August, 2007

Hello!

Can you believe that summer is coming to an end? Soon vacations will be ending and our offices should be back into a more normal routine. Maybe you are finally getting to your own vacation? If so, please enjoy.

We begin this month's newsletter with an announcement:

The Small Business Success Conference
Long Beach, October 3rd
IS POSTPONED!

It is our hope that we will soon be seeing a new date for this event. We will of course keep you posted as any new details are released. Thanks for your support of this conference if you had previously registered.

Summer invites relaxation. So to keep you on your toes, our articles this month are full of information on what to pay attention to with your employee documentation. We begin with social security discrepancies ... what to do and how to do it, upon discovering a potential illegal employment.

Also in this month's newsletter is detail on the importance of accurate record keeping for wages paid to employees. This, of course, includes overtime, something you may have experienced more of during the summer as employees cover for each other.

Here is a quick quiz to start you thinking about regulations for wages:

The Situation
Last week, Dick gave notice that he would quit in four weeks. However, Dick's boss Danielle wants to "advance" his resignation to today. If Danielle terminates Dick today, will she owe him for the remaining three weeks of his notice period?

Pick an Answer
A. Yes, Danielle is legally required to pay Dick for the remaining three weeks until his quit date.

B. No, as long as Danielle does not require employees to give advance notice before they resign.

C. Danielle must pay for the remaining three weeks only if she did not consider terminating Dick before he gave his notice.

You can find the correct answer at the end of our articles.

Enjoy our August articles.

New Regulations Issued Regarding Social Security "No-Match" Letters

On August 10, the Department of Homeland Security (DHS) implemented new rules regarding Social Security No-Match Letters. Under the regulations, new specific legal obligations are imposed on employers that receive the so-called "no-match" letter from the Social Security Administration (SSA). A no-match letter may be issued when an employee's social security number does not match the employee's name in the SSA database.

The new rules add two specific examples of where an employer may be deemed to have "constructive knowledge" regarding illegal employment. These include:

1. Receiving written notice from the SSA that the combination of the name and social security number submitted for an employee does not match SSA records.
    
   


2. Receiving written notice from DHS that an immigration status document or employment authorization document presented by an employee as proof of work authorization is assigned to another person or that there is no DHS record of the status document or employment authorization document being issued to that employee.

Employers may take specific steps under the "safe-harbor" procedures to protect against the DHS using the no-match letter as evidence that the employer has constructive knowledge of employing an illegal worker.

To be eligible for "safe harbor" under the regulations, an employer must take action within 30 days of receipt of the no-match letter by either correcting clerical errors or requesting the employee to correct the error directly with the SSA or DHS.

In the event that the discrepancy cannot be clarified within 90 days, the employer must then choose between terminating the employee or face the risk that DHS will determine they have constructive knowledge of employing an illegal worker.

Although DHS will continue to consider the totality of the relevant circumstances in determining the employer's "constructive knowledge" regarding illegal employment, employers should pay special attention to the "safe harbor" procedures. Employers should also implement and execute company policies in a non-arbitrary, consistent and non-discriminatory manner.

© 2007 OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.
www.ogletreedeakins.com

Our Arizona employers should be especially aware of these rules since the recent passage of the state law imposing severe penalties on employers who "knowingly" employ undocumented workers. If you would like a review of your I-9 forms and your hiring procedures, call us at 480-924-6101 or send an e-mail to Margaret@mjms.net.


FLSA Recordkeeping Violations Bite Employers

Do you know what information you need to record about your employees' work time?Sloppy wage and hour recordkeeping can result in big verdicts against employers for unpaid wages and significant penalties.

Q. I recently heard at a seminar that employers can be liable for recordkeeping violations under the Fair Labor Standards Act (FLSA). Our wage and hour records are incomplete. Could this be a problem?

A. Absolutely. While most employers do not think of recordkeeping violations as being a big issue, a recent district court verdict and Department of Labor (DOL) settlement indicate that you could face big penalties if you are not keeping accurate records of your employees' work time.

Without proper records, you cannot be sure you are paying your employees for all time actually worked, including overtime, and you leave your organization vulnerable to expensive wage and hour claims.

