be prepared to explain [in court] how the inquiry might be job-related and ask the same question to everyone you interview.

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A federal judge in San Francisco issued a temporary restraining order blocking implementation of the new  No-Match program regulations issued by DHS and SSA. The regulations were to take effect on September 14, 2007. They are delayed until at least October 1, 2007 when the next court hearing is scheduled.

The lawsuit was initiated by the ACLU and other plaintiffs including the AFL-CIO. A posting by Bill Leonard for SHRM summarizes the gist of the complaint and decision:

In the complaint, the ACLU stated that the DHS and SSA had overstepped their authority by attempting to use wage and tax information to enforce immigration law. U.S. District Judge Maxine Chesney agreed and stated that there were serious questions whether the new regulations were authorized by law. The judge said that the federal government would suffer little inconvenience if enforcement of the rules were delayed.

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EEO-1 reports under the new reporting format are due at the end of the month.  On line access to the form can be obtained from the EEOC website.   Filing information and technical assistance are also available on line.  E-mail extension requests can be made, but are not guaranteed.

There are several areas of change in the EEO-1 Form and some guidance on collecting information.  Employers have always faced a dilemma on how to collect the information. The EEOC previously encouraged employers to identify the race and/or ethnicity of their employees by visual inspection.   The EEOC now prefers that employers gather data through voluntarily self-reporting by employees.

The new EEO-1 Reports also have revised job categories for "Officials and Managers" by dividing it into two categories based on responsibility and influence within the organization as follows:

• Executive/Senior Level Officials and Managers (plan, direct and formulate policy, set strategy and provide overall direction; in larger organizations, within two reporting levels of CEO)
• First/Mid-Level Officials and Managers (direct implementation or operations within specific parameters set by Executive/Senior Level Officials and Managers; oversee day-to-day operations)

The revised EEO-1 also will move business and financial occupations from the Officials and Managers category to the Professionals category (to improve data for analyzing trends in mobility of minorities and women within Officials and Managers).

The new EEO-1 Report also made the following changes to the race and ethnic categories:

• the addition of a new category entitled “Two or more races”;
• the separation of “Asian” and “Native Hawaiian or other Pacific Islander” into two categories;
• the replacement of the category “Black” with “Black or African American”; and
• the replacement of the category “Hispanic” with “Hispanic or Latino.”

The revised EEO-1 Report can be found at: EEOC revised EEO-1 Report.  Additional information from the EEOC about the revised form can be found at: Q&A: Revisions to the EEO-1 Report.

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Remember the old adage that "No good deed goes unpunished?" I think it applies to voluntarily using the various electronic verification systems available in E-Verify and SSNVS. Although there are electronic resources to assist employers in complying with the I-9 verification requirements, I don't think employers should jump to use them until they are forced to which is clearly on the horizon. Federal Contractors will be forced to use the E-Verify system under administration proposals.

My reasons for taking a "wait and see" approach are as follows:

1. Using the E-Verify does not provide safe harbor from worksite DHS enforcement.   It only protects the employer from assertions by DHS that the employer actual knowledge knowingly hired an unauthorized alien and that only applies if the social security and e-verify documents match to the employee. If the documents don't match, the employer has actual knowledge of a potential unauthorized employee and cannot continue to employee that individual. There is no protection from the employee's claims that the employer engaged in immigration-related discrimination.   Although ICE takes the position that an employee is not liable for employee terminations under the safe harbor, that doesn't apply to E-Verify and doesn't stop an employee from filing a claim.
2. Data base inaccuracies and limitations can put employers at risk for immigration claims. If the data base is inaccurate, which whole justification for the No-Match letters, then employers are inviting immigration complaints by employees terminated for E-Verify problems.   Statistically, the E-Verify system states that participating employers matched 92% of employment inquiries. Of the remaining 8%, one percent of the employees contested the E-Verify results. To me, that's the number of potential claims against employers who couldn't hire the employees. That doesn't even include employees who provide one of the myriad of other documents used for I-9 authentication that are not in the data base.
3. Sources predict the E-Verify system will be overwhelmed when estimated 200,000 government contractors are required to use it. DHS states that the system can handle 25 million inquiries annually. It currently has 19,000 registered employers increasing at a rate of 1000 per month. Employers have only three days to verify I-9 documents and, once they elect E-Verify, they must use it for all employees (not only those who may have immigration issues).
4. Changes in I-9 documentation requirements will make compliance simpler and E-Verify more effective. The number of Form I-9 documents used to establish identity and employment eligibility will be reduced from the current 29 categories. Employers have little capacity to verify the authenticity of these current documents, and the sheer quantity of accepted documents is an invitation to fraud. This regulation will reduce unlawful employment by weeding out insecure documents now used often for identity fraud. Simultaneously, the government will enhance the E-Verify System to include 14.8 million images stored on the DHS database including green cards. Passport and VISA data will also be added.

