News, Articles & Updates

LABOR DEPARTMENT ANNOUNCES PLANS TO RESCIND TIP-POOLING RESTRICTIONS

On Friday, July 21, 2017, the U.S. Department of Labor announced plans to rescind the controversial tip-pooling restrictions imposed on employers in 2011.  The announcement has potential to significantly impact hospitality employers throughout California.

Background

Under the Fair Labor Standards Act, hospitality employers may pay wait staff a lower wage so long as they receive enough tips to bring their hourly rate to the $7.25 federal minimum wage.  While banned in California, this option, known as a “tip credit,” allows employers to pay wages as low as $2.13 per hour so long as the employee receives at least $5.12 in tips.  If the employee does not earn at least $7.25 after factoring tips, the employer must pay the difference; if there are more than enough tips, the employee keeps the excess.

2011 Tip-Pooling Restrictions

The current tip-pooling restrictions were enacted by the Obama administration in 2011.  The rules established that tips are the property of employees and cannot be distributed to other workers or by the employer, even if the employer does not take a tip credit and pays tipped employees the full minimum wage.  Several circuit courts  have struck down these restrictions, holding that they do not apply to employers who pay employees at least the $7.25 minimum wage.  Employers in these circuit jurisdictions have thus been permitted to retain employee tips and distribute them to back-of-house employees who do not otherwise receive tips.  Such tip-pooling arrangements are designed to make pay more equitable throughout a restaurant.

The Ninth Circuit, holding jurisdiction over California, has disagreed; hospitality employers throughout the state have thus remained subject to the tip-pooling restrictions and have had no control over employee tips.  In effect, back-of-house staff have been excluded from tip pooling arrangements.

Effect of the July 21, 2017 Announcement

The announcement by the U.S. Department of Labor on July 21, 2017 to rescind the tip-pooling restrictions thus is significant to California employers and others throughout the Ninth Circuit.  If the Department proceeds as planned, California hospitality employers may exercise control over employee tips and arrange tip pooling that benefits back-of-house staff.

Hospitality employers should understand that the announcement does not have any legal effect; the restrictions remain in place until further action is taken by the U.S. Department of Labor.  Nonetheless, given the split amongst circuit courts, employers should expect the Department to act quickly.

Mitzel Group attorneys will monitor developments in this regard and update employers of any further changes.  Please contact us with any questions.

U.S. CITIZENSHIP AND IMMIGRATION SERVICES ISSUES NEW FORM I-9

On Monday, July 17, 2017, U.S. Citizenship and Immigration Services (USCIS) issued a new Form I-9 and accompanying instructions.  The new form replaces the Form I-9 issued on November 14, 2016 and becomes mandatory for all employers on September 18, 2017. 

Employers should note that the fillable portions of the new form have not changed. Rather, the new form differs from the last version in regards to page 3, List C, setting forth documents that establish employment authorization.  The new form has added “Consular Report of Birth Abroad (Form FS-240)” as an additional acceptable document under List C.  All List C documents were thereafter renumbered except for the Social Security Card.

The form instructions have also changed the name of the Office of Special Counsel for Immigration-Related Unfair Employment Practices (“OSC”) to the “Immigrant and Employee Rights Section (IER).”  This agency investigates and prosecutes unfair documentary practices and retaliation that may occur during the I-9 completion process.  The agency renamed itself to avoid confusion with another federal government agency.

Employers should complete Form I-9 following the same rules and timelines as before.  For answers to additional questions, or to schedule an I-9 training with one of our immigration experts, please contact the Mitzel Group.

SAN FRANCISCO PASSES ORDINANCE BANNING SALARY HISTORY INQUIRIES

On July 21, 2017, San Francisco Mayor Ed Lee signed an ordinance banning employers from asking job applicants about their salary histories.  The new ordinance is scheduled to take effect on July 1, 2018.

The “Pay in Parity Ordinance” applies to all employers registered to do business in the city. It applies to applicants applying for jobs that will be performed in San Francisco and whose application, in whole or in part, will be solicited, received, processed or considered in the city.  “Applicants” include any individual who applies for temporary, seasonal, part-time work or for work through a temporary agency.

