Middle District Judge Disagrees With NLRB Over Class and Collective Action Waivers

POSTED BY SCOTT T. SILVERMAN ON MAY 25, 2012

In a decision filed on May 18, 2012, Oliveira v. Citicorp North America, Inc. and Citigroup, Inc., Case No. 8:12-cv-251-T-26TGW (M.D. Fla. 2012), Judge Richard A. Lazzara of the Middle District of Florida held that a complete waiver of class and collective actions in either a judicial or arbitration forum was enforceable.  This decision directly conflicts with the National Labor Relations Board's ("NLRB") holding in In re D.R.Horton, Inc., 357 NLRB No. 184 (2012), that such agreements violate employees' right to engage in protected concerted activity under the National Labor Relations Act. 

Plaintiffs brought FLSA overtime claims, alleging that they were improperly categorized as exempt.  Defendants moved to compel arbitration on the basis of handbook acknowledgements, which both required employees to bring all claims in arbitration and waived any right to collective or class arbitration.  While the parties agreed that FLSA claims are subject to arbitration, plaintiffs, relying on D.R. Horton, argued that the collective action waiver was unenforceable. Judge Lazzara disagreed, reasoning that the Eleventh Circuit has enforced waivers of FLSA collective actions in mandatory arbitration agreements. Caley v. Gulfstream Aerospace Corporation, 428 F.3d 1359 (11th Cir. 2005). The court noted that district courts outside of the Eleventh Circuit are split as to whether to follow D.R. Horton, but determined that it was bound to apply the Eleventh Circuit precedent of Caley

As previously reported, the NLRB continues to apply D.R. Horton and has brought unfair labor practice proceedings to enjoin enforcement of such arbitration agreements.  Given the divergent authority, employers are cautioned to review their arbitration agreements and to carefully consider whether to amend them.  Until further notice, courts in the Eleventh Circuit will likely enforce such waivers in employment-related lawsuits, but this will not prevent the NLRB from bringing unfair labor practice charges against employers who have such agreements.  It is expected that the Eleventh Circuit will soon be asked to consider the continued vitality of Caley and this issue may wind up in front of the Supreme Court.  We will continue to provide updates as new developments occur. 

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Premarital Sex is Not Protected Under Title VII - But Pregnancy Is

POSTED BY RICHARD D. TUSCHMAN ON MAY 18, 2012

Premarital sex is not protected activity under Title VII.  But it can lead to pregnancy, which is a protected status under Title VII.  Which raises the question:  can an employer use an employee’s pregnancy as evidence of premarital sex, and terminate her employment because the employer has a moral objection to premarital sex? 

The answer is yes.  But as the Eleventh Circuit’s recent decision in Hamilton v. Southland Christian School illustrates, the court will closely scrutinize the employer’s motivations if the employee alleges pregnancy discrimination. 

The Eleventh Circuit summarized the facts of the case as follows:

In January 2008, Jarretta Hamilton began teaching at Southland Christian School. Sometime in January 2009, she and her then-fiancé conceived a child. They got married the next month. On Sunday, April 5, 2009, Hamilton met with John and Julie Ennis, Southland’s administrator and assistant administrator, to tell them that she was pregnant and to ask for maternity leave during the next school year. During that meeting, she admitted that she had conceived the child before getting married. Southland fired Hamilton the following Thursday, purportedly because she had sinned by engaging in premarital sex and, as John Ennis put it, “there are consequences for disobeying the word of God.”

Hamilton sued the school alleging pregnancy discrimination.  The district court granted summary judgment to the school on the grounds that Hamilton had not produced evidence of a non-pregnant comparator who was treated differently.  But on appeal, the Eleventh Circuit reversed the trial court’s ruling.  The court noted that a plaintiff in a Title VII case does not have to show a comparator if there is enough other circumstantial evidence to raise a reasonable inference of discrimination. 