Until the system proves its reliability and demonstrates responsiveness, employers could experience unacceptable delays and errors leading to litigation and staffing problems.

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The so called safe harbor from prosecution/sanction for immigration law violations arising from an employer’s handling of No-Match letter places a heightened burden on employers and may only exacerbate an already growing worker shortage. It is a poor effort to solve the problems created by a lack of consensus on a national immigration policy. It has collateral effect of heightening employer’s liability for immigration-related discrimination and employee relations problems.

Many Commentators believe that No-Match letters are not an effective mechanism for ferreting out illegal immigration, so granting a safe harbor to employers for playing along is meaningless. Some of the facts that lead me to this observation are as follows:

• Estimated 12 million illegal workers.

• The Social Security Administration sent out 138,447 no match letters in 2006.

• The data underlying the no match system contains numerous errors leading to "false positives". There may also be privacy issues limiting the sharing of data.

• There is no reliable data base for employers to check/verify employment status and the existing data base is predicted to be "overwhelmed" when government contractors are forced to use it. There is no safe harbor for using the E-Verify System.

• The I-9 Form process is complicated with  a maze of documents that can be used to authenticate work eligibility and identity . Some are temporary and require re-certification when they expire.

• Employers are also responsible for assessing the genuineness of documents which may be easily forged, altered or fabricated..

• Employers  face liability for actual and constructive knowledge of employment of unauthorized workers. The actual knowledge standard can make HR managers avoid answering employee questions when it comes to immigration status. It can also make HR Managers rumormongers and workplace immigration police when they must reasonably investigate third party comments on immigration status. The constructive knowledge standard is addressed in the safe harbor.

• Placing onuses on employees to resolve no match discrepancies within 90 days is untenable. My limited experience with SSA and Immigration leads me to believe that almost nothing can happen in 90 days.

• Employers must re-examine verification and identity documents for those employees who have no match problems and fire those who cannot comply with the I-9 requirements. Employers cannot rely on mismatched documents for re-certification.

• Office of Special Counsel for Immigration-Related Unfair Employment Practices is  posed to protect employees from immigration-related discrimination.

• The predicted worker shortage will put pressure on employers to run their businesses.

• The economic impact of enforcement may be  concentrated on a few states that have Labor pools that rely on immigrant workforces like Texas, California, New York and Florida.

• Some perceive the No-match program as an employer motivated, government endorsed mechanism to fire immigrant workers.

• Unions and other interest groups will mobilized to protect workers and organize around immigration issues.

My conclusion is that employers will be whipsawed  by worker shortages, immigration sanctions for hiring illegal workers, discrimination claims by fired workers who lack documentation and employee relations issues including unionization. 

I received several questions about  my contrast of the No-Match safe harbor and  a perfect storm. I borrowed the “perfect storm” allusion from my friend Ira Wolfe who has written a book entitled The Perfect Labor Storm which highlights the impact of demographic trends on national employment.

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The Department of Homeland Security (DHS) issued new regulations that create a "safe-harbor" for employers who either receive a (i) no-match letter from the Social Security Administration or (ii) written notice from DHS questioning an I-9 Form. Employers who follow the protocol and timeline set forth in the regulations will not be charged with "constructive knowledge of employment of an unauthorized worker"; hence, being shielded from civil and criminal sanctions in a subsequent DHS audit. However, when one examines the safe-harbor, it clearly puts the employer in a position of terminating employees who cannot meet government requirements and time frames thereby facing discrimination claims and employee backlash.

