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Legislative Update March 2013

As Spring arrives so do a number changes and developments in the world of labor and employment law, including new I-9 forms and FMLA posters.  Below are a few matters of note, including updates on the new Form I-9 employers should begin using (for identity and immigration verification), changes to the Family and Medical Leave Act (new forms and posters), the latest on federal budget sequestration employment law implications for federal contractors, and an update on the federal appellate decision that called into question the authority of the National Labor Relations Board to render binding decisions over the past year.

 

NEW FORMS FOR IMMIGRATION IDENTITY VERFICATION

After a lengthy delay and extensive comment period, U.S. Citizenship and Immigration Services (USCIS) this month released a revised Form I-9 (Rev. 03/08/13 N). Employers may download the new form here (PDF).

The government has made several significant changes to the Form I-9, which must be used by all employers to verify the identity and employment eligibility of new hires to confirm they are authorized to work in the United States.  Although prior versions of the Form I-9 will remain valid for use until May 7, 2013, we encourage employers to begin using the revised form immediately.

Key Changes in the New Form 

USCIS highlighted three key changes to the Form I-9 that it said are designed to minimize errors in completing the form.  They are:

  • Addition of new data fields.  The revised Form I-9 debuts new fields for collecting data on the individual's foreign passport (if applicable), telephone number, and e-mail address.  During the notice and comment period for the proposed form, employers voiced concern over the addition of the latter two fields.  The Instructions to the Form I-9 now indicate that employees may voluntarily provide a telephone number and e-mail address in Section 1; however, if employees choose not to provide this information, they may write "N/A" instead. The Instructions also contain a vague (and somewhat ominous) explanation that DHS may contact the individual if there is a mismatch between government records and the information the individual provided.
  • Revisions to the layout of the form.  The length of the Form I-9 itself has increased from one page to two pages to accommodate the new fields, a larger font size, and a layout that is intended to be easier to read.  Section 1: Employee Information and Attestation takes up the entire first page, while Section 2: Employer Review and Verification and Section 3: Reverification and Rehires are both on page two.  The List of Acceptable Documents now includes clarifying language as to the types of documents that may be accepted for I-9 purposes, including language on restricted Social Security cards.
  • Improvement in the form's instructions.  USCIS has improved some of the language in the Instructions to the Form I-9 as well.  For instance, the new Instructions include more definitive statements on the required timing for completing the Form I-9 and the employee's presentation of acceptable documents.  The format of the Instructions has also improved the overall readability of the form, but the number of pages has doubled from prior versions (from three pages to six pages of Instructions).  Additionally, USCIS indicates that it is in the process of updating "The Handbook for Employers" (M-274) – a useful guide for employers on completing the Form I-9 – to comport with the revised Form I-9 and that an updated version of the Handbook will be released soon.

What Employers Should Do Now

All employers should understand the impact of the changes and become familiar with the new Form I-9.  While employers generally are encouraged to begin using the new Form I-9 right away, USCIS has heeded pleas for a transition period from employers for whom immediate use of the form would not be possible.  Such employers include those that will need to update their internal business processes and train staff, as well as users of electronic I-9 systems that will have to be modified to conform to the new Form's content and design changes.  Employers have sixty days before they must begin using the 03/08/13 version of the Form I-9 exclusively.  Prior versions of the Forms dated 02/02/09 and 08/07/09 will be accepted until May 7, 2013.

Please note that use of the revised Form I-9 is prospective – that is for new hires moving forward from today.  Employers do not need to "re-do" the Form I-9s for existing employees already completed and on file.  Excessive or unnecessary verification of existing employees may bring an employer under Department of Justice scrutiny for a violation of antidiscrimination provisions of the Immigration and Nationality Act.

What To Look Out For In The Future

The release of the new Form I-9 comes amidst growing political discourse over comprehensive immigration reform, a potential federal mandate that would require use of the electronic E-Verify system by more employers, and reported changes by U.S. Customs and Border Protection to convert to paperless I-94 Cards, which would eliminate a document commonly presented by employment-authorized temporary workers in the I-9 process. 

[N.B.:  On the subject of forms, per our last update employers should also be aware that new forms are now required by Consumer Financial Protection Bureau (CFPB) when doing credit and background checks on applicants and employees pursuant to the requirements of the federal Fair Credit Reporting Act (FCRA).   The forms can be found here.]

