Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance. Employment Law Breakfast Series Sponsored by Cowles & Thompson, PC & The International Business Council of the Frisco Chamber Employment lawsuits and government audits and investigations are at a record high. In 2013 the government settled the largest immigration fine in history with a Plano, TX based company in the amount of $34 million for charges of visa and I-9 non-compliance. Avoid the penalties, damages, and negative publicity for those who have been caught unaware. Regardless of size or industry, your company must be able to prove its observance of federal and state employment laws and regulations concerning both domestic and foreign workers. The Frisco Chamber of Commerce International Business Council and Cowles & Thompson, PC presented three educational events to help your organization meet regulatory challenges for your domestic and foreign employee workforce. This is the third event - Best Practices for Business - held on August 6, 2014 at the Frisco Chamber of Commerce, Frisco, Texas.

1. Avoiding Workplace Pitfalls
Domestic and Foreign Employee Compliance
Session III – Best Practices for Businesses

2. Agenda
1
2
3
Immigration Compliance Best
Practices
How to Prevent and Defend Government
Investigations
The FLSA, Worker Misclassification &
North Texas Businesses

3. Immigration Compliance
Best Practices
Ann Massey Badmus
Angela M. Lopez
Katrina M. Moore
Cowles & Thompson, P.C

4. Immigration Compliance Plan
Written Procedures
and Policies

5. Written Procedures & Policies
I-9 procedures for
hiring and re-
verification
Anti-discrimination
policies
Retention of I-9
forms
E-Verify
procedures, if
applicable
Investigations

6. Immigration Compliance Plan
Training and
Supervision
• Group training
• Individual training
• Sample training
• Ongoing and periodic

7. Immigration Compliance Plan
Secure and Consolidated
Recordkeeping
• Retention
• Electronic storage
• Separation from
personnel records
• Consolidation

8. Immigration Compliance Plan
• Establish a protocol to
respond to no-match letters
and other agency
notifications
• Be consistent and do not
discriminate
• Allow employees to make a
good faith effort to resolve
the discrepancy
Social Security
No Match

9. Immigration Compliance Plan
Independent Contractor Compliance
– Clear communication that contractor is
responsible for I-9 compliance
– Require proof of I-9 policies and procedures
– Get commitment to send only work authorized
employees to your worksites
– Include indemnification clauses
– Reserve right to cancel if contractor has violated
I-9 rules
– Notify contractor you will investigate credit
reports of unauthorized workers

10. Immigration Compliance Plan
Anti-Discrimination Best Practices
– Consistency – do not treat workers differently because of
immigration status
– No “citizen only” policy
– Do not demand specific documents, e.g. “green card”
– Do not re-verify “green card” when the card expires
– Do not demand more documents than needed to
complete I-9
– Do contact an immigration attorney if uncertain

11. Immigration Compliance Plan
Violations reporting
and investigations
• Non-discriminatory
and consistent
• Credible, detailed
reports
• Follow company policy
regarding terminations
and other related
policies
• Enforce, enforce,
enforce!

12. I-9 Self Audits
Prepare for government audit
Identify errors
Identify training issues
Demonstrates good faith
compliance

13. I-9 Self Audits
Internal – experienced HR
Attorney audit
Third-party auditors

14. Post-Audit Implementation
Conduct training
Ensure corrections are made
Review audit report and implement
procedural changes
Maintain ongoing project attitude

15. ICE Enforcement Action

16. Responding to ICE Enforcement Actions
Choose a point person
Ask to see documents authorizing the search of
premises or employees (warrant)
Make copy of the warrant, notice of inspection
(NOI), subpoena, etc

17. Responding to ICE Enforcement Actions
Ask about purpose and scope of inspection
Accompany agents on the search
Comply with the warrant but do not volunteer
information not covered by warrant

18. Responding to ICE Enforcement Actions
If I-9 inspection, don’t waive right to 3-day notice (ask
for extension)
Separate I-9 forms from personnel files
Offsite review – make copies of all documents
submitted
Onsite review – seat office in conference room or
somewhere separate from work areas

19. Responding to ICE Enforcement Actions
Call an experienced attorney immediately
upon receipt of the NOI or initiation of
enforcement action and do not allow agents
to talk with employees before calling an
attorney.

20. Immigration Counsel
Develop written
compliance plans and
audit safeguards
Conduct compliance
audits
Develop contractor
compliance and
termination policies

21. Immigration Counsel
Conduct training and
reviews
Advise on
immigration-related
hiring or firing issues
Represent company
during enforcement
actions

23. The FLSA, Worker Misclassification &
North Texas Businesses
Mark Hill
Shareholder, Cowles & Thompson, P.C.

24. Legal Landscape
 100s of claims are filed in North Texas
State and Federal Courts everyday.
 Employment claims against local
businesses are an increasing part of the
legal landscape in Collin, Dallas and
surrounding counties.

