Employer News: You Must Start Using the New Form I-9

Employers are required to keep an employment eligibility verification form (I-9) on each employee. The form documents the employee’s citizenship status and eligibility to work in the United States. In July, U.S. Citizenship and Immigration Services revised the form for use beginning September 18, 2017. The new form only applies to new hires; employers don’t have to fill out the new form for current employees.

Where is the new form? You can find the new form I-9 in English and Spanish as well as instructions here: https://www.uscis.gov/i-9.

What changed? The changes seem minor. The most significant change is that U.S. citizens born abroad can now use a Consular Report of Birth Abroad (Form FS-240) as proof of status. Minor edits were made to the form instructions.

Keep a copy of the completed I-9 in the employee’s personnel file. I-9 forms do not get filed with any state or federal agency.

What You Need to Know About the Equifax Data Breach

What happened? From May to July 2017, hackers breached data security at Equifax, one of the three major credit bureaus. The hackers got names, Social Security numbers, birth dates, addresses, and driver’s license numbers. They also credit card numbers of 209,000 consumers and dispute documents with personal identifying information of 182,000 consumers. Equifax estimates this data breach affects 143,000,000 American consumers – over 40% of American adults. Texas Attorney General, Ken Paxton, estimates 12 million Texans are affected. Equifax learned about the breach on July 29 and failed to disclose the breach publicly until September 7.

Was my information stolen? Equifax has set up a website for consumers to find out if they are affected. Visit: https://www.equifaxsecurity2017.com/potential-impact/ and click the maroon box. You’ll be taken to a form where you type in your last name and the last 6 digits of your Social Security number. You’ll also have to answer a question to prove you are a human and not a robot. The site will tell you simply whether or not Equifax believes your information was impacted and will allow you to sign up for a year of free credit monitoring.

What is being done to help victims? Not a lot. Equifax is offering victims one year of free credit monitoring through its TrustedID service. The service includes one year of identity theft insurance. So far, 30 class action lawsuits have been filed against Equifax as a result of the breach; a couple are in Texas. The Senate Finance Committee is asking questions of Equifax, and that could lead to a Congressional investigation. The Federal Trade Commission has put up an information website: https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do.

What should I do? Here’s a checklist:

  • It is safest to assume you are affected.
  • Place a 90 day fraud alert on your credit report by calling 1-888-766-0008.
  • Consider placing a credit freeze. A credit freeze is more effective than a fraud alert, but unless you have made a police report, you must pay a nominal fee to each credit bureau to freeze your credit, and to use your credit you must unfreeze your reports. To place a credit freeze, you must contact each credit bureau separately at the links or phone numbers listed below:
  • Visit annualcreditreport.com and get a free credit report from Transunion or Experian. Look through the report carefully. If there is any information on it that does not belong to you, dispute it immediately. Check again with the other company in November.
  • Carefully check all of your bank statements and credit card statements from May forward. If you find transactions that you did not authorize, report them. Note that the financial institution is not required to investigate the items you report from May, June, or July.
  • Make plans to review all of your statements each month and immediately dispute any transactions that you did not authorize.
  • Be alert to scammers trying to profit off your misery. If you did not initiate a phone call, email, or text message, treat it like a scam!
  • Plan to file your federal income tax return as early as possible – before identity thieves do it.
  • Visit our identity theft information page: ppiercelaw.com/identity-theft.

Overtime Update

 

It seems a lifetime ago that the Department of Labor (DOL) announced changes to employee overtime rules that would raise the salary threshold for exempt employees.* The rule was to take effect on December 1, 2016. Many employees who had been exempt from overtime would be eligible for overtime pay under the new rule which raised the exemption threshold to $913 a week: $47,476 per year rather than the current $23,660. Employers scrambled to revise job descriptions and policies regarding overtime work to comply with the rule.