 

FMLA CHANGES:  NEW FORMS AND POSTERS AND FINAL RULE EXPANDING FMLA LEAVE FOR MILITARY FAMILY MEMBERS AND AIRLINE CREW EMPLOYEES

Last month the Department of Labor (DOL) published a Final Rule implementing the changes to the Family and Medical Leave Act (FMLA) made by the Airline Flight Crew Technical Corrections Act (AFCTCA) and the 2010 National Defense Authorization Act (NDAA). 

The new rules, explained below, take effect March 8, 2013, are available here (PDF).  A list of Frequently Asked Questions about the new regulations is also available.

The regulations also require that FMLA covered employers post a new, updated poster (PDF) by March 8, 2013.  Additionally, the FMLA optional-use forms, which were removed from the regulations and are no longer available in the appendices, are also available on the DOL's web site.  The forms have been updated to reflect these new changes.

AFCTCA Changes 

The AFCTCA amended the FMLA to incorporate a special eligibility provision for airline flight crewmembers and flight attendants.  There are five (5) significant components of these regulations: (1) explanation of the new crewmember eligibility standards; (2) establishment of a uniform FMLA leave bank for crewmembers; (3) implementation of a new manner of calculating crewmember FMLA leave usage; (4) retention of the "physical impossibility exception," which permits extending FMLA leave when crewmembers cannot immediately be returned to service; and (5) establishment of unique recordkeeping obligations.

The DOL has published two Fact Sheets discussing the crewmember amendments, which can be accessed here and here.  .

NDAA Changes

The 2010 NDAA, among other things, amended the FMLA's military caregiver leave provision to permit eligible employees to take leave to care for certain veterans with a serious injury or illness incurred or aggravated in the line of duty on active duty, which manifested before or after the veteran left active duty, and to allow military caregiver leave for current service members with a serious injury or illness that existed prior to service and that was aggravated by service in the line of duty on active duty.

The NDAA also expanded the qualifying exigency provision to permit eligible employees to take qualifying exigency leave for covered family members in the Regular Armed Forces and added a foreign deployment requirement for qualifying exigency leave for all military members (National Guard, Reserves, and Regular Armed Forces).

The DOL's Final Rule implements and interprets these amendments and makes certain additional clarifying changes. Some of the more significant provisions relating to the NDAA revisions include:

  • Clarifying that while the qualifying exigency leave provision of the 2010 NDAA was effective on October 28, 2009, the military caregiver leave provision to care for a covered veteran does not take effect until the effective date of the Final Rule (March 8, 2013). Thus, the DOL takes the position that any leave to care for a veteran voluntarily provided by an employer before March 8, 2013 that does not otherwise qualify as FMLA leave to care for a family member with a serious health condition is not FMLA-protected and does not count against an employee's FMLA entitlement.
  • Defining covered veteran as a veteran discharged or released under conditions other than dishonorable within the five-year period prior to the date the employee's military caregiver leave began.
  • Clarifying that, for a veteran who is discharged before the effective date of the Final Rule (March 8, 2013), the calculation of this five-year period excludes the period of time between October 28, 2009 (the 2010 NDAA's effective date) and March 8, 2013.
  • Providing four alternatives for the definition of serious injury or illness of a covered veteran, only one of which must be met.
  • Increasing the amount of time an employee can take qualifying exigency leave related to the military member's Rest and Recuperation to a maximum of 15 calendar days. This leave may only be used while the military member is on Rest and Recuperation leave.
  • Creating a new qualifying exigency category that permits an eligible employee to take FMLA leave for certain activities relating to the care of a military member's parent who is incapable of self-care, when the care is necessitated by the covered active duty of a military member.

The Final Rule (PDF) was published in the February 6, 2013 issue of the Federal Register.  More information regarding the rule, including a side-by-side comparison of the new rule with the prior version, frequently asked questions and a fact sheet, is available on the DOL's web site.

SEQUESTRATION ARRIVES WITH CONSTRACTORS STILL FACTING WARN ACT UNCERTAINTIES

March 1 arrived without a budget compromise in Washington, DC.  For employers, this is likely to result in a variety of direct and indirect consequences, including automatic cuts to the budgets of various federal agencies with workplace oversight and enforcement responsibilities.  But far and away the most significant impact is expected to be on employers doing business with the federal government, particularly contractors with sizeable workforces servicing federal contracts. 

Many federal contractors in anticipation of the cuts (commonly referred to as “sequestration”) began contingency planning for the possible impact of sequestration several months ago, including analyzing and identifying ways to cut employment-related costs, such as reducing employee hours and possibly implementing furloughs and reductions in force. 

Such planning has of course been hindered and complicated by the various uncertainties surrounding sequestration and whether it would even occur. 

