Category Archives: Colorado

February 16, 2017

Court Overturns $1.3 Million Trade Secret Award Because Design Isn’t Secret

By Mark Wiletsky

Businesses often go to great lengths to protect the secrecy of an essential product design or valuable manufacturing process. But if that design or process is commonly known in the industry, it isn’t actually secret and won’t be protected under trade secret law. One business recently had a $1.3 million jury award for trade secret misappropriation overturned when the Colorado Court of Appeals ruled that its sealed bearing pack design was not a trade secret. Hawg Tools, LLC v. Newsco Int’l Energy Servs. USA, Inc., 2016 COA 176M.

The Design of Sealed Bearing Packs For Mud Motors

Hawg Tools supplies and rents equipment used by oil and gas drilling companies. One of the tools supplied by Hawg Tools is called a mud motor, which is inserted into an oil well hole for drilling operations. One of the components in the mud motor is a bearing pack that allows a tubular shaft to turn the drill bit without friction. Bearing packs can be either wash bearing packs, which leave the bearings exposed to the surrounding drilling fluid, or sealed bearing packs, which are sealed to prevent fluid from entering the bearing assembly. Sealed bearing packs last for days whereas wash bearing packs last only a few hours. Consequently, the sealed packs permit drilling to continue longer before maintenance is required.

In 2008, Daniel Gallagher, the owner of Hawg Tools, arranged for a designer, Joe Ficken, to design the sealed bearing packs to be used in mud motors for one of Gallagher’s prior businesses. Gallagher did not request any special features or customizations for the sealed bearing packs. Ficken stated that the design was simple and took him only two days to complete. Through a series of assignments, all rights in Ficken’s design were assigned to Hawg Tools.

Hawg Tools Files Lawsuit For Misappropriation of Trade Secrets

In 2011, Ficken accepted a job at Newsco, an oil and gas drilling operation that also uses mud motors, where he was asked to design sealed bearing packs for Newsco’s use. In 2013, Gallagher discovered that Ficken had designed a sealed bearing pack for Newsco that was similar to the design he had assigned to Hawg Tools. Gallagher filed a lawsuit against Newsco and Ficken for misappropriation of a trade secret, as well as other claims, based on Newsco’s use of the similar sealed bearing pack design.

The case went to trial and a jury returned a verdict of $1.3 million in favor of Hawg Tools on its trade-secret claim, with additional damages awarded on other claims. The trial court denied defendants’ post-trial motions and the defendants appealed to the Colorado Court of Appeals.

Step One: Is It A Trade Secret?

The Court of Appeals determined that Hawg Tools had provided ample evidence at trial to establish that Newsco’s design of its sealed bearing pack was essentially the same as its own design. But the appellate court also found that Hawg Tools failed to provide sufficient evidence that its design was in fact a trade secret.

The Colorado Uniform Trade Secret Act defines a trade secret to include “the whole or any portion . . . of any . . . design . . . which is secret and of value.” The Court of Appeals thus looked at whether the design of Hawg Tools’ sealed bearing pack was in fact secret and not a matter of public knowledge or of general knowledge in the trade or business.

The Court acknowledged that a design may be a protectable trade secret if it includes a combination of elements in the public domain that is unique and the unified design or operation of those elements provides a business with a competitive advantage. However, if the design is not unique to the business, the publically known elements typically will destroy an attempt to characterize it as a trade secret.

In examining the evidence regarding the design of the sealed bearing packs, the Court found that Hawg Tools did not show that its design was different from other designs that were publically available at the same time. In fact, the Court noted that sealed bearing packs had been around since 1971. Evidence in the record showed that Hawg Tools’ design was “of public knowledge or of a general knowledge” in the mud motor manufacturing business. Therefore, the Court ruled that there was insufficient evidence that the design was secret. The Court overturned the jury’s verdict on the misappropriation claim, depriving Hawg Tools of the jury’s $1.3 million award. It is unclear whether Hawg Tools will seek review at the Colorado Supreme Court.

Lessons Learned

Trade secrets must be truly secret to be protected under trade secret laws. Businesses may utilize various legal means to protect confidential information that may not rise to the level of a trade secret, including using non-disclosure agreements and other contractual restrictions. But in order to allege a claim of misappropriation of a trade secret, the design, process, or formula at issue must not be in the public domain or known within the industry.

