A January Surprise!

Are you on the 'E-Verify' hook? If you have a contract for services or construction with the Federal Government, then you probably need to get to know 'E-Verify'. But even if you don't have a federal contract, you still might need to get to know 'E-Verify'. Here's why:

In an earlier blog posted on July 21, 2008, Senitria Goodman explained the computer-based E-Verify program of the U.S. Department of Homeland Security and discussed the proposed rule that makes it mandatory for any federal contractor or subcontractor to use 'E-Verify' for all employees 'assigned' to the federal contract. After a comment period on the proposed rule, a slightly revised final rule was published on November 14, 2008. Its effective date is January 15, 2009.
Basically, the new regulation states that if you provide services or goods (except goods that are 'commercially available off-the-shelf') under a contract with the U.S. government, you are required to use the 'E-Verify' program to verify whether your employees working under the federal contract are eligible to work in in the U.S. (When we talk about being 'eligible' we are talking about making certain that you are not employing someone in violation of U.S. Immigration laws; this is why you complete a Form I-9 for all of your employees.)
If you have a federal contract, you must use E-Verify on all employees assigned to work under the government contract. Furthermore, you must also use E-Verify on all new hires - whether or not they are assigned to work under the government contract.
Now, here's the fun part. All federal contractors must include language in their subcontracts that the subcontractor will use the E-Verify program under the same circumstances. By now you have probably figured out that - even if you are not a federal contractor - this means that if you do business with someone who is a federal contractor - or even another subcontractor of a federal contractor - you may also have to use the E-Verify program for your employees.

Here is the language from the regulation identifying who a 'subcontractor' is:

"Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor." (emphasis added)

Following this to its absurd conclusion, you might be required to use E-Verify for your employees if a product you provide ultimately ends up in the hands of a federal contractor.
Fortunately, there are some restrictions that narrow this interpretation; the subcontract must meet the following specifications:

1. The subcontract is for 'commercial or noncommercial services' or it is a construction contract;
2. The subcontract has a value of more than Three Thousand Dollars ($3,000.00); and
3. The subcontract includes work performed in the United States.

Nonetheless, if you perform a contract meeting these qualifications, you might be obligated to use the E-Verify program for your employees. The federal contractors are required to put this requirement in their contracts with their subcontractors, so read your contracts carefully - and govern yourself accordingly.

Happy New Year!

FMLA UPDATE

Below you will find links to the final Family and Medical Leave Act regulations addressing the changes arising from the National Defense Authorization Act amendments. You'll recall that the FMLA was amended to create a new class of leave (servicemember leave) and a new basis for leave (call to active duty). Note that the appendices of the final rule includes new forms to be used in accordance with the revised law.

Part I: http://www.hsdlaw.com/pages/Part%20I.pdf
Part II: http://www.hsdlaw.com/pages/Part%20II.pdf
Part III: http://www.hsdlaw.com/pages/Part%20III.pdf

If you're having any difficulty in obtaining the regulations, please contact me at lsteel@hsdlaw.com, and I will be happy to send them to you by e-mail.

Money, money, money, money

The holidays are, perhaps unnervingly, quickly approaching. For some employers, holiday time means bonus time. This time of year may also mark the end of a quarter where bonuses are routinely awarded. It's, thus, the perfect time for us to remind you about the treatment of bonuses paid to non-exempt employees under the Fair Labor Standards Act ("FLSA").

For those of you who are scratching your head, we may have some issues to deal with one-on-one. Yes, bonuses may count as compensation (and impact a non-exempt employee's regular hourly rate) under the FLSA. The question to ask becomes, "Is the bonus discretionary?" In other words, is it solely your company's call whether to pay the bonus? If the answer is yes, then you do not count the bonus toward the employee's regular hourly rate.

Now, did you announce that everyone would receive a bonus upon, say, meeting a productivity goal, or meeting a minimum number of hours without any missed time, or that everyone would receive a bonus because your company hit an economic milestone? If this answer is yes, then you must recalculate the employee's regular hourly rate for the time period covered by the bonus. Once that is done, you must determine if any overtime was paid to the employee. If the employee did have overtime during that period, you'll need to make an overtime adjustment payment based upon the increased hourly rate.

Some food for thought as we approach a season commonly associated with eating. Gobble up the turkey (get it? Gobble?), catch as much football as possible (get it? Catch?), and check out your bonus program (get. . . oh, never mind).

Happy bonusing!

Toto, I've a feeling we're not in Kansas anymore

Exactly the thought that ran through my head when I read the Hannan v. Alltel decision handed down on Halloween from the Tennessee Supreme Court. The next thought was, "Perhaps the justices are putting on their idea of a haunted house? What you see is not real, only put before you to scare your wits off."

No such luck. For those of you who are familiar with litigation, you probably recall your attorney talking to you about possibly filing a Motion for Summary Judgment. In effect, the motion asks the court to believe everything the opposing party is saying and still find for your side because the facts are insufficient to support the claim, the facts fail to support an essential part of the opposing side's claim based upon case and/or statutory law, you get the idea. You're saying to the court, "Your Honor, it does not matter to us if the story presented by the other side is true. In fact, please give the other side the benefit of the doubt. At the end of the day, the case law and the statute require that you find for us." It's a powerful tool to have on your side.

The Alltel decision works to reduce the probability that the party moving for summary judgment will be successful by, for all intents and purposes, raising the bar you must clear in order to prevail. The standard to take away from Alltel is that summary judgment will only be granted where the party asking for it can "(1) affirmatively negate an
essential element of the nonmoving party’s claim; or (2) show that the nonmoving party cannot prove an essential element of the claim at trial." May not sound like much, but these two options will most likely change the way your attorney weighs the use of this tool in his/her litigation strategy.

The Court, in its opinion, says it is reinforcing over 10 years of precedent in this state of when summary judgment is appropriate. Perhaps, but I would venture the guess that some summary judgments granted before the Alltel opinion might not have been upheld if challenged in the post-Alltel court system. The opinion, for those of us who practice employment defense litigation, is reminiscent of something we would read out of a California state court, not the warm surroundings of Tennessee's judicial system.

So does this change the way you conduct your daily operations? No. But it is something to keep in mind next time you find yourself in the Tennessee court system. If you are in those shoes, you certainly would be wise to ask your attorney if there is some way to have your case removed to the federal court system, where the employer-friendly opinions for our Circuit remain relatively intact. . . at least for now.

[Cue Vincent Price's laugh from "Thriller"] Happy trick-or-treating!