The ordinance prohibits employers from

  • Directly or indirectly inquiring about an applicant’s salary history
  • Considering or relying on an applicant’s salary history when making hiring decisions and salary offers
  • Refusing to hire or retaliating against an applicant for not disclosing his/her salary
  • Releasing the salary of any current or former employee to a prospective employer without the employee’s written authorization.

The ordinance does not prohibit an applicant from “voluntarily and without prompting” disclosing salary history. In such instances, an employer may consider salary information when making employment decisions (while also keeping in mind that, under California’s Equal Pay Act, salary history cannot be used as sole justification for pay differentials amongst genders or races for substantially similar work).

The ordinance is intended to narrow the wage gap between men and women by eliminating consideration of prior salaries that may reflect historical inequities.  In addition to prohibiting salary history questions, the ordinance also requires employers to post a notice advising employees of their rights.  Failure to abide by the ordinance will subject the employer to fines and other penalties.

The ordinance is part of a growing trend across the country and mirrors a current state proposal under consideration by the California legislature. Attorneys at the Mitzel Group will monitor any amendments to the ordinance and statewide trends.  We encourage you to contact us with any questions.

U.S. DEPARTMENT OF LABOR EXPECTED TO INCREASE INVESTIGATIONS RELATED TO H-1B AND H-2A VISA PROGRAMS

Following a recent announcement from the U.S. Department of Labor, investigations and audits of foreign worker programs such as H-1B and H-2A visas are likely to increase. The announcement states that the Department “will focus on preventing visa program abuse and take every available legal action against those who abuse these programs.”

Expected enforcement measures include:

  • Increased scrutiny by the Department’s Wage and Hour Division
  • Changes to the Labor Condition Application targeted at identifying fraud and abuse
  • Review of investigatory forms to better identify systematic violations and potential fraud
  • Increased coordination between the Employment and Training Division, the Wage and Hour Division, and the Office of the Solicitor to avoid duplication of efforts and maximize the efficiency of the Department’s activities regarding the visa programs.

To protect themselves in the event of an audit or investigation, employers should continue to keep well-organized and thorough records of all foreign worker applications and employment.  Mitzel Group attorneys are available to answer any questions employers have regarding foreign worker visas.

 

INCREASES TO MINIMUM WAGE FOR SAN FRANCISCO AND NEARBY CITIES EFFECTIVE 7/1/2017

The city of San Francisco and several nearby localities will face a scheduled minimum wage increase on July 1, 2017. Affected employers should ensure their payroll administrators are aware of these increases and amend their payroll schedules accordingly.  Employers should also amend any separate policies or pay scales, such as travel pay, that are based upon the minimum wage.

Below is a table of the expected minimum wage increases.  Please reach out to your Mitzel Group employment expert for additional information.

Locality Current Minimum Wage New Minimum Wage Effective July 1, 2017
San Francisco $13.00 $14.00
Berkeley $12.53 $13.75
Emeryville (employers with 56+ employees) $14.82 $15.20
Emeryville (employers with 55 or fewer employees) $13.00 $12.00
San Jose $10.50 $12.00

FEDERAL COURT ISSUES FIRST VERDICT FINDING THAT INACCESSIBLE WEBSITES VIOLATE TITLE III OF ADA

On June 13, 2017, a Florida federal district court issued the first verdict of its kind holding that a website that was inaccessible to a blind customer violated Title III of the Americans with Disabilities Act (ADA).  The case, Gil v. Winn-Dixie Stores, Inc.,  concerned a blind man who could not access Winn-Dixie coupons, order prescriptions, or find store locations on the company’s website.  After a full trial, the Court ordered injunctive relief, requiring Winn-Dixie to modify its website and pay the plaintiff’s attorneys fees and costs.