February 7, 2017

SEC Targets Severance Agreements That Impede Whistleblowers

By Mark Wiletsky and Brian Hoffman

The U.S. Securities and Exchange Commission (SEC) is cracking down on severance agreements that prohibit former employees from contacting regulators or accepting whistleblower awards under threat of losing their severance payments or other post-employment benefits. More and more, the SEC’s Enforcement Division has announced new cases filed against, and settlements made with, companies which restrict former employers from blowing the whistle through severance agreement clauses. Many of the scrutinized companies are not in the securities industry, and the problematic contract language is not as obvious as you may think.

Dodd-Frank Act Established Whistleblower Programs

The 2010 Dodd-Frank Act established whistleblower programs for the SEC as well as the Commodity Futures Trading Commission. Under the SEC’s whistleblower program, eligible whistleblowers who provide unique and useful information about securities-law violations to the SEC can collect significant awards of 10-to-30 percent of a penalty that exceeds $1 million.

Essential to the program, however, are the anti-retaliation provisions, which prevent whistleblowers from suffering adverse actions as a result of their whistleblowing activities. In addition, an SEC rule, Rule 21F-17, prohibits any action that impedes an individual from communicating with the SEC about possible securities violations. Rule 21F(h)(1) of the Dodd-Frank Act prohibits employers from taking retaliatory actions against whistleblowers who make protected reports.

Award Waivers, Confidentiality, and Non-Disparagement Clauses

Severance agreements often contain boilerplate language, occasionally including clauses that restrict a former employee from disclosing any confidential company information and disparaging the company or its officers and managers. Agreements also sometimes require that a former employee agree to waive any awards or monetary recovery should he or she file a complaint with a governmental agency. These severance provisions are exactly the type of restrictive language that the SEC has been targeting.

In its first whistleblower protection case involving restrictive language, in 2015 the SEC charged a global technology and engineering firm with a violation of Rule 21F-17. The company had required witnesses involved in internal investigations to sign confidentiality agreements that stated that the employee could face discipline or termination if they discussed the matter with outside parties without the prior approval of the company’s legal department. Because the investigations could involve possible securities-law violations and the clause prohibited employees from reporting possible violations directly to the SEC, the SEC found that the restrictive language in the confidentiality agreements impeded whistleblowers. The company agreed to pay a $130,000 penalty to settle the charges and voluntarily amend its confidentiality statements to add language to inform employees that they may report possible violations to the SEC and other federal agencies without company approval or fear of retaliation.

Recent SEC Cases Targeting Severance Agreements 

Additional whistleblower severance agreement cases highlight other clauses targeted by the SEC. In mid-2016, the SEC charged a building products company with using severance agreements that required former employees to waive their rights to a monetary recovery if they filed a complaint with the SEC or another government agency. The clause stated that the departing employee was required to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits. The company did not admit liability, but agreed to settle with the SEC for a $265,000 penalty.

Also in mid-2016, the SEC charged a financial services company for using language in agreements that restricted employees’ ability to disclose information to government agencies. Problematic wording included restricting any disclosure of confidential information, except when disclosure is required by law, in response to a subpoena, or with the company’s permission. (See also our prior client alert on the above three cases.)

Read more >>

February 1, 2017

Workplace Implications of the President’s Immigration Executive Order

6a013486823d73970c01b8d1be606f970c-120wiBy Roger Tsai

On January 27th, President Trump signed an Executive Order titled “Protecting the Nation from Foreign Terrorist Entry into the United States” immediately suspending the entry of citizens from Syria, Iran, Libya, Somalia, Yemen, Iraq, and Sudan, as well as the entry of new refugees. Employers with immigrant employees in the affected countries are encouraged to suspend work-related travel into the U.S. for the time being, as they may be unable to enter the U.S. Where possible, immigrant employees currently in the U.S. from the affected countries, even those with valid immigration documentation, such as H-1B visas, should avoid international travel for the next 90 days unless there is more clear indication of enforcement activities, a change to the Executive Order, or court-related clarity.

Who Does The Executive Order Impact?