In this case, such evidence existed.  “Hamilton presented evidence,” wrote the court, “that, in making the decision to fire her, Southland was more concerned about her pregnancy and her request to take maternity leave than about her admission that she had premarital sex.”  Therefore, the court remanded the case to the district court, where it will either be settled or proceed to trial. 

For employers, the Hamilton decision should serve as a reminder to proceed carefully when proceeding with a termination of a pregnant or other “high-risk” employee.  If an employer cannot demonstrate that only legitimate, non-discriminatory reasons motivated its termination decision, reconsideration of that decision may be in order.

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NLRB Suspends Implementation Of Representation Case Process Changes

POSTED BY SCOTT T. SILVERMAN ON MAY 15, 2012

According to a D.C. federal court, another regulation issued by the National Labor Relations Board (the "Board") is unlawful.  This time, the Board's so-called "quickie election" rule, which would shorten the time period between an union petition and the election, has been struck down.  This is an important outcome for employers, because the new regulation, if it had been approved, would have resulted in a greater percentage of union victories and a consequential increase in union organizing.  For the time being, at least, those outcomes have been avoided.

In Chamber of Commerce of the United States of America, et al. v. National Labor Relations Board, Civil Action No. 11-2262 (JEB) (D.D.C. May 14, 2012), Judge James Boasberg of the D.C. District Court held that the Board's regulation was invalid, because no quorum existed for the final vote in favor of its adoption.  Although expressing no formal opinion on other challenges, Judge Boasberg strongly hinted that a properly constituted quorum of the Board could vote to adopt a final version of the regulation.  Until then, however, Judge Boasberg held that the Board's prior procedures govern representation elections.

On June 22, 2011, the Board formally proposed to amend its procedures governing election disputes in a Notice of Proposed Rulemaking ("NPRM"), which was issued by a 3-1 vote. Member Brian Hayes ("Hayes") dissented. On November 30, 2011, the remaining three members of the Board voted to prepare a final rule containing certain of the amendments contained in the NPRM, which passed by a 2-1 vote, with Hayes again dissenting.  Thereafter, a final rule was prepared and circulated in the Judicial Case Management System ("JCMS").  Both Chairman Mark Pearce and Member Craig Becker voted to approve the rule, and it was forwarded to the Solicitor for publication in the Federal Register on the same day.  However, Hayes did not register a vote on the final version in JCMS.

The Board argued that, because Hayes had continually voted against the new regulation, he had sufficiently indicated his opposition to be counted toward the quorum.  However, Judge Boasberg disagreed with the Board's position, reasoning that, under 29 U.S.C. §153(b), "three members of the Board shall, at all times, constitute a quorum," and, therefore, three members' participation was necessary for the vote on the final version of the rule. Judge Boasberg noted three (3) facts that led him to consider Hayes absent: (1) Hayes took no action whatsoever in response to the JCMS notice; (2) no one requested that Hayes provide a response; and (3) only a short amount of time passed between the circulation of the JCMS notice and the forwarding of the rule for publication.  Hayes' mere Board membership was insufficient for a quorum.

In response to the decision, the Board announced that it has temporarily suspended the implementation of changes to its representation case process, which had taken effect April 30.  Further, Acting General Counsel, Lafe Solomon, withdrew the guidance to regional offices that he had issued on the new procedures and advised regional directors to revert to previous practices governing election petitions.  The Board stated that it is considering its options. However, it will likely seek a stay of the decision pending appeal, or may seek to revote, with its current composition of three Democrats and two Republicans.  Still, consistent union avoidance strategies continue to be paramount in this ever-changing landscape.

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NLRB Seeks To Invalidate Arbitration Agreements

POSTED BY SCOTT T. SILVERMAN ON MAY 11, 2012

On April 30, 2012, the National Labor Relations Board ("Board")  issued a complaint alleging that 24 Hour Fitness USA, Inc. violated the National Labor Relations Act ("Act") by requiring that all employment disputes be resolved by an arbitration in which only individual, and not class or collective, claims could be brought.