Although the decision is non-binding, it has significant implications.  First, it is the first case of its kind concluding that an inaccessible website violated Title III of the ADA.  Businesses should carefully consider whether to litigate or settle these forms of cases, as the possibility of an adverse verdict – once thought unlikely amongst business and legal communities – has now become a reality.   Second, the draft injunction adopts the Web Content Accessibility Guidelines (WCAG) 2.0 as the applicable standard in determining a website’s accessibility.  These guidelines were developed by a private group of  experts and have been incorporated into many consent decrees and settlement agreements. The guidelines have not been adopted as the legal standard for public accommodation websites, but businesses should remain aware of their increasing relevance, especially in light of this decision. Third, the Court did not consider the $250,000 cost of updating the website to be an undue burden to Winn-Dixie, considering that the company had previously invested $9 million to create and remake its website. This cost comparison is likely to be emulated in later cases.

Of particular note, the Court held Winn-Dixie responsible for the entire website’s lack of accessibility, even though parts of the website are operated by third party vendors.  This implication bears particular relevance to businesses who extensively rely on outside vendors to provide services offered through their website.

Although there are not yet any federal regulations setting forth requirements for a website accessibility program, businesses should remind mindful of judicial decisions such as this one because they provide potential frameworks for Title III compliance.  For additional questions regarding this case or compliance with Title III of the ADA, please contact a Mitzel Group specialist.

NONSIGNATORY JOINT EMPLOYERS RECEIVE BENEFITS OF ARBITRATION AGREEMENT

A recent decision from the California Court of Appeal provides considerable protection to certain joint employers seeking to arbitrate claims.  In Garcia v. Pexco, LLC, the Court held that a company hiring temporary workers from a staffing agency can enforce the arbitration agreement entered into between the staffing agency and its workers, even if the company did not sign the arbitration agreement itself.

Garcia v. Pexco, LLC

In Garcia, the plaintiff, Narciso Garcia, sued a staffing agency for alleged wage and hour violations.  He included Pexco LLC, the company that had hired him through the staffing agency, as joint defendant, alleging that Pexco was also liable as a joint employer.  The trial court compelled arbitration for all parties, including Pexco, according to an arbitration agreement signed by Garcia and the staffing agency. Garcia appealed this decision on the grounds that Pexco could not invoke an arbitration agreement it had not signed.

The Court of Appeal disagreed, stating that two exceptions – equitable estoppel and agency – warranted application of the agreement to Pexco.  First, under the doctrine of equitable estoppel, it would be unfair for Garcia to allege that Pexco was as a joint employer  – and therefore liable for the staffing agency’s wage and hour violations – while excluding the company from applicable employment agreements.  Second, under the agency exception, the Court held that Garcia’s allegations that Pexco was an agent of the staffing agency did not stop at the offense; rather, as an agent, Pexco could enforce the arbitration agreement as an agent of the staffing agency that had signed it.

Implications for Employers

The Garcia decision is especially important for employers who rely on temporary staffing agencies to meet their business needs.  Although limited to those instances where the plaintiff’s claims against both defendants are “inherently inseparable” and “intimately founded in … the underlying contract obligations,” the decision, when applicable, provides employers significant protection against claims brought by temporary employees.  Employers should review the staffing companies’ employment agreements to determine the protections such agreements may afford.

For more information, please contact your employment attorney at the Mitzel Group, LLP.

PRESIDENT TRUMP ISSUES NEW EXECUTIVE ORDER REVISING PREVIOUS TRAVEL BAN

On March 6, 2017, President Donald Trump issued a new Executive Order temporarily banning the entry of nationals from Iran, Libya, Somalia, Sudan, Syria, and Yemen who are outside of the United States, do not hold a valid visa on March 6, 2017, and did not hold a valid visa at 5:pm EST on January 25, 2017.

The new Executive Order follows – and revokes – an Executive Order issued on January 25, 2017 that immediately banned nationals from the above-mentioned six countries and Iraq. The prior Executive Order generated significant controversy due to its application to legal permanent residents and valid visa holders, along with the immediate effect of the order. The Executive Order was reviewed and halted by federal courts in February 2017.