  • Foreign nationals from the seven affected countries will likely be temporarily prevented from entry at U.S. airports and ports of entry by U.S. Customs and Border Protection for a 90-day period. Similarly, U.S. Embassies abroad are expected to suspend the issuance of temporary nonimmigrant visas and immigrant visas to foreign nationals of the seven countries. The issuance of visas or entry into the U.S. of dual citizens of affected countries will also likely be temporarily suspended. To prevent unnecessary travel, the Department of Homeland Security (DHS) is working with airlines to prevent the selected travelers from boarding international flights. Because the Executive Order also orders DHS to suspend “visas and other immigration benefits” to the citizens of the affected countries, immigrant employees in the U.S. seeking extensions of existing visas through U.S. Citizenship and Immigration Services may potentially be impacted.
  • U.S. permanent residents who are citizens of the affected countries will be allowed to enter the U.S. based on recent updates issued by White House Chief of Staff Reince Priebus and DHS. Initially, the Executive Order only permitted the entry of U.S. permanent residents “when in the national interest” on a case-by-case basis. On January 29th, DHS clarified that lawful permanent resident status will be a dispositive factor in the case-by-case determinations, absent derogatory information indicating a serious threat to public safety and welfare.
  • Newly admitted refugees from any country will be suspended for a 120-day period under the Executive Order. Current employees under refugee status should be permitted to travel internationally but may face additional scrutiny at Customs if they are from the seven affected countries. The entry of new Syrian refugees is indefinitely suspended.
  • Immigrants seeking renewal of their visas through the Visa Interview Waiver Program (VIWP). Previously, the VIWP allowed visitors and other visa holders to renew visas without a consular interview if the immigrant was applying for the same visa category within 12 months of the initial visa expiration. Applicants could simply drop off their application, passport and payment and obtain a renewed visa stamp without undergoing a visa interview. The Executive Order immediately suspends the VIWP and most nonimmigrant visa applicants will be required to attend an in-person interview to renew their visas. The VIWP is separate from the Visa Waiver Program which allows citizens of 38 countries to enter the U.S. as visitors for 90 days without a visa.

Over the course of the next 30 to 120 days, the Department of State and DHS will provide reports to the President regarding the public-security concerns, and we will provide additional alerts as the policy evolves.

January 18, 2017

National Origin Discrimination Checklist

west_lBy Little V. West

National origin discrimination may not be as high on your radar screen as sex, race, or disability discrimination, but it accounted for almost 11% of the total number of charges filed with the Equal Employment Opportunity Commission (EEOC) in fiscal year 2015. The numbers are even higher for states with more diverse populations – 18.1% of total charges for New Mexico were for national origin discrimination, 16.6% in California, 16.2% in Colorado, and 15.3% in Texas, to name a few.

Title VII Prohibits National Origin Discrimination

As you may know, Title VII, which applies to employers with 15 or more employees, prohibits employment discrimination on the basis of race, color, religion, sex, and national origin. Its protections extend to all employees and applicants for employment in the United States.

The EEOC defines national origin discrimination as discrimination because an individual, or his or her ancestors, is from a certain country or region, or shares the physical, cultural, or language characteristics of a national origin or ethnic group. For example, national origin discrimination would result from treating an employee adversely because he or she is from another country or former country (such as Mexico, China, or Yugoslavia), a place that is closely associated with an ethnic group but is not a country (such as Kurdistan), or belongs to a group that shares a common language, ancestry, or other social characteristics (such as Arabs or Hispanics).

While outright discrimination may be more obvious, Title VII also prohibits less straightforward forms of discrimination. For example, Title VII prohibits associational discrimination, which is when an employer treats an applicant or employee less favorably because he or she associates with (e.g., dates, marries, lives with, is the parent of, etc.) someone of a particular national origin. Employment discrimination also results when an employer treats an individual less favorably because he or she does not belong to a particular ethnic group. For example, a Hispanic business owner who refuses to hire anyone other than Hispanics would be discriminating on the basis of national origin. Moreover, discrimination based on the perception or belief that an individual (or his or her ancestors) belongs to a particular national origin group can be discriminatory, regardless of whether the individual is in fact part of that group.

In addition to prohibiting discriminatory employment decisions, Title VII also prohibits unlawful harassment and retaliation based on national origin. Harassment can include the use of ethnic slurs, intimidation, threats, mocking, and other verbal, written, or physical conduct that is directed toward an individual because of his or her birthplace, ethnicity, culture, language, dress, or accent.