24 Hour Fitness, which operates centers across the country, requires employees as a condition of employment, to execute an arbitration agreement, in which they forego any rights to file collective or class action lawsuits or arbitrations.   Earlier this year, in D.R. Horton, Inc., 357 NLRB No. 1 (2012), the Board had held that such a requirement violates the protected rights of employees to engage in concerted activity under Section 7 of the Act.

The Board's San Francisco Regional Office issued a complaint, which charged that the company had enforced its policy by asserting it in numerous actions in an effort to compel employees to submit common claims to individual arbitrations.  The company engaged in an unfair labor practice by violating protections guaranteed by the Act, according to the complaint issued by the agency’s San Francisco Regional Office.

The Board's action demonstrates that employers must examine their arbitration policies to see if they are in compliance.   An effort by employers to compel employees to bring all employment-related claims through individual arbitration may be found to constitute an unfair labor practice.

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Private Internships Must Almost Always Be Paid

POSTED BY SCOTT T. SILVERMAN ON MAY 11, 2012

With the summer almost upon us, private, for-profit companies may be thinking of high school or college students as a resource for unpaid labor, through "summer internships."  This is almost always unlawful!

According to the Department of Labor ("DOL") Fact Sheet, internships in the “for-profit” private sector will most often be viewed as employment, unless a six-factor exclusion test is met.  Interns in the “for-profit” private sector who qualify as employees must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek. The determination of whether an internship program meets the exclusion depends upon all of the facts and circumstances. However, the DOL states that the employer must meet all six criteria to exempt interns from payment, and that the exclusion is "quite narrow":

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

In the unlikely event that an employer decides  that its program  meets this test, it must have a document for the student to sign, which should replicate the six factors and include the intern's acknowledgement that the position is an unpaid internship. The document should also specify the ending date of the experience.

In the more likely scenario that the summer hire qualifies as an employee, the employer would simply follow its normal hiring procedures.  However, it is vital that the employer include a written acknowledgement that the work is only for the summer and the employment position will terminate on a date certain.

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Akerman Labor & Employment Breakfast Seminar Provides Guidance on Conducting Workplace Investigations

POSTED BY CHRISTOPHER DUKE ON MAY 8, 2012 

Today's employers are often called upon to conduct internal investigations into claims of workplace misconduct. When performed correctly, a proper workplace investigation can effectively shield an employer from liability in the face of many types of employment related claims. However, a poorly performed or ineffective workplace investigation can not only fail to protect the company from liability, but can actually increase potential exposure to an employee's claim. Now more than ever it is important for employers to learn the proper way to conduct an internal investigation.

Topics to be covered include:

  • Whether and to what extent to initiate a formal investigation
  • How to choose the right investigator
  • Best practices for conducting witness interviews
  • How to discipline violators when warranted

Armed with the information provided at this seminar, employers can feel confident in their ability to conduct an effective workplace investigation.

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EEOC Updates Enforcement Guidance on Arrest and Conviction Records

POSTED BY RICHARD D. TUSCHMAN ON MAY 1, 2012 

The Equal Employment Opportunity Commission has updated its enforcement guidance on employers’ use of arrest and conviction records in making employment decisions.

The enforcement guidance consolidates and clarifies prior EEOC guidance in light of judicial decisions on the use of arrest and conviction records.  The guidance clarifies that the selective use of arrest and conviction records may constitute disparate treatment discrimination in violation of Title VII.  The guidance also explains how a neutral policy or practice that has the effect of screening out a protected group may violate Title VII under a disparate impact theory if the employer cannot show that the policy or practice is job related for the position in question and consistent with business necessity.   Exclusions based  solely on arrests will never meet this test,  but conviction-based screens may, if the employer considers the nature of the crime, the length of time since the crime, and the job requirements.