Now that sequestration has arrived, many contractors will be anxiously waiting to find out whether cuts will specifically impact them and, if so, how much advance notice they will receive.  This latter issue is potentially very significant from an employment law standpoint, given an employer’s notice obligations under the Worker Adjustment and Retraining Notification Act (the “WARN Act”).  Pursuant to the WARN Act, employers with 100 or more employees are generally required to give at least 60 days advance notice prior to instituting mass layoffs or plant closings (as those terms are defined in the statute).   In the sequestration context, the WARN Act could be implicated if a contractor suddenly finds it necessary to cut its workforce drastically in response to its federal project(s) being terminated or the funding reduced.  A number of contractors have expressed concern that they might be forced to take immediate action in response to sequestration and find themselves in a position where it is not possible or practicable to provide the full 60-day of notice contemplated by the WARN Act.  In such circumstances a contractor might qualify for one of the limited exceptions under the WARN Act when employers are permitted to provide less than 60-days notice, but it is the employer’s burden to establish that the exception applies.  Employers who fail to provide the required period of notice can find themselves subject to fines and lawsuits by employees seeking back pay and benefits.

In a number of states this issue is further complicated by existence of “mini-WARN Acts” that have been adopted by state legislatures, including California, Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Tennessee and Wisconsin.  Many of these laws impose obligations similar to those under the federal WARN Act, but some state statutes require even more advance notice, apply to smaller employers and/or are triggered when even fewer employees are let go.   (For example, New York State’s WARN Act requires that 90 days advance notice be given, applies to employers with 50 or more employees, and can be triggered when as few as 25 full-time workers are being let go.) 

As a result of all this uncertainty and the risk of potential liability, some federal contractors have elected to issue “contingent” WARN Act notices, notifying employees that mass layoffs and/or plant closings may become necessary as a result of sequestration.  The validity and effect of such notices is, however, the subject of some debate.  For example, the U.S. Department of Labor, through the Employment and Training Administration (“ETA”), has taken the position that such “blanket” notices to all employees are inappropriate and contrary to the purposes of the WARN Act, as the actual terminations themselves are still too speculative to constitute the kind of meaningful notice required by the statute.

Limited and somewhat controversial guidance has been offered by the ETA to contractors struggling with this issue.  On July 30, 2012, the ETA issued Training and Employment Guidance Letter No. 3-12 ( the “Guidance Letter”), which was directed to state dislocated workers units, but urged contractors to hold off issuing WARN Act notices before the sequestration deadline, noting that specific cuts were still speculative and unforeseeable, and that in its view blanket notices are contrary to intent of the WARN Act.  The Guidance Letter goes on to suggest that because the specific cuts are not yet known (and in turn what contracts and employees will specifically be impacted), if such cuts do come about and require less than 60-days notice, they would likely come within the “unforeseeable business circumstances” exception to the WARN Act, which allows employers to provide less than 60-days notice. 

During a hearing before the House Subcommittee on Workforce Protections last month, Jane Oates, ETA’s Assistant Secretary who issued the Guidance Letter, continued to stand by the Guidance Letter and its application to facts evolving around sequestration, while responding to some stern questioning from Republican lawmakers.

Although the Guidance Letter would appear to offer some measure of comfort to contractors, it is not clear what legal effect the Guidance Letter would have in a court case or how much deference it would receive if a contractor later finds itself being sued by employees for providing less than 60-days notice.  (For example, if the affected employees assert that layoffs were reasonably foreseeable and that the contractor should have provided the full 60-days of notice.)  The WARN Act’s implementing regulations make clear that enforcement of the Act is to be done through the courts and that the Department of Labor and ETA have “no legal standing in any enforcement action and, therefore, will not be in a position to issue advisory opinions of specific cases.” 20 C.F.R. § 639.1(d). 

In an apparent effort to provide further comfort to contractors, last fall the White House through the Office of Management and Budget (OMB) issued a memorandum (PDF) on September 28, 2012, which suggested that any WARN Act liability costs incurred by contractors who followed the Guidance Letter, including litigation costs, would be reimbursable and covered as allowable costs by the contracting agency.  The authority of the OMB to offer such broad assurances has, however, been questioned.

In the weeks after the OMB memorandum, a number of contractors nevertheless chose to issue contingent WARN Act notices in anticipation of the initial January 2, 2013 “fiscal cliff” deadline.  No further guidance or assurances have been provided by the federal government or lawmakers since the OMB memorandum, leaving federal contractors still in the difficult position of judging for themselves how best to prepare for and address the day that appears to have finally arrived. 