EEOC Issues Updated National Origin Discrimination Guidance

In late 2016, the EEOC published an updated enforcement guidance on national origin discrimination. Intending to better explain employee rights and promote employer compliance, the EEOC guidance offers many examples and HR practices in a wide variety of employment situations that could result in Title VII national origin violations.  In addition, it addresses how national origin discrimination often intersects with other protected characteristics, such as race, color, or religion.  The updated guidance includes several noteworthy points:

  • A place of national origin may be within the United States; in other words, “[n]ational origin discrimination includes discrimination against American workers in favor of foreign workers.”
  • Title VII applies to human trafficking. The guidance explains that, in addition to criminal liability for forcing labor and/or exploiting workers, Title VII may also impose civil liability if the conduct is directed towards person(s) in a protected class, including national origin.
  • The joint employer doctrine applies in the context of staffing firms and client employers. The guidance explains that, “[i]f both a staffing firm and a client employer have the right to control the worker’s employment and have the statutory minimum number of employees,” the entities can be considered joint employers. As an example, a staffing firm can be held liable under Title VII if it were to fail to take prompt corrective action for discriminatory actions based on national origin by the client employer.
  • Recognizing that employees have a choice as to which documents to present to establish authorization to work in the U.S., and that  “newly hired employees should be allowed to work if they have applied for but not yet received a Social Security number,” the guidance states that a blanket policy not to hire candidates who lack a Social Security number can violate Title VII if it disproportionately screens out work-authorized individuals in a national origin group.
  • Preference for U.S. citizenship may be unlawful if it has the purpose or effect of discriminating on the basis of national origin.

We encourage you to review the EEOC’s guidance document.

Checklist For Avoiding National Origin Discrimination Liability

To put the EEOC’s guidance into practical terms, here is a handy checklist that highlights concrete HR policies and employment practices to help your organization avoid liability for national origin discrimination or harassment.

  • ˜Your job application and posts should include an equal employment opportunity statement.
  • When recruiting applicants and posting job openings, do not:
    • state a preference for (or against) a particular national origin (e.g., “looking for U.S.-born candidates” or “must not speak with a foreign accent,” etc.);
    • ˜rely only on word-of-mouth referrals from existing employees (keeps applicant pool too homogenous); or
    • ˜send job postings only to non-diverse outlets or communities.
  • ˜Be careful not to reject applicants based on an ethnically sounding name; consider redacting or hiding names on your initial review of applications and resumes so you are not inadvertently influenced by an ethnic name.
  • ˜During interviews, do not ask candidates about their ethnic heritage, ancestry, accent, or any other direct or indirect questions about national origin, even if you are just trying to be friendly or curious.
  • If you conduct background checks or pre-employment testing, conduct it on all candidates/employees in a particular job category – do not single out only those individuals with foreign-sounding names, accents, etc. for such tests.
  • ˜Refrain from segregating or isolating employees based on their national origin (e.g., do not assign all Hispanic workers to lower-paying positions, or keep all Filipino employees away from the public, etc.).
  • ˜Be careful imposing an English-only language rule – any restriction on language spoken at work must be job related and consistent with business necessity, and should not be imposed during employee breaks or other employee personal time while on the employer’s premises.
  • Make sure your harassment policy prohibits harassment based on national origin, and that you train your employees to avoid using ethnic slurs, stereotypes, name calling, mocking tones, etc.
  • ˜Remember that customer and coworker preferences or prejudices do not justify discriminatory hiring, firing, promotion, or discipline decisions.

A culturally diverse workplace can present unique issues for management but can also help employers remain relevant in our increasingly diverse society. Use this checklist to help avoid potential liability for national origin discrimination in your workplace. Additional information on national origin discrimination may be found on the EEOC’s question-and-answer publication and small business fact sheet.

January 10, 2017

Tips For Accommodating Depression, PTSD, and Other Employee Mental Illnesses

6a013486823d73970c01b8d1dc5d4a970c-120wiBy Mark Wiletsky

An estimated 16.1 million adults in the United States had at least one major depressive episode in 2015, according to the National Institute of Mental Health. This number represents 6.7% of all adults age 18 or older in the U.S. About 7 or 8 out of every 100 people will have posttraumatic stress disorder (PTSD) at some point in their lives, says the U.S. Department of Veteran Affairs, National Center for PTSD. That number goes up to about 11 to 20 out of every 100 for veterans who served in Operations Iraqi Freedom and Enduring Freedom.