Of particular interest are the “best practices” the EEOC recommends when employers are considering using criminal records in making employment decisions.  These “best practices” are:

General

  • Eliminate policies or practices that exclude people from employment based on any criminal record.
  • Train managers, hiring officials, and decisionmakers about Title VII and its prohibition on employment discrimination and how to implement policies and procedures consistent with Title VII.

Developing a Policy

  • Develop a narrowly tailored written  policy and procedure for screening  applicants and employees for criminal conduct. 
    • Identify essential job requirements and the actual circumstances under which the jobs are performed.
    • Determine the specific offenses that may demonstrate unfitness for performing such jobs.
      • Identify the criminal offenses based on all available evidence. 
  • Determine the duration of exclusions for criminal conduct based on all available evidence.
    • Include an individualized assessment. 
  • Record the justification for the policy and procedures.
  • Note and keep a record of consultations and research considered in crafting the policy and procedures. 

Questions about Criminal Records

  • When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity. 

Confidentiality

  • Keep information about applicants’ and employees’ criminal records confidential.  Only use it for the purpose for which it was intended. 

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NLRB Acting General Counsel Issues Memo on New Representation Case Procedures

POSTED BY SCOTT T. SILVERMAN ON APRIL 27, 2012

Yesterday, NLRB Acting General Counsel Lafe Solomon outlined how regional offices will implement new representation case procedures that take effect on Monday, April 30.  Of benefit to employers, the guidance covers the entire representation case process from beginning to end, incorporating the new rules and the procedures that remain unchanged.  Briefly, the changes to the rules are:

1) An explicit statement that the statutory purpose of a pre-election hearing is to determine if a question concerning representation exists.

2) Hearing officers presiding over pre-election hearings have the authority to limit the presentation of evidence to that which supports a party’s contentions and is relevant to the existence of a question concerning representation. Importantly, issues that will not clearly affect the results of an election are to be deferred until after the election

3) Hearing officers have discretion over the filing of post-hearing briefs, including over the issues to be addressed and the time for filing, subject to the authority of the regional director.

4) Most requests for Board review—with the exception of special permission to appeal—are postponed until after the election.

5) The requirement of a 25 day delay between the direction of an election and the actual election is eliminated.

As explained by the Board, the changes primarily affect procedures in elections for which the parties cannot agree on unit, eligibility and similar issues.

The General Counsel’s office also issued a set of frequently asked questions, which explain the Board’s revised rules and the procedures that will be followed by regions in elections.

Employers should understand that the new procedures will dramatically shorten the time period between a petition and the actual election.  Therefore, employers should no longer assume that there will be sufficient opportunity for an effective campaign.  Consistent proactive union avoidance strategies should be considered.

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Transgender Workers Are Protected by Title VII, Rules EEOC

POSTED BY RICHARD D. TUSCHMAN ON APRIL 25, 2012

The EEOC has ruled that claims of discrimination based on transgender status, also known as “gender identity,” are protected by Title VII.

In a decision issued on April 20, 2012, the agency found that the claims of Mia Macy ("Macy"), a transgender woman who had applied for a position with the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATFE”), were cognizable under Title VII.  Macy, who had “presented” as a man when she applied for the position, alleged that she was denied the position when she informed ATF that she was in the process of transitioning from male to female.

The EEOC reasoned that Title VII prohibits not merely discrimination based on sex, but also on gender, i.e. on the “cultural and social aspects associated with masculinity and femininity.”  Thus, decisions based on transgender status constitute gender discrimination, according to the EEOC.  The EEOC cited numerous court decisions that have reached the same conclusion, including the Eleventh Circuit’s recent decision in Glenn v. Brumby, 663 F.3d 1312 (11th Cir. 2011).

But what does “transgender” mean? A male who is in the process of converting to female through surgery and hormone treatments is clearly transgender, but what about a cross-dresser?  Are employers prohibited from taking into account the fact that a male applicant is a “drag queen”, or that a female applicant wears her hair short, applies no make-up, and appears androgynous?