Twenty-one states file suit to challenge the new rule. On November 22, 2016, the U.S. District Court in Sherman, Texas granted the states’ motion to prevent the rule from taking effect. The DOL appealed the decision to the Fifth Circuit. Briefing was completed last month, and it appears that the DOL has abandoned the new salary level. Instead, the DOL is seeking information. On July 26, the Federal Register published a request for information posing 11 sets of specific questions for public comment. Questions include whether there should be multiple salary levels for exempt employees based on factors such as inflation, employer size, and census region; how setting different exemption levels for executive vs. administrative employees would affect businesses; and whether the exemption test ought to be based solely on the employee’s duties rather than salary. Comments are due by September 25, 2017. The questions and instructions for submitting comments are here. Anyone can submit a comment, and so far over 65,000 comments have been submitted.

What should employers do? Nothing for now. Now, we wait for the Fifth Circuit to issue an opinion.

See our previous blogs about the overtime rule: 11/29/16 – A Lump of Coal for Admin Employees? Texas Court Blocks Implementation of DOL’s Overtime Rule Change; 11/16/16 $47,476 the Magic Number – Are You Ready?; 10/10/16 – Time’s a Wastin’ – Get Ready for the new Overtime Rule; 5/27/16 – Holiday Gift for Salaried Workers: OVERTIME.

Time’s A Wastin’ – Get Ready for the New Overtime Rule

running-payroll

 

Each year the Texas Workforce Commission and the Wage and Hour Division of the U.S. Department of Labor investigate scores of Texas businesses for violating minimum wage and overtime laws. With the new federal overtime exemptions imminently taking effect, employers should review their payroll policies to ensure compliance. Beginning December 1, salaried employees who make less than $47,476 per year or $913 per week will be entitled to overtime pay for working more than 40 hours in a work week. Texas recognizes the federal minimum wage which is currently $7.25 an hour.

 

Plan now to be in compliance with the overtime rule on December 1. Salary alone is not the only factor for determining whether a salaried employee is entitled to overtime or is exempt:

 

  • Salaried employees are paid a salary not an hourly wage;
  • Full-time exempt employees’ salaries must be at least $47,476 annually; and
  • Exempt employees must have executive, administrative, or professional duties, e.g., management, exercise of discretion and independent judgment, or work that requires advanced knowledge.

payroll1

Nonexempt employees are entitled to overtime pay at time and a half for each hour worked beyond a 40 hour work week. The Department of Labor enumerated four options for employers to comply with the new rule:

 

  • Raise salaries to maintain the exemption;
  • Keep current salaries and pay overtime;
  • Adjust workloads and schedules so that employees work no more than 40 hours per week; or
  • Adjust wages by converting salaried employees to hourly.

 

Raising salaries and paying overtime is not financially feasible for many small businesses. Converting salaried workers to hourly pay could tank employee morale. Another way to comply with the new rule without undertaking additional financial burdens is to adopt a workplace policy forbidding non-exempt employees from working overtime without prior written approval from a supervisor. Enforce the policy consistently. This allows the business to predict and control labor costs while encouraging healthy work-life balance for employees.

The last minute has arrived. If you haven’t already adopted procedures to comply, consult a lawyer to help your business transition to the new rule. The Department of Labor has published this fact sheet for employers: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf

 

Ins and Outs of Online Reviews The Communication Decency Act

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Anyone with a social media account can post online reviews of businesses, and there’s virtually no way to vet a review, that is, whether the reviewer is being truthful or whether the reviewer has an ulterior motive.

Schemes have been found where reviewers were compensated for good reviews, where reviewers blackmailed businesses into giving benefits in return for not writing bad reviews, where businesses threatened to sue reviewers for bad reviews, and where reviews were blatantly faked.

While a sudden plethora of five star reviews might be a red flag to Yelp, Google, or Tripadvisor, business owners are more concerned about the impact of fake negative reviews on their business.

amazon-consumer-reviews

When faced with a negative review that appears malicious or fake, people often respond by contacting the review site. Unfortunately, the review site has no legal responsibility for user posts.