As these number show, depression, PTSD, and other mental illnesses are relatively prevalent in our society. At some point, you will be faced with an employee who suffers from a mental condition and you need to know your obligations related to potential accommodations for such employees. The Equal Employment Opportunity Commission (EEOC) recently released information to help explain workplace rights for employees with mental health conditions under the Americans With Disabilities Act (ADA). Incorporating the EEOC’s guidance, here are our top practical tips for accommodating individuals with mental impairments.

Tip #1 – Don’t Get Hung Up On Disability Definition

Following the 2008 enactment of the Americans With Disabilities Amendments Act (ADAAA), it is easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the statute. In fact, the ADAAA states that the definition of disability should be interpreted in favor of broad coverage of individuals.

Mental conditions, such as depression, PTSD, bipolar disorder, schizophrenia, and obsessive compulsive disorder (OCD), need not be permanent or severe to be deemed a disability. Instead, as long as the condition substantially limits a major limit activity, such as the individual’s ability to concentrate, interact with others, communicate, sleep, eat, learn, think, or regulate emotions, it will be considered a disability. Even if the employee’s symptoms are sporadic or episodic, if they limit a major life activity when active, the condition will likely qualify. This means that in most cases, you should focus on whether you can accommodate the individual, rather than whether the individual meets the legal definition of having a “disability.”

Tip #2 – Accommodate “Known” Mental Impairments

You have an obligation to reasonably accommodate “known” impairments for otherwise qualified individuals. Generally, this means that an applicant or employee must ask for a reasonable accommodation. But remember that the disabled individual need not use any special words to trigger your accommodation obligation. In other words, the person does not need to specifically say he or she needs a reasonable accommodation or mention the ADA. The individual instead may simply say that they need a change at work, such as needing to arrive late on certain days in order to attend therapy sessions, and your accommodation responsibility begins.

Generally, however, you are not obligated to provide an accommodation when one has not been requested or no work-related change has been mentioned. But, if you have knowledge of an employee’s mental condition (perhaps from prior conversations or medical documentation) and that “known” disability impairs the employee’s ability to know of, or effectively communicate a need for, an accommodation that is obvious, you should engage in a discussion with the employee about potential accommodations.

Tip #3 – Ask For Documentation

When an employee requests a reasonable accommodation due to a disabling condition, ask the employee to put the request in writing, describing the condition and how it affects his or her work. You may also request a letter from the employee’s health care provider documenting the mental condition and that the employee needs a work accommodation because of it.  However, even if the employee declines to provide a request for accommodation in writing, you still have an obligation to engage in the interactive process and potentially accommodate that individual.

Be careful not to discriminate in your requests for documentation. It is best to have a uniform practice of requesting this written information for all accommodation requests, for both physical and mental disabilities, so that you cannot be charged with singling out a particular employee based on a mental illness.

Tip #4 – Keep An Open Mind About Accommodations

Don’t jump to the conclusion that an accommodation will necessarily be burdensome or costly. Some reasonable accommodations for mental disabilities may be relatively benign. Examples may include allowing the employee to wear headphones to drown out excessive noise, writing down work instructions rather than verbal instructions, changing shifts or start/end times to allow for doctor or therapy appointments, or working in a private room.

Of course, if an accommodation will result in significant expense or disruption to your business, you may be able to decline it due to undue hardship. But don’t assume that upon first request. Instead, engage in an interactive process with the employee, including input from his or her health care provider, to consider possible accommodations. A brainstorming session can often produce a variety of workable solutions, and you can choose the one that best suits your business, as long as it permits the employee to perform his or her job.  Be sure to confirm those discussions in writing with the employee to avoid disputes down the road about what was discussed and/or agreed upon. Read more >>

December 21, 2016

No Such Thing As A Free Lunch!

Cave_BradBy Brad Cave

Hundreds of hourly employees sued their former employer alleging that they were due additional overtime pay. They asserted that the company failed to include their $35 daily travel meal reimbursement in their regular rate of pay when calculating time-and-one-half, meaning they were paid less overtime than they were due. The Tenth Circuit Court of Appeals, whose decisions apply to Wyoming, Colorado, Oklahoma, Kansas, New Mexico, and Utah, recently analyzed their claim.