25. Most Common Business Claims
Fiduciary cases Contract cases
EMPLOYMENT
cases

26. Employment Cases
Non-Compete
Confidentiality
& Trade Secret
Discrimination
FLSA

27. What is the FLSA?

28. Fair Labor Standards Act (FLSA)
The FLSA establishes minimum wage,
overtime pay, tip pooling, record keeping,
and youth employment standards affecting
employees in the private sector and in
Federal, State, and local governments.

29. Key FLSA Components
“Collective
Action”
treatment
Liquidated
Damages
Willful
Violations
Recovery of
Attorney’s
Fees

30. FLSA Claims Filed
Within The Last Month

31. Recent FLSA Claims
Laundromat - Attendant
● Min. Wage, OT
Payroll co. - Consultant
● Misclassification, OT
Medical co. – Customer Serv. Coordinator
● OT, Time Sheet manipulation
Cleaning serv. – Maid/Cleaners
● Min. Wage, OT, Travel time

32. Worker Classification

33. Independent Contractor or Employee
This may surprise some, but having a worker
sign an Independent Contractor agreement does
not make that worker an independent
contractor.
…At least not by itself.

34. Worker Classification Analysis
The Supreme Court has said that there is no definition
that solves all problems relating to the employer-
employee relationship under the FLSA.
The goal of the analysis is to determine the underlying
“economic reality” of the situation and whether the
individual is economically dependent on the supposed
employer.

35. Several Factors to Consider
A Framework has been established to determine
whether a worker is an employee or an independent
contractor.
Several factors to consider – no one factor controls.
The Supreme Court has said determination of the
relationship cannot be based on isolated factors or
upon a single characteristic, but depends upon the
circumstances of the whole activity.

36. Independent Contractor Framework
(1) the extent to which the worker's services are an integral
part of the employer's business;
(2) the permanency of the relationship;
(3) the amount of the worker's investment in facilities and
equipment;
(4) the nature and degree of control by the principal;
(5) the worker's opportunities for profit and loss; and
(6) the level of skill required in performing the job and the
amount of initiative, judgment or foresight required for
success.

37. Misclassification is a Focus
The U.S. Department of Labor (DOL) is also making
employer compliance with the FLSA a focus, and
misclassification of employees as independent
contractors is at the center of its scrutiny.
A recent study by the University of Texas found that
almost half of all construction workers were
misclassified as independent contractors.

38. What can the Business
Owner do?

39. How to Prevent and Defend
Government Investigations
Brian Farrington
Shareholder, Cowles & Thompson, P.C

40. Preparing for a Wage Hour Investigation
1. Identify all salaried exempt employees.
(Distinguish from salaried nonexempt.)
2.Make sure you know what exemption you are
claiming for each.
3. Some are obvious—CEO, etc. Focus on the
ones which are not.

41. Preparing for a Wage Hour Investigation
Make sure you have job descriptions in place for
all, and that they are accurate.
Do periodic audits of jobs—interview
incumbents, make sure duties are what you
think they are, and are accurately represented
in the job description.

42. Preparing for a Wage Hour Investigation
When new job is created, or job functions
change significantly, revisit the job soon
thereafter—e.g., 90 days, 6 months. Make
sure job duties are what you envisioned they
would be.

43. Preparing for a Wage Hour Investigation
Make sure you pay salaried exempt employees
according to the regulations.
Have a policy in place which allows exempt
employees who think they have been
improperly docked to complain, and fix any
problems which arise.

44. Records of Hours Worked
Make sure you have a system in place to record
accurately the hours worked by all nonexempt
employees.
No such system works without proactive
monitoring by first-level supervisors.
Audit periodically—interview employees to be
sure they are recording all hours worked.

45. Records of Hours Worked
Focus on:
Employees coming in early/staying late and
working off the clock.
Employees working through lunch.
Employees not paid for compensable travel.
Preparatory and concluding activities paid.

46. Minimum Wage
Make sure all employees are paid
federal/state/local minimum wage, whichever
is the highest.
For employees paid on a contingent basis (piece
rate, commission, etc.), make sure there is an
automatic feature which identifies any week
in which employee didn’t make MW, and
preferably automatically supplements their
pay.

47. Minimum Wage
Make sure recapture is explained in policies. If
you intend to recapture such advances, make
sure it’s clear and have employees sign an
authorization to this effect.

48. Minimum Wage
Make sure that any deductions for employer’s
benefit don’t reduce employees below MW.
Also, make sure to have employee consents for
any deductions other than legal deductions.

49. Tipped Employees
Make sure you only claim tip credit for eligible
employees—employees with direct customer
serving contact.
Watch state laws—many states don’t allow tip
credit at all, or allow less than the feds.