Sites are protected by Section 230 of the Communications Decency Act (CDA), a little known federal law that was originally enacted to keep internet pornography out of the hands of children.

Congress passed the CDA in 1996. Most of the law focused on limiting indecent or obscene material on the internet; however, those provisions were struck down in a series of lawsuits filed by free speech advocates. Section 230 remains. In a nutshell, Section 230 says that internet providers are not the publisher or speaker of information they post when the information was created by someone else. 47 U.S.C. § 230. This means that a website generally is not responsible for content posted on it that was created by a website user. There are a couple of exceptions, e.g.,  criminal content and intellectual property infringement are not protected. So, online review sites are not responsible for the content of reviews posted by site users.

Even though they may not be legally liable, social media sites are concerned about the reliability of reviews posted on their sites. Most sites have adopted procedures for taking down fraudulent reviews. These procedures are site specific. So victims of fraudulent reviews must contact each site owner for instructions.

While the site may not be liable for fraudulent content, the individual doing the posting does not have legal protection for fraud, criminal acts, or defamation. If a reviewer did not use the business it reviewed, the review is likely fraudulent. If the review contains facts that are not true, the review may be defamatory. The basic test for defamation is that the statement is false and caused harm, is published, and is made negligently or maliciously. However, an opinion is not defamation.

So, what’s a victim to do? Look at the site’s acceptable use policy and see if the site has a procedure for taking down fraudulent content. Contact a lawyer to see whether the review contains content that is not legally protected and what recourse you may have against the individual that posted the review.

What’s The Deal With Arbitration?

It seems like every contract, service agreement, or website terms of service has a mandatory arbitration clause in it. Why is that? There are compelling reasons to arbitrate disputes, but arbitration also has its drawbacks.

Arbitration

Why arbitrate?

Arbitration is private; whereas, generally documents in court cases are public records.

So, if keeping a dispute out of the public eye is important, arbitration is preferable. In most cases, arbitration is faster. Arbitration can be accomplished in a matter of months. In smaller cases, parties can ask for fast track arbitration which is even faster. Fast track arbitration can be accomplished in a month or two.

Litigation of smaller cases will generally take six months or more. Litigation of complex cases can take years. Arbitration is informal. Because arbitration is done by agreement, it is flexible.

The rules of evidence don’t apply, so parties can either loosen or dispense with the need for testimony necessary in court that makes documents and such admissible. The investigation phase of a lawsuit is called discovery.

Discovery in arbitration is more of an informal exchange of information rather than a structured process involving asking, objecting, and getting court rulings on information requests. Arbitrators can, but do not have to, strictly follow some statutes. For example, an arbitrator can relax some of the “gotcha” procedural laws that litigants find to be unfair such as the time limits for filing suit. Arbitration is final. It is very difficult to appeal an arbitration award.

 

What are the drawbacks to arbitration?

Because the arbitrator does not have to follow laws strictly, statutory claims and defenses that may be a slam dunk in litigation may not be followed by the arbitrator. It is very, very difficult to overturn or appeal an arbitration award. Litigants have a right to have a higher court review lower court rulings.  

Because the rules of discovery and rules of evidence do not apply to arbitration, parties run the risk of not getting all of the information and evidence relevant to the case. The arbitrator may base an arbitration award on evidence that is not admissible in court. Courts and juries cannot consider inadmissible evidence.

There is no jury right in arbitration. The arbitrator is both judge and jury. If the losing party doesn’t pay the award, it will take longer to make the award collectible. If a court judgment is not appealed, it becomes final and collectible in 30 days. After arbitration, the winner must file the arbitration award in court, and the court will confirm the award making it collectible. However, the loser has 90 days to dispute the award in court.

 

Which is more expensive?

That depends. The filing fees for arbitration are higher, but overall costs of arbitration can be lower because arbitration takes less time and because preparing the case for arbitration is less expensive.