The safe-harbor protocol requires that the employer complete the following steps within the prescribed time frames:

• Within 30 days of the letter, check employer records to determine if there is an employer error like a typo or transcribed number/misspelled name.
• If unresolved, employers must ask the employee to confirm accuracy of records. (Employers may wish to immediately inform employees about their obligation to resolve the disparity explaining that resolution of the mismatch could take time…. a lot of time).
• If the employer is able to resolve the mismatch, the employer should follow the instruction in the No-Match letter.
• If unresolved, the employer should inform the employee that the employee has 90 days from the date the employer received the No-Match letter to resolve the matter with SSA.
• If the discrepancy is not resolved within 90 days of receipt of the No-Match letter, the employer should complete, within three days, a new I-9 Form as if the employee in question were newly hired, except that no document may be used to verify the employee's authorization for work that uses the questionable Social Security number. Additionally, the employee must present a document that contains a photograph in order to establish identity or both identity and employment authorization.

Completing a new Form I-9 without reliance on the old disputed documents or social security numbers, will be difficult if not impossible. Furthermore, reliance on the government's voluntary E-verify system provides no safe harbor for I-9 compliance. If the employee is unable under such circumstances to provide satisfactory documentation, the I-9 instructions state that "employment should be discontinued."    In the case the employee provided false information but somehow manage to comply with the Form I-9 requirements the second time, the same instruction suggest an employer follow its policy on employees who provide false information.

In either case, an employer is prohibited from discriminating against applicants or employees based on their national origin. Employers must also manage the perception among employees that this bureaucratic approach to national immigration policy isn't the employer's doing. The new regulations create a "safe-harbor" from DHS prosecution and an employee relations perfect storm.

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An Associated Press article by Lindsey Tanner reports that McDonald's wrapper tricks kids' taste buds:

Anything made by McDonald's tastes better, preschoolers said in a study that powerfully demonstrates how advertising can trick the taste buds of young children.

Even carrots, milk and apple juice tasted better to the kids if it was wrapped in the familiar packaging of the Golden Arches.

The study had youngsters sample identical McDonald's foods in name-brand or unmarked wrappers. The unmarked foods always lost the taste test.

This doesn’t surprise me or others one bit. The Evil Hr Lady take is that the wrapper perception created by titles pervades corporate decision-making. The result is that good ideas in the wrong wrappers don't get their just due.  I took a different direction.  When I saw the same article, I thought of appearance bias.

We are about due for another round of surveys or articles about how good looking people get better jobs, raises, and service for no other reason then they are attractive. Some older articles make this point like CNBC's Hidden Camera investigation entitled "Face Value", Catherine Kaputa's Why Attractive People Get Paid More and What You Can Do About It, or Kate Lorenz's Do Pretty People Earn More?

To use a cliché, perceptions are reality. The concept of evaluating people and their ideas on their merits is intellectually unassailable. However, if it were universally practiced, society wouldn't need laws against discrimination and job bias. Discrimination is, at least partially, a bias based on the wrapper, rather than the content. Certainly, "unattractive" is not a protected class. However, unattractive can be a code word for appearance prejudices that are legally prohibited such as those based on race, sex, national origin, age, and disability.

No where is the difference between the wrapper and its contents more important than in the defense of a discrimination claim. TheMcDonnell Douglas Test uses a three step legal standard for evaluating such claims. In the first step, the employee/applicant must show they are in a protected class, are qualified for a job and suffered some adverse employment action. In the second step, the employer must that it had a legitimate business reason for its decision. In the third step, the employee may show that the employer's "reason" is a pretext for discrimination.

Don't let the McDonald's/kid's eating habits analogy trivialize my point, employment decisions must be based on content and qualifications. When evaluation of the content involves subjective assessments make sure that decisions aren't influenced by stereotypes or biases resulting from perceptions.  Interviewers should be trained to appreciate the legal importance of job content in their evaluations of candidates.  Everyone should assess the role of their own hidden biases and their impact on workplace decisions.