Calculating Regular of Pay

The Fair Labor Standards Act (FLSA) requires employers to pay employees at one and one-half times the employee’s “regular rate” of pay for all hours worked in excess of 40 per workweek. An employee’s regular rate of pay includes all remuneration paid to the employee, subject to certain exceptions. If a part of an employee’s pay is left out of the “regular rate” calculation, the employee’s overtime rate will be undervalued.

A large group of former hourly employees for a nationwide seismic-mapping services company filed a lawsuit claiming that the company violated the FLSA by failing to include an established meal allowance, which was paid to employees while traveling, in the employees’ regular rate of pay.  In their collective action, the parties asserted that the company required employees to travel away from home and stay in hotels near remote job sites for four to eight weeks at a time. Employees then typically returned home for about two to four weeks before traveling to another remote location. They often worked more than 40 hours per week while at the remote location, triggering overtime pay.

Per Diem For Meals

The company provided its employees with a $35 per diem for meals for all days at the remote location as well as the days spent traveling to and from the remote job location. The company did not pay the $35 meal reimbursement on days that employees worked from their home location or when food was provided at the remote job site.

Exception To “Regular Rate” For Traveling Expenses

The regular rate of pay generally must be calculated to include all remuneration for services paid to the employee.   One exception to this rule is that employers can exclude from the regular rate all reasonable payments for traveling expenses incurred by an employee in the furtherance of his employer’s interests and properly reimbursable by the employer. The regulations state that this exemption includes the “reasonably approximate amount expended by an employee, who is traveling ‘over the road’ on his employer’s business, for . . . living expenses away from home . . . .” 29 C.F.R. § 778.217(b)(3). The company argued that the $35 meal payments were exempt travel expenses and therefore, need not be included in the calculation of the employees’ regular rate.

Meal Reimbursement Was Exempt Travel Expense

The employees countered by arguing that the $35 payments were not exempt travel expenses because the employees were no longer traveling while they worked at the remote job sites for four to eight weeks at a time. They also argued that the phrase “living expenses” did not include the cost of food. The Tenth Circuit disagreed on both arguments.

The Court reasoned that the employees’ position that they were no longer “traveling over the road” when they reached their remote job site was a “hyper-literal interpretation.” The Court instead read “traveling” more broadly to include not just time in transit, but also time away from home. On the employees’ argument that the cost of food did not qualify as a “living expense,” the Court agreed with prior determinations by the U.S. Department of Labor to find that the cost of food away from home is an additional expense that the employee incurs while traveling for the employer’s benefit and therefore, is a living expense. The Court ruled that the $35 per diem meal reimbursements were exempt travel expenses and need not be included in the employees’ regular rate when determining overtime pay. The Court upheld summary judgment in favor of the company. Sharp v. CGG Land Inc., No. 15-5113 (10th Cir. Nov. 4, 2016). Read more >>

November 21, 2016

New Form I-9 Must Be Used By January 22, 2017

6a013486823d73970c01b8d1be606f970c-120wiBy Roger Tsai

This week, the U.S. Citizenship and Immigration Services (USCIS) released a new version of its Form I-9, the Employment Eligibility Verification form. All U.S. employers must begin using the new Form I-9 after January 22, 2017.

Currently, U.S. Immigration and Customs Enforcement conducts over 3,000 I-9 employer audits annually, and immigration enforcement is anticipated to increase due to the Trump presidency. In January, Holland & Hart will host a webinar explaining the changes to the Form I-9 and discussing what immigration reforms employers should expect in a Trump presidency.

Form I-9 Changes

The new version of the Form I-9 includes some clarifications as well as some changes designed to make the form easier to fill out electronically. Completing the Form I-9 electronically will require downloading the latest version of Adobe Reader. Form I-9s completed electronically will still need to be printed and signed by the employee and employer agent by hand. One of the changes is in Section 1 which now asks for “other last names used” rather than “other names used.”