A district court in Maryland recently determined that a nonprofit organization operating community living facilities owed over $525,000 to almost 400 employees in back wages and penalties. The court found that the organization failed to keep proper timesheets for employees and did not pay wages and overtime owed. (See Chao v. Self Pride, Inc., 2006 U.S. Dist. LEXIS 18865 (D.Md. 2006), affirmed, 2007 U.S. App. LEXIS 11543 (4th Cir. 2007).

And, in 2005, the DOL settled a case against a New York convenience store distributor for more than $831,000 in damages involving more than 100 employees. The DOL agreed with a court's determination that the employer had failed to keep proper records and did not pay overtime appropriately over a two-year period.

Clearly, recordkeeping violations can be expensive. So, you need to make sure that you understand your obligations.

Here is an overview of the FLSA's recordkeeping requirements.

The FLSA requires covered employers to maintain basic payroll and other records for each employee, explained in the FLSA regulations at 29 C.F.R. §516.1, et seq. The regulations do not specify any particular form of records.

In general, employers should retain for at least three years, from the last date of entry, payroll records containing the following information:

• Each employee's name, as used for Social Security, and the employee's identification number or symbol, if used in place of the name
  on any payroll record;
   
  
• Home address and zip code;
   
  
• Date of birth for employees under the age of 19;
   
  
• Sex and occupation;
   
  
• Time and day of the week when the employee's workweek begins;
   
  
• Regular rate of pay for any week when overtime is worked, hours worked each workday and total hours worked each workweek, total daily or weekly straight-time earnings, and total overtime compensation for the workweek (this requirement applies only to nonexempt employees);
   
  
• Total additions to or deductions from wages for each pay period;
   
  
• Total wages for each pay period, date of payment, and pay period covered by the payment;
   
  
• Certain collective bargaining agreements, plans, and trusts; employment contracts; and notices of the Wage and Hour Administrator;
   
  
• and Sales and purchase records for employees who are subject to minimum wage requirements and tipping.

In addition, you also should keep supplementary basic records for all employees for at least two years. These records include:

• Wage rate tables;
   
  
• Work time schedules, time cards or sheets, and records of amount of work produced by each employee;
   
  
• Order, shipping, and billing records;
   
  
• Records of additions to or deductions from wages paid.

As the employers found in the cases discussed above, if you do not keep proper records of work hours, the DOL and courts may rely on employee testimony to establish the number of hours worked. Many state wage and hour laws also require employers to keep certain payroll records and should be consulted.

© 2007 Personnel Policy Service, Inc. All Rights Reserved.

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The correct answer to our quiz is "B".
Please note that this quiz is not advice and the correct answer depends on your company profile.
© 2007 LawRoom

ABOUT MJMS, INC.

President and Principal Consultant: Margaret Jacoby, PHR

Margaret Jacoby has more than 25 years of Human Resources and professional management experience in a variety of industries. She has designed human resources infrastructure and implemented systems to ensure compliance with state and federal employment laws. She has directed high quality human resources functions for small and emerging businesses, and served as an external consultant to a wide range of diverse organizations, including non-profits.
 
Her work has included: 

• Conducting H.R. Needs Assessments
• Drafting employee handbooks and policy manuals
• Conducting job analysis and developing position descriptions
• Conducting on-site compliance audits
• Counseling management on progressive discipline
  
• Drafting and review of employee disciplinary actions
• Providing mediation in employee/employee conflict
  
• Training employees/supervisors/managers in the implementation of human resources systems and policies such as Sexual Harassment
• Conducting workshops for business owners on H.R. compliance issues.

 
Ms. Jacoby has earned the nationally-recognized certification of Professional in Human Resources (PHR) from the HR Certification Institute, Society for Human Resource Management (SHRM).
 
Ms. Jacoby's professional affiliations include:

• Professionals in Human Resources Association (PIHRA)
• Society for Human Resource Management (SHRM)
• National Association of Women Business Owners (NAWBO), Los Angeles and Phoenix
• California Chamber of Commerce


• Arizona Small Business Association (ASBA)
• Long Beach Community Business Network (LBCBN)
• Institute for Management Consultants (IMC)
• Los Angeles Area Chamber of Commerce