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I received a call from a very irritated client who just hired a new book keeper only to find out the new hire had just been arrested for embezzling from the same prior employer who gave her a glowing reference. Ethics aside, what are the legal parameters for giving a reference?

Frankly, misleading references involve a developing area of the law that is based on negligence theories. To be liable for negligence, you must owe a duty to someone, breach that duty, and the breach must cause damage. The best way to avoid being sued for a reference is not to give one.

No state imposes a duty on an employer to provide a reference on behalf of an employee. However, if a business chooses to provide a reference, it must do so uniformly and may be liable to the employee, other businesses or third parties if the reference is negligent. Negligent references are either inaccurate, materially incomplete, or both.

Pennsylvania law gives employers some protection in lawsuits by employees; provided, the employer acts in "good faith" when it discloses information. Lack of good faith must be established by clear and convincing evidence that the employer disclosed information:

• Knowing it was false or should have known it was false
• Knowing it was materially misleading
• With reckless disregard of the truth or falsity.
• In violation of some other contract or legal right of the employee.

However, the employer's "opinions" about the quality of work are not generally considered to be slanderous or libelous, unless the opinion implies undisclosed defamatory facts as the basis for the opinion. For example, stating that someone is dishonest is an "opinion" which implies undisclosed and potentially defamatory facts. Stating that someone did "poor quality work" does not.

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A federal judge struck down the City of Hazelton's ordinance which was enacted to combat criminal and social service problems blamed on the influx of "illegal immigrants" into the area. The court's 206 page opinion ruled that the ordinance violates federal constitutional protections and was pre-empted by federal immigration laws.

The ordinance call the "Illegal Immigration Relief Act" prohibited employment and apartment rentals to illegal immigrants. It subjected anyone who hired an illegal immigrant or rented an apartment to loss of their business license and significant fines. The ordinance also required Hazleton landlords to present the  City with a passport, birth certificate or immigration documents or citizenship to show that he renter was in the country legally. The names were then checked against a federal data base to determine their immigration status.

The City of Hazelton's frustration is a microcosm for the national immigration debate. According to news reports, these types of ordinances are being adopted by localities out of frustration with the lack of Congressional action to address issues created by the estimated 10 million illegal immigrants now living in the U.S.  In late June, Congress rejected the controversial Immigration Reform legislation. Cited as reasons for the bill's failure were the grant of amnesty for current illegal immigrants and the resulting cost increases in government spending (estimated at $126 billion).

The public sentiments reflected in anti-immigrant legislation will be difficult to reconcile with the predicted labor shortage in the U.S. Many groups have already bemoaned worker shortages, particularly among skilled workers. One of the best resources for putting the whole problem in perspective is Ira Wolfe's book entitled the Perfect Labor Storm, an update of which is due out in October. It is a compilation of facts about demographic trends in the global and U.S. economies in the areas of worker shortages, aging, employee turnover, obesity, education, literacy and others. Some of the many facts can be found on his website.

Juxtaposing the lack of national immigration reform, the backlash of public sentiment against immigrants and the demographic analysis of the U.S. labor market leads to very troubling conclusions which cannot be addressed by one judge's opinion striking down a local ordinance.

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The Department of Labor closed America's Job Bank- a national online job board- effective July 1, 2007. The decision was somewhat controversial leaving some government contractors with no good alternative to comply with OFCCP regulations mandating job posting.

The Department of Labor has not published a final rule for compliance with Mandatory Job Postings Requirement under VEVRAA. Regulations for government contractors (41 CFR § 60-250.5) require contractors to list job openings with the appropriate local employment service office. Listing openings with America's Job Bank is expressly recognized as a method for satisfying the obligation.  As an alternative, OFCCP recommends that contractors take the following affirmative steps:

• Create partnership arrangements with local and national recruiting sources for referral of qualified covered veteran applicants;
• Establish a relationship with the Local Veterans' Employment Representative or his or her designee;
• Recruit covered student veterans at educational institutions;
• Create partnership arrangements with veterans' service organizations to employ qualified covered veterans;
• Establish relationships with the Veterans Administration Medical Center job placement programs;
• Advertise job openings and recruit qualified covered veterans during company career days and/or related activities in the local community;
• Encourage subcontractors to seek qualified covered veterans for employment opportunities; and
• Contact the Local Veterans' Employment Representative when new Federal contracts are obtained, or when significant hiring will occur.