The Executive Order issued on March 6, 2017 is more limited in scope than its predecessor. Notable differences include exemptions for legal permanent residents, dual nationals from non-designated countries, foreign nationals holding a valid visa on the effective date of the order, and individuals already granted asylum or refugee status in the United States before the effective date of the order. The new Executive Order also fails to exempt religious minorities from the ban and imposes a 120-day – rather than indefinite – ban on Syrian nationals.  The Trump administration cited concerns for the stability for the United States-allied Iraqi government as justification for excluding Iraqi nationals from the new ban.

Attorneys at the Mitzel Group recommend that all foreign nationals consult with their immigration attorneys before any international travel. As always, please contact our immigration attorneys, Lisa Liu and Amelia Lancaster, with additional questions.

NOTES ON THE DRAFT EXECUTIVE ORDER AFFECTING H-1B VISAS

Employers of individuals holding H-1B  and other forms of employment-based visas may be concerned about a draft Executive Order that has been circulated by the media.  While immigration attorneys at the Mitzel Group recognize the serious consequences this order would have to employers, we want to emphasize that this is a draft Executive Order that has not yet been signed by President Donald Trump.  The final version of the order and its mandates remain to be seen.  It is also uncertain at this time whether President Trump will sign the order or leave reform of the employment-based visa system to Congress.

The draft executive order would reduce the scope of employment-based visas and contains a variety of provisions. Among them, the order would reverse the current OPT extension available to F-1 visa holders in a STEM field, reform the H-1B and J-1 visa programs, and increase site visits to employers with L-1 employees.  The overall objective of the order is to “prioritize[] the interests of American workers.”

Unlike the Executive Order affecting individuals from select countries that took effect on January 25, 2017, this draft  Executive Order would not take immediate effect.  Rather, the order directs the Director of Homeland Security to take appropriate measures to achieve the order’s objective within varying time frames.  Thus, procedural and administrative changes enacted by the draft Executive Order are unknown at this time.

Your immigration attorneys at the Mitzel Group will keep you apprised if and when this draft Executive Order is signed by President Trump. As always, please contact us with any questions.

ALL EMPLOYERS ENCOURAGED TO SCHEDULE I-9 TRAINING & INTERNAL AUDIT

Following Donald Trump’s recent executive orders and the release of a new Form I-9 that became mandatory on January 22, employers must remain aware of their obligations to correctly complete and store their Forms I-9. To better protect your company, to ensure your workforce stays intact, and to better prepare for new federal regulations and presidential directives, we at The Mitzel Group, LLP encourage you to consider an I-9 training and internal I-9 audit with our office.

Why I-9 Training now?

On January 25, 2017, President Donald Trump issued an executive order tripling the number of immigration and customs enforcement (“ICE”) officers with potential authority to conduct I-9 audits. In addition, a draft executive order is now circulating that would require ICE officers to target certain employers as a means of immigration enforcement. These signed and draft executive orders imply that increasing number of I-9 audits are certain and imminent.

Changes to the new form I-9 and new federal regulations also present substantial pitfalls for employers. The new paper and electronic versions of the form introduce changes that can lead well-intentioned employers to commit grievous and irremediable errors. Increased civil and criminal penalties magnify the impact these errors can have to employers, potentially resulting in asset forfeiture, loss of business license, mandatory layoffs, and criminal liability, among others. Civil penalties increased in August 2016 and can now amount up to $21,000 per form I-9.

The best way to protect your business and yourself from criminal and civil liability is to review your current forms I-9 and train staff in properly completing the new form going forward. Thus, I-9 training and audit are two crucial measures that you, as an employer, can take when preparing for changes brought by the new presidential administration.

How do I schedule I-9 Training?

Please contact The Mitzel Group, LLP attorneys Lisa Liu or Amelia Lancaster by email or by calling (415) 742-4972 to schedule a training at your earliest convenience. As always, we are available to answer any questions you may have and help ensure your company is protected in the event of future immigration enforcement.