Enhancements for easier completion of the form include drop-down lists and calendars for entering dates, the addition of prompts to help ensure that information is entered properly, on-screen instructions for each field, and easy access to the full instructions. It also includes an option to clear the form and start over. Other changes you’ll find on the new I-9 include:

  • Question regarding whether a preparer or translator was used
  • Space to enter multiple preparers and translators
  • A supplemental page for the preparer/translator
  • Creation of a QR code once the Form I-9 is completed electronically
  • A field to enter additional information such as E-Verify confirmation numbers, termination dates and correction notes, and
  • Separating the full instructions from the form itself.

Reminder of I-9 Process

As you may know, the 1986 Immigration Reform and Control Act (IRCA), prohibits employers from hiring employees, including U.S. citizens, without first verifying their identity and checking that they have proper authorization to work in the United States. The Form I-9 ensures that you have completed this necessary verification for all new hires. The proper timing and process for completing Form I-9s for each newly hired employee is:

  1. Employee accepts offer for employment.
  2. Employee completes Section 1 of the I-9 form no later than the first day of work for pay.
  3. Employee provided documents showing identity and employment authorization to employer.
  4. Employer completes Section 2 of the I-9 form no later than the third business day after the employee starts work for pay.

What You Need To Do

You have just over two months to switch to the new Form I-9, so it is best to put procedures in place now to make that switch for all new hires to ensure compliance.

November 16, 2016

Judge Declares Persuader Rule Unlawful With Permanent Nationwide Injunction

6a013486823d73970c01b8d1fb4b76970c-120wiBy Brian Mumaugh

The U.S. Department of Labor’s final persuader rule was dealt yet another blow today as federal Judge Sam Cummings of the Northern District of Texas issued a permanent injunction declaring the rule unlawful. The ruling will prevent the persuader rule from being enforced anywhere in the nation.

Rule Would Have Expanded Disclosures of Union-Avoidance Activities 

As we’ve reported before, the DOL’s final persuader rule, issued this past March, would have expanded the reporting requirements of both employers and their hired labor consultants who assist with union-avoidance activities. Under the Labor-Management Reporting and Disclosure Act (LMRDA), when employers hire outside consultants, including attorneys, who are directly involved in  “persuading” workers whether or not to join a union or engage in collective bargaining, they must file a report disclosing the consulting relationship as well as the fees paid to the consultant. Under the now-enjoined  “new rule,” the DOL expanded the scope of reportable activities to include not only those that involved the consultant making direct contact with employees, as was previously included as reportable “advice,” but also those activities where the attorney or labor consultant works with the employer behind the scenes to draft or review documents, presentations, speeches, and other materials to aid the employer in opposing union organizing and other related activities.

Legal Challenge Prevailed 

The DOL’s expansion of the rule as to what constitutes reportable “advice” was highly controversial. The DOL was set to begin enforcing the final rule on July 1, 2016, but numerous business groups filed lawsuits claiming that the DOL overstepped its bounds and that the rule was unlawful. On June 22nd, a Minnesota federal judge declined to issue a preliminary injunction to block the rule, but less than a week later, Judge Cummings in Texas did just that. He issued a preliminary injunction blocking the DOL from enforcing the rule nationwide.

With today’s order, Judge Cummings turned his preliminary injunction into a permanent block on enforcement of the rule. The result is that the employers and labor consultants, including lawyers, will continue to report their persuader activities consistent with the prior rule. In other words, only those activities that meet the “advice” standard under the prior persuader rule are reportable. Such activities generally include only those that involve direct contact between the consultant and the employees.

Is This Rule Dead Forever?

It remains to be seen whether the DOL will appeal this order, but for now, the final persuader rule appears dead. With the new GOP administration taking office in late January, it is unlikely that the DOL, under GOP leadership, would try to advance this union-friendly rule in the years to follow. We’ll keep you posted on any new developments.

November 16, 2016

OSHA Clarifies Discipline, Retaliation and Drug Testing Commentary

linton_mBy Matt Linton

When the Occupational Safety and Health Administration (OSHA) released its 2016 final rule requiring the electronic reporting of workplace injury and illness reports, it included controversial provisions on discriminatory discipline, retaliation, and even post-incident drug testing by employers. The uproar was instantaneous, with industry groups quickly filing lawsuits challenging OSHA’s authority to enforce the rule. Originally scheduled to go into effect on August 10th, the effective date for the new anti-retaliation rule was pushed back by OSHA until November 1st, and more recently, until December 1st.