There are other solutions mentioned in Kurt Ronn's Business Week article. An alternative for Pennsylvania employers is to post with Pennsylvania CareerLink. Pennsylvania's Comprehensive Workforce Development System (CWDS) is scheduled to launch in September of 2007. The CWDS will allow employers to post profiles and job orders on line.

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The OFCCP reports coordination of EO Surveys with statistical analysis techniques to predict "systemic discrimination" in order to target its compliance audits. The result from using data from 3,723 establishments that responded to the EO Survey, together with the findings from 2,651 completed compliance evaluations was that 89 cases of systemic discrimination were found.  In 2006, the OFCCP recovered a record $51.5 million for over 15,000 workers. Of the recovery, 88% was collected for cases of systemic discrimination in the application process because of unlawful employment policy or practice.

Government contractors are selected for audit in several ways including the use of a mathematical model that predicts the likelihood of a finding of systemic discrimination. The model analyzes data from five years of OFCCP compliance evaluations to formally identify and characterize relationships between reported EEO-1 workforce profiles and findings of discrimination.

I have been involved is several of these style OFCCP audits and the approach is the same. The audit is triggered by an anomaly in a business' EO Survey which shows a statistical disparity in either hires or terminations. For example, the percentage of minority applicants differs by more than 80% from the percentage of minorities hired (the four-fifths rule). The investigation into the disparity in the hiring process follows the road map set out in the OFCCP's Compliance Manual as follows:

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The EEOC announced a $20 million settlement with Walgreens based upon "systemic discrimination" against African American retail management and pharmacy employees in promotion, compensation and assignment. In addition to the monetary relief for an estimated 10,000 class members, the consent decree prohibits store assignments based on race.

The EEOC's lawsuit is part of its Systemic Initiative launched in April of 2006 based on a Systemic Task Force Report. The Report recommends, among other things, that the agency make a "top priority" the following:

• Developing of systemic investigation plans for each District Office.                                  
• Staffing systemic investigations and litigation with agency members with specialized training.
• Creating "incentives" through performance plans to encourage investigators to "successfully identify, investigate, and litigate systemic cases."
• Linking agency charge data with EEO-1 Survey and using technology to trigger investigatory efforts and litigate cases.

According to the OFCCP Blog Spot, both the OFCCP and EEOC have made systemic discrimination and testing top enforcement priorities. However, the EEOC doesn't have a formal definition of "systemic discrimination" but enforces it as a hybrid of traditional "pattern and practice" discrimination and disparate impact. 

No matter how the EEOC tries to repackage it, pattern and practice or disparate impact discrimination cases are not new. Most cases involve a single employee or a class of employees claiming that a facially neutral employment practice had a significant discriminatory impact on a protected class of individuals. In these situations, the Supreme Court has stated that the employee must point to some specific aspect of the employment process and then must prove that the processes caused disparate impact on the protected group.

What is new is the method that the EEOC and OFCCP are going about pursuing the claims. A rudimentary statistical review of employment data provided in the EEO-1 Report or EO Survey can now lead to a government investigation and a potential class action for systemic discrimination. Some, like Mary Swanton in her article "Offensive Measures" theorize that the EEOC (not unlike the plaintiff's employment bar) is trying to get more bang for its buck by taking on larger class action type suites. When you combine this trend with the audit tactics that I will outline in my next posts, it looks ominous for employers.

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The incidents of corporate raiding and mass employee defections to competitors are on the rise as businesses scramble to find and retain high quality employees. Under any business model, it is far easier to recruit away a group of experienced employees with a "book of business" than it is for an employer to start from scratch.   Whether or not these actions are "illegal" or just aggressive competition primarily turns upon the existence of any contracts limiting competitive activities by employees and former employees.