50. Tipped Employees
Make sure all necessary disclosures are
made—see 29 CFR 531. Have employees sign
forms describing how they are paid, indicating
that they understand, and put copies in
personnel files.

51. Tipped Employees
Make sure employees are reporting enough
tips to bring them up to MW. If not, make up
the difference, preferably automatically. If
employees can’t make at least MW, need to
have another job.

52. Tipped Employees
If you use service charges, make sure they are
announced to the customers, and are included
in gross receipts. Records should clearly reflect
this, even if all are distributed so it’s “in and
out.”
Also, remember that service charge distributions
are wages, not tips, and increase the regular
rate for overtime purposes.

53. Tipped Employees
Make no deductions for the employer’s
benefit—uniforms, shortages, breakage,
walkouts, etc.—from the wages of tipped
employees.

54. Tip Pools
Make all necessary disclosures.
Make sure tipped employees who contribute are
left with MW
Make sure recipients get enough to make MW,
or supplement them.
Make sure only serving employees receive
anything from tip pool—not managers, not
back of house.

55. Overtime
Make sure OT is paid on w/w basis, not longer
periods.
Don’t pay OT on paid time off unless you
really want to.

56. Overtime
Make sure all compensation except statutory
exceptions are included in Regular Rate. Pay
particular attention to bonuses, shift
differentials, on-call pay.
Also, remember that commissions, bonuses,
etc. earned over periods longer than a
workweek must be allocated back over the
entire period they are intended to recognize.

57. Overtime
Make sure expense reimbursements are exact
or reasonably approximate.
If use fluctuating workweek, or daily rate,
make sure these payments are the employees’
only form of compensation.

58. Child Labor
No one under 14.
14 – 15: make sure they aren’t working in
hazardous or prohibited occupations, and
make sure they don’t exceed hours/time
standards
16 -17: make sure they don’t work in Hazardous
Occupations.

59. Investigations
NEVER ALLOW UNANNOUNCED WALK-IN
INVESTIGATIONS! Politely refuse to provide
any information at all. Make an appointment
for investigator to return. Make sure all your
satellite offices know this.
(exception: investigator has a warrant)

60. Investigations
Best practice—give them your lawyer’s
contact info, and let the lawyer handle it.

61. Investigations
When investigator arrives, only provide what
you’re asked. DON’T VOLUNTEER.
Copies of records: don’t have to provide
photocopies or electronic copies, but makes
sense in most cases.

62. Investigations
Interviews: generally allow investigator to
interview on premises.
Don’t coach employees, but for exempt
employees, make sure they understand and
can explain all their duties and
responsibilities. Pre-interviews are helpful.
May sit in on interview of supervisors when
discussing employer policies, not individual’s
exempt status.

63. Investigations
Final conference: don’t agree to anything you
are uncomfortable with without checking with
your lawyer.
DON’T SIGN THE BACK WAGE SUMMARY! Unless
you agree.
If you can’t resolve with investigator, ask for a
second level conference
If you are assessed CMP’s, appeal timely. You
can then negotiate.

64. EEOC—General
Audit policies—have all the ones you need: EEO,
harassment, etc.
Have a discrimination/harassment complaint
procedure in place.
Thoroughly and timely investigate all internal
complaints, no matter how unlikely.
Inform complainant of results, positive or
negative.
NO retaliation!

65. EEOC—General
Accurate essential function job descriptions
should be in place for all jobs, updated as
needed and audited periodically.

66. EEOC—General
EEO, anti-harassment training should be
provided:
-all supervisors
-all interviewers
-all HR personnel
-all employees, to some extent
Record who took the training, when, and have
copies of content on file.

67. Responding to Charges of Discrimination
Issue a “document hold” ensuring no relevant
documents are destroyed.
Make sure charge is timely—CP’s generally must
complain within 300 days of date of alleged
discrimination.
Decide if you want to mediate—usually do so if
you are vulnerable.

68. Responding to Charges of Discrimination
Position statements:
-make sure all assertions in charge are accurate.
If not, say so.
-Explain your reasons for adverse action.
-Provide documentation
-Address comparators—point out the helpful
ones, distinguish the bad ones.

69. Responding to Charges of Discrimination
“Same actor” inference—if the same person(s)
who fired the CP hired him/her, point this out.
Provide relevant policies, and show how you
followed, or why you didn’t.
Respond to any questions in the Questionnaire
or Request for Information, but briefly and
succinctly.

70. Responding to Charges of Discrimination
Employers have a
right to be present
for any interview
of supervisors.

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Dallas, Texas 75202
214-672-2000
info@cowlesthompson.com
www.cowlesthompson.com
How to connect with us

73. What to Do Next?
Facts of each case are different.
The general information provided
here should not be relied and is
not legal advice.
Consult with an experienced
attorney to get the right
advice for your specific
circumstances.