The answer would appear to be yes.  According to the American Psychological Association (“APA”) web site, “transgender” is “an umbrella term for persons whose gender identity, gender expression, or behavior does not conform to that typically associated with the sex to which they were assigned at birth.”  That definition would seem to cover a wide range of people apart from those who have physically converted, or are in the process of converting, from one sex to another – including cross-dressers and people who appear androgynous. 

The lesson of the Macy decision is clear:  Employers faced with an applicant or an employee who does not meet gender-based cultural and social norms should be aware that discriminating against such persons based on their identity, behavior or appearance may constitute a violation of Title VII. 

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NLRB Stays Implementation of Notice Posting Rule

POSTED BY SCOTT T. SILVERMAN ON APRIL 18, 2012

The D.C. Circuit Court of Appeals has temporarily enjoined the National Labor Relations Board's Rule requiring the posting of employee rights, which had been scheduled to take effect on April 30, 2012.  In  light of this order, the Board has stated that regional offices will not implement the Rule, pending the resolution of the issues before the DC Circuit Court.  The Board explained that its action was necessary in order to assure uniform implementation and administration of agency rules. 

The Board represented that it plans to appeal the D.C. District Court's decision that the enforcement mechanisms of the Rule were impermissible.  In addition, the Board will appeal the South Carolina District Court opinion, which found that the NLRB lacked authority to promulgate the Rule, rendering it completely unlawful.

Until further notice, therefore, employers should not post the NLRB rights poster.  Be sure to check this blog as more updates are sure to occur in this rapidly changing environment.

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Firefighter's Race-Baiting Rant Renews Questions About Employers' Access to Facebook Pages

POSTED BY RICHARD D. TUSCHMAN ON APRIL 16, 2012

Do employers have a right to demand access to their employees’ Facebook pages to ensure employees’ posts do not reflect poorly on their employers? A Miami-Dade firefighter’s race-baiting rant about the Trayvon Martin case - posted on his personal Facebook page - is sparking new interest in this question.

Captain Brian Beckmann’s post, published on the website theGrio.com, criticizes the prosecutor in the George Zimmerman case for political posturing and states that “urban youth” are the products of “failed, sh*tbag, ignorant, pathetic, welfare dependent excuses for parents.” Beckmann’s post goes on to say that urban youth are “just misunderstood little church going angels and the ghetto hoodie look doesn't have anything to do with why people wonder if they're about to get jacked by a thug.”

The source of the story apparently had access to Beckmann’s Facebook page and sent a screen shot of his post to theGrio.com. The source expressed concern that the comments reflected "the thoughts of someone who responds to the homes of the very people" being denigrated in the post. The Miami-Dade Fire Rescue Department is investigating the matter.

For public sector employers like Miami-Dade County, the question of whether employers can demand access to their employees’ Facebook pages is complicated by civil service rules, collective bargaining agreements, and First Amendment rights. But for private sector employers in Florida, no law currently restricts an employers’ right to demand access to their employees’ Facebook pages.

That is not to say that requiring employees to disclose their Facebook passwords is a good idea. An employer’s routine demands to view employees’ Facebook pages would undoubtedly be viewed as heavy-handed and smack of “Big Brother.”

But where an employer has knowledge of discriminatory posts or other online behavior by an employee that reflects badly on their business, demanding access to the employee’s Facebook page may be prudent, and perhaps even necessary, to prevent liability or reputational injury to the employer.

Legislation may change the legal landscape on this issue. Maryland recently passed a bill that prohibits employers from asking applicants and employees for social media account log-ins and passwords. Several other states are considering similar legislation. Florida is not among them, for now, but federal legislation may be on the horizon. We will keep an eye on this fast-moving issue and report on new developments.