 

Mediation is an alternative.

Mediation is a means of dispute resolution that is less expensive than arbitration or litigation. Mediation is attractive because the parties agree on a resolution. If mediation is not successful, then the parties may resort to arbitration or litigation.

Many businesses prefer arbitration because it provides a private forum for resolution of disputes, and arbitration can be faster and less expensive than litigation.

In business disputes among licensed professionals such as doctors or lawyers, the privacy afforded by arbitration is preferable to public court proceedings that may expose the dispute to media coverage.

In reality, inserting arbitration clauses into business contracts has become a knee jerk almost rising to the level of boilerplate. Before inserting an arbitration clause into a contract, consider the pros and cons in light of the contract and the parties’ relationship. Rather than inserting an arbitration clause into every contract, consider requiring mediation prior to arbitration or litigation as an even less expensive means of resolving disputes.

Writing it Down: 4 A Recipe for Writing Simple & Personal Agreements

Contract

My last post explored common problems with handshake agreements.

Now that you’re convinced to write stuff down, what do you write?

A contract is no good if it isn’t enforceable. To be enforceable, a contract must be made by people who are legally able to make a contract (generally, adults who understand what they are doing), must have a lawful purpose, and must have an offer, acceptance, and consideration.

An offer is exactly what it sounds like – a promise to do something if the other person will do something else. Acceptance means both parties agree to hold up their end of the bargain. Consideration is payment. Consideration can be money, a promise, an action.

The Texas Comptroller’s Office has a handout that describes the legal elements of a binding contract: 

http://comptroller.texas.gov/procurement/pub/contractguide/LegalElementsofaContract.pdf.

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‘TIS THE SEASON TO BE SCAM SAVVY

With Thanksgiving behind us, the Holiday Season is in full swing, and so are scams. There may be nothing you can do to prevent the early morning call from your credit card’s fraud department asking if you are buying athletic shoes in London, however there are ways to protect yourself from scams and identity theft.

Here are a few tips for minimizing your risk during the holiday season.

  •  Surf smart. When shopping online make sure you are using a safe site. Take a moment to look for the lock symbol on the screen or “https” in the URL (website’s address). Type in the URL line; don’t click on a link from an email. And, Google has a free service that monitors malware attacks. Type http://google.com/safebrowsing/diagnostic?site= and the website you want to check. You will see a report whether the site has been attacked by malware in the last 90 days.
  • Shop smart. Be aware of your surroundings especially at ATMs and in stores. In the past, pickpockets were the main concern. Someone may still try to snatch your purse or wallet by hand, but now digital pickpockets use technology to steal your credit card information remotely. For a modest investment in equipment, thieves can wirelessly read the information on your credit card’s magnetic strip from a short distance and place the information on a fake card. If your card has one of the new EMV chips in it, you are still vulnerable. The magnetic strip is still hackable, and last summer fraud experts in Mexico found a device on ATMs intended to hack EMV chips. So, how can you minimize your risk? Carry only what you need. If you are going to use one credit card on a shopping trip, leave the rest at home. Most devices work within a short distance – six inches or so. If someone is standing too close to you, move away.
  •   Don’t fall for phone or email scams. All phone and email scams follow a pattern: unsolicited contact, with either a sad story or a fabulous deal, followed by an “Aask.” The Aask takes one of two forms: money or the victim’s personal information. A scammer seeking money will usually request a wire transfer because once started, a wire transfer is extremely difficult to stop. Once completed, a consumer has little hope of recovering the money. Here are a few tips for avoiding scams:
    • If you didn’t initiate the call or email, treat it like a scam. Be cautious, and don’t give out any personal information.
    • If a phone call, don’t guess who it is. Ask, “What is your name?” A common scam begins with a caller saying, “Grandma?” This scammer is betting the recipient will guess a grandchild’s name instead of saying, “Which grandkid are you?”
    • Don’t give out personal information over the phone if you didn’t initiate the call. If you call your bank, they need to verify your identity by asking for information. If you don’t give them information, they cannot help you. A scammer pretending to be your bank, will ask for your account number. Don’t give it.
    • Don’t fall for a fake deal. If you didn’t enter a lottery, you didn’t win a lottery. If you don’t have any relatives in Michigan, it’s unlikely you’d inherit anything from a Michigan resident.
    • Don’t use a phone number or email address given by a scammer. It just goes right back to the scammer. Instead, if you are unsure whether a call is genuine, look up the phone number independently and call back. If a credit card, call the number on the back of the card and ask for the fraud department. If a financial institution, call the number on your statement.
    •  Verify email addresses. If you get a suspicious email that looks like someone you know, look closely at the email address. Scammers fake email addresses by changing one or two letters.
    • Don’t wire money to another country without independent verification. You don’t have the same consumer protections when you send money to another country. A common scam involves an imposter who pretends to be a friend or relative who is stranded in another country. Hang up. Call the person who is supposedly asking for the money. Ask whether they just called you.
    • It’s okay to hang up on a scammer. Scammers are masters of human behavior. They rely on victims to be polite and helpful. The best way to avoid the scam is to simply hang up the phone or delete the email.