In the interim, Dorothy Dougherty, OSHA’s Deputy Assistant Secretary, issued an interpretation memorandum designed to explain the anti-retaliation and injury reporting procedures in more detail. The interpretation may help clarify what your organization must do in order to comply with the final rule – even if it doesn’t make the rule more palatable.

Reasonable Procedures For Employees To Report Workplace Injuries/Illnesses 

An employer violates OSHA’s new final rule if it either fails to have a procedure for employees to report work-related injuries or illnesses, or its reporting procedure is unreasonable. OSHA states that this requirement is not new, as it was implicit in the previous version of the rule. But now, it is an explicit employer requirement.

OSHA considers a reporting procedure to be reasonable if it is not unduly burdensome and would not deter a reasonable employee from reporting an injury or illness. Examples of what it considers reasonable and unreasonable are as follows:

Reasonable

  • Requiring employees to report a work-related injury or illness as soon as practicable after realizing they have a reportable incident, such as the same or next business day, when possible
  • Requiring employees to report work-related injuries or illnesses to a supervisor through reasonable means, such as by phone, email or in person.

Unreasonable

  • Requiring ill or injured employees to report in person if they are unable to do so
  • Disciplining employees for failing to report “immediately” if they are incapacitated because of the injury or illness
  • Disciplining employees for failing to report before they realize they have a work-related injury that they are required to report
  • Unnecessarily cumbersome or an excessive number of steps to report a work-related injury or illness

In short, if your procedure allows employees to report workplace injuries and illnesses within a reasonable amount of time after they realize they have experienced a reportable event, and the procedure does not make employees jump through too many hoops, it will be reasonable and comply with the final rule.

Anti-Retaliation Provision Explained

Retaliating against employees for reporting work-related injuries or illnesses has long been unlawful. To issue a citation under section 1904.35(b)(1)(iv), OSHA must have reasonable cause to believe that an employer retaliated against an employee by showing:

  1. The employee reported a work-related injury or illness;
  2. The employer took adverse action against the employee (i.e., action that would deter a reasonable employee from accurately reporting a work-related injury or illness); and
  3. The employer took the adverse action because the employee reported a work-related injury or illness.

As in most employment retaliation cases, the third element on causation is often the toughest to prove. The determination is made on a case-by-case basis, depending on the specifics facts in any particular case.

OSHA has focused its commentary primarily on three types of potentially retaliatory actions —  discipline policies, incentive programs, and post-accident drug testing. OSHA’s recent interpretation helps shed light on how employers should address these three issues to avoid a citation for a violation of the anti-retaliation rule. Read more >>

November 9, 2016

Colorado Minimum Wage Hike Passes

6a013486823d73970c01b8d1dc5d4a970c-120wiBy Mark Wiletsky

Colorado voters decided to raise the minimum wage to $12 per hour over the next four years. By about a 54-to-46 margin, Colorado passed Amendment 70 which amends the Colorado constitution to gradually raise the state’s minimum wage.

Gradual Increases In Minimum Wage

Amendment 70 raises the hourly minimum wage in Colorado by 90 cents per hour each year, starting from the 2016 minimum wage of $8.31. The annual increases will be as follows:

  • $9.30 in 2017
  • $10.20 in 2018
  • $11.10 in 2019
  • $12.00 in 2020

Tipped employees will continue to be entitled to a minimum wage that is $3.02 per hour less than the regular state minimum wage. The minimum wage for tipped workers is currently $5.29 per hour, plus tips. It will then go up by 90 cents per hour each year until reaching $8.98 in 2020.

After 2020, annual adjustments will be made to reflect increases in the cost of living.

Adjustments Already in Colorado Constitution

This is not the first time that Colorado voters have approved a Constitutional amendment increasing the minimum wage. In 2006, Colorado voters approved Initiative 42 which increased the minimum wage from $5.15 to $6.85 per hour, and added a provision to the Colorado Constitution that requires an annual adjustment in the state minimum wage based on the Consumer Price Index (CPI). That measure was approved with 53 percent voting “yes” and 47 percent voting “no.” Under that amendment, the Colorado Department of Labor and Employment has set the state minimum hourly wage each year, adjusting it either up or down according to the changes in the CPI over the prior year.

Under this year’s Amendment 70, the minimum wage will only be adjusted up for increases in the CPI. It will not go down, even if the cost of living decreases. Read more >>