Corporate raiding isn't just a Wall Street phenomenon. It was recently reported that Resource Bank, a Virginia based subsidiary of Fulton Financial Corporation, was hit with a defection of nearly its entire mortgage company staff to a rival lender. The employees allegedly followed two executives who are now accused of orchestrating an employee raid. The former Resource Bank executives signed employment agreements containing restrictions on soliciting employees on behalf of a rival business. This good business practice will undoubtedly form the primary basis for legal claims by Resource Bank against its competitor.

Noncompetition Agreements are invaluable in protecting legitimate business interests provided they are carefully drafted and properly executed. Such agreement typically contain some or all of the following clauses:

• Prohibitions on a former employee's competition by working for or starting a competitive business.
• Restrictions on soliciting, selling to, or providing services to customers and prospective customers of the former employer.
• Restrictions on soliciting employees of the former employer.
• Prohibitions on using or disclosing confidential business information of the former employer.

There are special legal requirements for noncompetition agreements under Pennsylvania law. As restrictions on free trade, these agreements must be:

• Necessary to protect an employer's legitimate business interest
• Entered into at the commencement of the employment relationship or supported by "additional consideration" in the form of a promotion or payment
• Reasonably limited in duration and geographic scope

On the other hand, prohibitions on disclosure of confidential information need not be supported by consideration or limited in duration. However, it is essential for an employer to define the scope of what is confidential by delineating the specific categories of material and taking steps to keep it from entering the public domain.

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It starts out as a normal workday in the HR department of XYZ company…You just deleted 54 spam e-mails, listened to 27 inane voice messages, and refilled the empty coffee pot (again). You look out the window to the parking lot (because those are the types of scenic views HR managers get in the corporate hierarchy). You notice several buses surrounded by black clad, gun wielding figures with the letters "INS" on their jackets. This can't be good. You look over to the file cabinet with the drawer labeled "I-9 Forms". Your next thought… "I hope I'm not Paris Hilton's cell mate?"

This may have been how it went down at Iridium Industries' Artube Division in East Stroudsburg, Pennsylvania when 81 employees were arrested in an immigration raid. Fortunately for them, the target was a temporary agency operating in the area. The subject of immigration compliance for temporary agencies has been covered by me in a previous post.

The immigration raids are conducted by the U.S. Immigration and Customs Enforcement (ICE) as part of its "Worksite Enforcement Initiative". These raids target "egregious employers involved in criminal activity or worker exploitation." However, the scope of ICE operations might suggest more as it operates 17 teams making 15,049 immigration arrests.

The INS has several mechanism to discover the employment of illegal workers including the following:

• Social Security Mismatch Letters: Coordination between the IRS and the SSA began in 2002 with the issuance of "mismatch letters" that require an employer to check and report on discrepancies between SSN# and W-2 forms. The SSA process and ramifications are summarized in a posting by Linda S. Husar.
• DOL and OFCCP Audits: Several government agencies conduct random audits of employer's I-9 forms as a part of their other audit activities.
• Proposed Electronic Employment Verification System (EEVS): The White proposal for an electronic verification system under the Immigration Reform Bill is likely to succeed. Under this system, employers will be required to verify the work eligibility of ALL employees.

The consequences to a business and individuals for noncompliance with immigration laws including correct I-9 reporting are significant. The following is a partial list of penalties:

• For employers who fail to properly complete, retain, or make I-9 Forms available for inspection, fines range from $100 to $1,100 per individual I-9.
• For employers who knowingly hire or knowingly continue to employ unauthorized workers, civil penalties range from $250 to $11,000 per violation.
• For employers engaging in a pattern or practice of knowingly hiring or continuing to employ unauthorized workers, fines can be as much as $3,000 per employee and/or 6 months in imprisonment.

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The Human Resource Blog has a great post on the benefits of hiring a summer intern. At the risk of throwing the legal wet blanket on internship programs, employers need to be cautious when it comes to unpaid interns. The FLSA provides minimum wage and overtime protection to those employed within the meaning of the Act. FLSA section 3(g) states that to “employ” means to “suffer or permit to work.” The Supreme Court in Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947), identified six factors to evaluate whether a trainee, intern, extern, apprentice, graduate assistant, or similar individual is to be considered an employee. If all of the following six factors are met, then an