Stay safe, and enjoy the holiday season!

Writing it Down: 3 Excuses, Excuses

My last post noted how writing things down supports healthy business relationships. If writing things down is so important to protecting a healthy business, why don’t people do it?

Common reasons for resisting written agreements are:

“I do deals on a handshake. It’s a matter of trust.”

“It’s too expensive; I’d have to hire an attorney.”

“My friend wouldn’t break a promise. He’d never do that to me.”

None of these are good excuses from my perspective. I’ve seen too many business relationships deteriorate as a result of otherwise savvy business owners adopting these excuses. Let’s explore the problems with handshake agreements.

  • Verbal agreements are too broad. People invariably do not remember details exactly the same way; therefore, a handshake agreement often will lack all of the necessary terms of the agreement. Example: Joanna installs tile. Bert hires Joanna to install tile in his bathroom for an agreed price payable half up front and half when the job is complete. Joanna estimates the job will take 2 days to complete. Bert selects tile from Joanna’s sample books. Joanna installs the selected tile and matching grout. Bert is unhappy because he wanted contrasting grout. The grout decision was a missing term. Bert demands that Joanna remove and replace the grout at no extra charge. Joanna believes their contract requires Bert to pay the rest of the agreed price and re-negotiate a new contract for removal and replacement of the grout. The parties have created their own mess. At a minimum, Joanna should be using a written work order or estimate that clearly lays out what work will be done, what decisions the customer will make, and how changes will be handled.
  • Verbal agreements can be ambiguous. When terms are not reduced to writing, they are subject to differing interpretations much the same way that two people witnessing the same event often describe it differently. Even lawyers are guilty. Example: Samantha cannot afford a lawyer to handle her entire divorce. She hires Amanda’s virtual law firm to provide limited scope services to aid her in handling her own divorce. Both agree that for a flat fee, Amanda will draft the divorce petition and court orders, give Samantha instructions for filing the petition, and provide a publication explaining the divorce process including how to handle the final hearing. In the interim, Samantha agrees to pay her spouse a small sum every month to cover an unexpected home repair. Samantha expects Amanda to draft an agreed temporary order since their flat fee covers “court orders.” Amanda disagrees. Her intention was that “court orders” included only the final divorce decree. “Court orders” in this context is ambiguous. A written agreement signed by Amanda and Samantha would have given Amanda the opportunity to spot the ambiguity before agreeing to provide services and, even if imperfect, writing down the parties’ expectations would have given them a starting point for discussing adding services to their agreement.
  • Oral agreements are hard to enforce, and agreements are worthless if they are not enforceable. Agreements are not enforceable if all the parties have not agreed to all the terms. Example: Ben and Dan form a partnership to start a mobile car wash service. Ben owns a panel van that he will contribute to the business. He estimates the van is worth $10,000. Dan will contribute $10,000 in cash for start-up costs. Both will work without salary for 6 months, and Dan will “manage” the business. After 60 days, the relationship starts disintegrating. It seems Ben and Dan can’t agree on anything. Ben has had enough and kicks Dan out of the business. Ben claims all of the improvements Dan made to the truck belong to him. Dan wants his $10,000 back and wants to be paid for the time he spent building the business. Since the parties never agreed to an exit strategy, Dan has no contract that provides him reimbursement for his time or his money. Dan must rely on common law theories of recovery to get his money back and soon realizes that attorneys’ fees and litigation costs will exceed his initial $10,000 investment. While he may be able to recoup attorneys’ fees after a trial, he decides a lawsuit is a risk he does not want to take.
  • Verbal agreements are susceptible to differences in memory making the proof of terms a matter of which party is more credible. Lawyers call this a “he said/she said” dilemma. Example: In the previous example, Dan visits a lawyer. He explains his agreement with Ben, and wants to know how to get his money back and get paid for his time and efforts to build the business. After a few minutes of hard questioning, Dan realizes that by not writing things down, Ben can simply deny the terms of their agreement. Whereas a written agreement speaks for itself, to enforce their verbal agreement, Dan will have to find witnesses and other evidence to prove every part of the agreement. Most of the terms were made in private conversations between Dan and Ben, so most of Dan’s witnesses are relying on Dan’s description of the agreement. Dan’s lawyer calls this hearsay and explains it may not be useful in court. A legal action to enforce their agreement will come down to who is more believable under the pressure of a court proceeding.