In assessing how to respond to sequestration in the coming days, contractors should be working closely with legal counsel to identify possible solutions and potential issues.  For example, as an alternative to permanent reductions in force that might trigger the WARN Act, contractors may want to consider reducing employee hours and/or putting employees on temporary furloughs or short-term layoffs.  (Under the WARN Act,  an employee is not considered to have experienced a qualifying “employment loss” that counts towards the WARN Act being triggered if the employee’s hours are reduced by 50 percent or less during each month of any six-month period, nor do layoffs of six months or less constitute an “employment loss” for WARN Act purposes.)  In implementing such alternatives, however, other legal issues can arise.  For example, putting employees on reduced schedules or temporary furloughs can have both state and federal wage and hour law implications, particularly when implementing such measures with respect to exempt employees.  The U.S. Department of Labor addressed some of these issues in a Fact Sheet (PDF) in 2009.  Such actions can also trigger a loss of coverage under benefit plans and/or possibly qualify employees for unemployment benefits depending upon the state’s applicable law and qualifying period.

Employers’ Bottom Line

Now that sequestration is upon us, employers at risk of being directly impacted should be reviewing all of their options and working closely with their legal advisors.  Some employers may opt to issue or “refresh” contingent WARN Act notices to provide maximize notice to their employees and bolster their potential defenses should litigation ever arise, but they should recognize that the legal effect of such notices may be open to question and that such notices carry with them the risk of creating anxiety and disruption among their workforce. 

D.C. CIRCUIT FINDS PRESIDENT'S RECESS APPOINTMENTS TO NLRB UNCONSTITUTIONAL

In late January a three-judge panel of the D.C. Circuit Court of Appeals held that President Obama's recess appointment of three members to the National Labor Relations Board (NLRB) violated the U.S. Constitution.  See Noel Canning v. NLRB, No. 12-1115 (January 25, 2013) (PDF).  

On March 12 the NLRB issued a short statement indicating that it will file a petition of certiorari and request that the Supreme Court review the decision, rather than ask a full panel of the D.C. Circuit to review the decision.  If the decision stands, it could mean that hundreds of Board decisions issued over the last year are invalid.

The case itself involved a February 2012 decision by a three-member panel of the Board which affirmed an ALJ's finding that the employer violated the National Labor Relations Act (NLRA) by refusing to reduce to writing and execute a collective bargaining agreement with the Teamsters Union.  The employer appealed this decision to the D.C. Circuit Court of Appeals, arguing, among other things, that the Board's order was void because it lacked a quorum to act when it issued its decision because three members of the five-member Board were never validly appointed.  The court agreed, holding that the President's recess appointments in January 2012 of Members Block, Flynn, and Griffin violated the U.S. Constitution.

The Recess Appointments Clause gives the President the power to "fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."  The employer argued that the term "recess" in the Recess Appointments Clause means the intersession recess – that is, the period between sessions of the Senate when the Senate is, by definition, not in session and therefore unavailable to receive and act upon nominations by the President.  The Board argued that the Recess Appointments Clause gives the President the power to make appointments during intrasession recesses or breaks in the Senate's business when it is otherwise in a continuing session. 

The court rejected the Board's argument, holding that "[t]o adopt the Board's proffered intrasession interpretation of "the Recess" would wholly defeat the purpose of the Framers in the careful separation of powers structure reflected in the Appointments Clause."  Further, the court found that "the Constitution's appointment structure – the general method of advice and consent modified only by a limited recess appointments power when the Senate simply cannot provide advice and consent –  makes clear that the Framers used ‘the Recess' to refer only to the recess between sessions."  Because the Board conceded at oral argument that the appointments at issue were not made during the intersession recess, the court held that the Board lacked a quorum when it issued the order in this case and that order must be vacated. 

The court also held that the Recess Appointments Clause requires that the relevant vacancy arise during the recess.  Because these appointments did not happen during the recess, the court held that they are invalid for this additional reason. 

Employers' Bottom Line:  

While the NLRB has decided to request that the decision be reviewed by the Supreme Court, if it stands it could have a far-reaching impact, invalidating hundreds of Board decisions issued over the past year.  The decision also casts questions on the President's appointment of other agency heads, including Richard Cordray to the Consumer Financial Bureau on January 4, 2012, which has been challenged in a separate proceeding.  Employers should stay tuned to see how this issue is ultimately resolved.

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For additional information on any of the foregoing, please contact:

Andy Hament or Louis Wilson

Ford & Harrison LLP

Melbourne, Florida

(321) 724-5970

ahament@fordharrison.com

ldwilson@fordharrison.com