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South Carolina Federal Court Strikes Down NLRB Notice Posting Rule

POSTED BY SCOTT T. SILVERMAN ON APRIL 16, 2012

On Friday, April 13, 2012, the United States District Court for South Carolina held that the National Labor Relations Board ("NLRB") exceeded its authority when promulgating a rule which requires that all employers subject to the jurisdiction of the National Labor Relations Act ("NLRA") post a notice of employee rights.  In Chamber of Commerce of the United States, et al. v. National Labor Relations Board, et al., Case No. 2:11-cv-02516-DCN, Federal Judge David Norton held that the NLRB violated the Administrative Procedures Act when promulgating the rule, and granted summary judgment to Plaintiffs on their claim that the rule was invalid.

As previously reported, on August 30, 2011, the NLRB published a Final Rule, which is currently set to take effect on April 30, 2012.  The rule is divided into two main parts: (1) Subpart A contains the requirement that all employers subject to the NLRA post notices, in conspicuous places, that inform employees of their NLRA rights, NLRB contact information and NLRB enforcement procedures; and (2) Subpart B states that a failure to post the required notice is an unfair labor practice and that the NLRB may toll the statute of limitations for a violation of the rule and find a failure to comply with the rule as evidence of unlawful motive in unfair labor practice proceedings.

Last month, the D.C. District Court issued an order on a separate challenge to the rule and held that the Subpart A notice posting requirement was a valid exercise of the NLRB's powers.  However, the D.C. District Court found that the NLRB's remedial measures in Subpart B of the rule were impermissible.

The South Carolina District Court disagreed with D.C. District Court and held that the rule was completely unlawful.  Initially, Judge Norton focused on Section 6 of the NLRA, which grants the NLRB the power to make, "in the manner prescribed by the Administrative Procedures Act,   such rules and regulations as may be necessary to carry out the provisions of" the NLRA.  Judge Norton found that while the notice posting rule may be helpful in carrying out the NLRB's functions, it was not necessary.  Further, Judge Norton reasoned that there is no provision in the NLRA, unlike several other federal labor statutes, which requires employers to inform employees of their NLRA rights. Thus, the rule could not be said to be necessary to carry out an explicit Congressional directive.  Judge Norton opined that the NLRA framework requires the NLRB to be reactive to election petitions or unfair labor practice charges and that the Board exceeded its powers by adopting a proactive notice posting rule.

The South Carolina District Court has not yet issued an injunction or other formal relief to Plaintiffs. Further, it is expected that the NLRB will seek to stay Judge Norton's order pending appeal.  Finally, the D.C. District Court's decision is currently on appeal.  Given judicial developments in this area, the NLRB may postpone the effective date of the rule again, or there may be some further judicial decision in advance of April 30, 2012.  Employers are advised not to display the NLRA notice rights poster prior to April 30, 2012 and to consult with counsel to determine the current status of the rule as of the current enforcement date.

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Akerman Labor & Employment Law Seminar to Feature Discussion on New Unemployment Compensation Law Amendments and How They Help Employers

POSTED BY KAREN M. BUESING ON APRIL 9, 2012

Employers should welcome the new amendments to Florida's unemployment compensation laws. Among other things, those amendments eliminate the provision that the unemployment compensation law is to be liberally construed in favor of the claimant, broaden the definition of "misconduct" which will disqualify a claimant from receiving benefits, and require claimants to take new steps to demonstrate efforts to find work.  "Misconduct" now covers certain conduct regardless of whether it takes place in the workplace or during working hours. It now specifically includes conduct demonstrating a "conscious" (rather than "willful") disregard of an employer's interests, carelessness or negligence that manifests an intentional disregard of those interests, chronic absenteeism or tardiness,  or a violation of an employer's known, valid and consistently enforced rule.

Prior to the amendments, claimants could receive unemployment compensation even though they were also receiving severance from their employer. Now, that severance will reduce the amount of unemployment compensation claimants receive. Further, the evidentiary burden for unemployment compensation hearings is relaxed under the new amendments – hearsay may now support a finding of fact if the party against whom it is offered has a reasonable opportunity to review it prior to the hearing and the hearing officer determines that it is trustworthy, probative and in the interest of justice to admit the evidence.