A trusting relationship does not cure the parties’ failure to communicate effectively. The failure to define all important terms can be fatal to any agreement. Writing things down gives people the opportunity to avoid future problems.

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Writing it Down: 2 It's All About the Relationship

Every profitable business is a complex web of relationships. Think about it. Common relationships on which a thriving business is based include:

Customer-Supplier

Co-Owners (shareholders, partners, members)

Employer-Employee

Supervisor-Supervisee

Owner-Management

Business-Regulators (taxing authorities, licensing boards)

Landlord-Tenant

Networking partners

Of course, there are more. On the most basic level, a business cannot exist without customers, and a business will not last long without strong customer relationships. Every profitable business is built on a web of thriving relationships. Relationships are strong when everyone is on the same page, expectations are clear and realistic, and the parties trust each other to do what each has agreed to do.

 

Relationships deteriorate when everyone is not on the same page, expectations are ambiguous or unrealistic, or someone fails to keep a promise. Many times, misunderstandings between parties cause or contribute to the deterioration of otherwise healthy relationships. Misunderstandings happen for a number of reasons – many of which are avoidable. A common cause of misunderstanding is the failure to accurately describe a task to be performed. Who will do what by when, and how will it be done?

Details may be assumed differently by various parties when the details are not written down. For example, John hires Dan to paint a wall. The two negotiate a price and a time for completion. Dan paints the wall. John refuses to pay full price because Dan did not prime the wall before painting it. A critical item was not discussed. Dan assumed the wall did not need priming because it was not discussed. John assumed that any painter would prime the wall first. Now, everyone is dissatisfied.

Had the two written down the terms of their agreement, they may have uncovered the missing information in time to clarify and correct. This example uses a very simple agreement. In reality, the more complicated an agreement is, the more terms and details are needed, and the more steps toward completion of each party’s agreed tasks, the more critical it is to write everything down.

Dan and John did not need a lawyer or fancy language to write their agreement. Their agreement could have been in the form of a work order signed by both of them. It seems obvious that a written agreement would have helped them avoid conflict and would have led to a better working relationship. So, why do we resist writing things down? My next post will explore our propensity to rely on a handshake over pen and paper.