These are exciting changes for employers long frustrated by the unemployment compensation process. We are pleased to have the Hon. Alan O. Forst, Chairman of the Florida Unemployment Compensation Appeals Commission join me in a discussion of how these changes are playing out in the field at the 17th annual Akerman Labor & Employment  Law Seminar in Hollywood, Fla. on Thursday April 19. We hope you will join us. To learn more please visit http://www.akerman.com/events/LELS12/overview.asp

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Temporary Visa or More Permanent Solution? Immigration Law 101 at the Akerman Labor & Employment Law Seminar Has the Answers

POSTED BY MICHAEL BENCHETRIT ON APRIL 3, 2012

The U.S. employer that wishes to have a foreign national conduct business with its company or work for its company in the United States should determine if a temporary visa or a more permanent immigration solution is required for time spent in the United States. As part of this strategy, the U.S. based employer should work closely with the foreign national to determine her educational background and employment experience abroad, especially if it is with a related entity of the U.S. based employer, in order to develop a well-rounded immigration plan.

Developing a successful immigration planning and compliance program can be accomplished by the HR professional that familiarizes himself with the I-9 Form, and understands the policy behind temporary employment options and permanent employment options. With new tools available to employers such as the E-Verify program, being able to track and manage the I-9 process and ensuring new employees are properly verified and existing employees are properly re-verified, the often complex world of immigration law and procedures can effectively be de-mystified.

In my Immigration Law 101 presentation at the 17th annual Akerman Labor & Employment Law Seminar, I'll address these topics and more. Come join us. To learn more please visit http://www.akerman.com/events/LELS12/overview.asp

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Negative Consequences May Flow From Workers' Compensation Denial

POSTED BY SCOTT T. SILVERMAN ON APRIL 3, 2012

Your company just won its workers' compensation case, and the employee was denied benefits.  Time to celebrate, right? WRONG. You may have just bought yourself a civil lawsuit for damages.

In Ocean Reef Club, Inc. v. Wilczewski and Leon, No. 3D09-2779 (Fla. 3d DCA March 21, 2012), the Third District Court of Appeal made two findings of which all Florida employers should be aware: (1) an employer with knowledge of workers' compensation injuries, but who fails to properly report them, is prevented from claiming workers' compensation tort immunity, because the employee failed to file for benefits or because benefits were denied as time-barred; and (2) an employer cannot claim workers' compensation tort immunity when its carrier has denied coverage on the ground that the asserted injuries were not within the course and scope of employment.

In Ocean Reef, employees, a hair stylist and nail technician in a beauty salon, had notified their supervisors of asthma-like symptoms, headaches and respiratory problems, resulting from chemical fumes, for which they sought medical treatment.  However, neither they nor their employer gave notice to the insurance carrier of these illnesses.  It was only after Ocean Reef was sued for damages, that it notified the carrier, which denied coverage on the basis that the illnesses did not occur in the course and scope of employment and that the statute of limitations had run.  Ocean Reef then moved for summary judgment on tort immunity in the civil action, which was denied.  The denial then went to the Third District on appeal.

The Third District held that an employer could not fail in its statutory obligation to provide notice of work-related injuries, and then argue that the tort immunity applied, because the employees did not give notice, and that the workers' compensation claim was barred due to the passage of the statute of limitations.  The court also found that it would be inequitable for the employer, through its insurance carrier, to assert there were no work-related injuries and no workers’ compensation coverage, and then later, when the employee brought a tort action against the employer, to assert a workers’ compensation coverage defense.  An employer simply cannot take such inconsistent positions.

The lessons for employers are: (1) to make sure that supervisors make the required notice of injury so that the employee will be limited to the workers' compensation remedy;  and (2) to coordinate the defense of workers' compensation claims with civil litigation to make sure that inconsistent positions are not taken.  Had this employer made the required notice of injury during employment, or had made sure that an inconsistent defense was not taken in the workers' compensation proceeding, it would not now be looking at a significant civil damages exposure.

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