On August 15, 2007, the Department of Homeland Security (DHS) issued a final rule amending the federal regulations relating to the unlawful hiring or continued employment of unauthorized alien workers, which was scheduled to become effective on September 14, 2007. According to DHS, this final rule is intended to clarify existing requirements making them more understandable. The rule broadens the current definition of “constructive knowledge” by adding that the constructive knowledge of unauthorized employment begins when an employer receives a “no-match” letter from the Social Security Administration (SSA) or similar documentation from DHS. Specifically, the no-match regulation adds three new examples of what constitutes constructive knowledge by an employer that an employee may be unauthorized for employment in the U.S. The examples include:

• A request by the potential employee to file an alien labor certification or employment-based immigrant visa petition;

• Written notice from SSA that the combination of name and social security number submitted for an employee does not match its records; and

• Written notice from DHS that the immigration-status or employment-authorization document presented or referenced by the employee in completing Form I-9 was not assigned to the employee according to DHS records. 

The rule further provides “safe harbor” procedures employers should take when they receive a no-match letter from the SSA or similar documentation from the DHS to avoid a finding that the employer had constructive knowledge of employing an illegal immigrant. The procedures include:

(1) Checking company records to determine whether the discrepancy was caused by a clerical error or an error in its communication to the SSA or DHS. If such an error exits, the employer should correct its records, inform the relevant agency, and make a record of the manner, date, and time of the verification. The employer may update the I-9 form relating to the employee or complete new I-9 (retaining the original). However, the employer should not perform a new I-9 verification;

(2) If the first step does not resolve the discrepancy, employers should promptly request that the employee confirm that his or her records are correct. If the employee indicates that the information is incorrect, the employer must make the necessary corrections, inform the relevant agency, and verify the corrected records with the relevant agency.

(3) If the employee confirms that the records are correct, the employer must promptly advise the employee of the date of receipt of the no-match letter and ask the employee to pursue the matter with the SSA no later than 90 days after receipt date. If the discrepancy notice came from DHS, the employer must contact the local DHS office in accordance with the written notice instructions and attempt to resolve the discrepancy. 

The employer must complete these steps within 30 days from receipt of the discrepancy notice from SSA or DHS. Employers should be mindful that notice from DHS may provide less than 30 days to resolve the discrepancy. 

(4) If the discrepancy cannot be resolved with either SSA or DHS within 90 days of receipt of the written communication from either agency, the employer must attempt to reverify the worker’s employment eligibility by completing a new I-9 employment verification form. Employers should use the same procedures as when completing an I-9 form at the time of hire, with a few exceptions:

• The employee must complete section one and the employer must complete section two of the new I-9 form within 93 days of receipt of the notice from SSA or DHS;

• The employer cannot accept any document (or receipt for such a document) referenced in the DHS notification or any document (or receipt) that contains a social security number that is the subject of the SSA no-match letter to establish employment authorization or identity;

• The employee must present a document that contains a photograph in order to establish identity or both identity and employment authorization; and

• The new I-9 form should be retained with the original I-9 form(s).

If the employer cannot verify the employee’s work eligibility through completion of a new I-9 form, the employer must decide whether to terminate the employee, or continue to employ the individual and face the risk of civil and criminal penalties for having constructive knowledge of an individual’s ineligible work status. These new civil penalties range from $250.00 to $2,000.00 for a first time violation for each unauthorized employee to $2,000.00 to $5,000.00 for a second violation for each unauthorized employee. For all subsequent violations, the monetary penalty increases to $3,000.00 to $10,000.00. The rule provides that whether an employer would be found to have constructive knowledge of an unauthorized worker depends upon the “totality of relevant circumstances.”

Since the issuance of this final rule, much discussion has been generated among employers and various groups such as the AFL-CIO, ACLU, and other interested organizations. The business community, including organizations as diverse as the American Immigration Lawyers Association, the United States Chamber of Commerce, and the United Fresh Produce Association have sent a letter to Michael Chertoff, Secretary of the Department of Homeland Security requesting that the DHS delay implementation of the final rule until unresolved questions and issues surrounding implementation of the final rule can be resolved. Additionally the AFL-CIO, ACLU and other interested organizations filed suit on August 29th in Federal District Court for the Northern District of California challenging the final rule. The Plaintiffs requested a temporary restraining order enjoining the government from taking any action to implement the final rule. The Order was granted by the Judge Maxine M. Chesney on August 31, 2007. Judge Chesney also set an October 1st hearing on a preliminary injunction to stop the September 14th implementation of the DHS rule.

To learn more about the amended regulations or how these changes affect employers, contact our Firm at (501) 371-9999, or attend our September 27, 2007, Breakfast Bulletin on “no-match letters” and the “safe-harbor” procedures. To learn more about the seminar, contact Suzanne Bilello at (501) 371-9999 or sbilello@cgwg.com.

 CMS ISSUES NEW HOSPITAL REGULATIONS

 The Centers for Medicare and Medicaid Services (CMS) published a new set of regulations on August 22, 2007, which provides hospitals nationwide with a strong incentive to re-evaluate their healthcare procedures. The new rules, which will take effect on October 8, 2008, deny payments to hospitals for what CMS believes to be preventable patient costs.

Included in these preventable costs are charges resulting from hospital-acquired infections and medical errors. For example, the regulations define several types of “serious preventable events,” including infections from objects left in patients during surgery and complications from the use of incompatible blood in transfusions. Infections at the patient’s surgery site and ulcers developed during post-operative stays also appear in the list. Such problems, according to CMS, usually result from factors within the hospital’s control.

The regulations refer to these types of problems as “secondary diagnoses.” While Medicare will continue to cover the primary diagnosis, or the underlying reason for the patient’s initial admission to the hospital, the program will no longer cover costs associated with many secondary diagnoses. By reducing coverage in this way, CMS believes hospitals will be forced to re-examine their health protocols and provide better care to Medicare recipients.

The regulations also state that hospitals may not bill patients to recover costs denied by Medicare under the new rules. Many hospitals are undoubtedly concerned about the potential for financial burden. CMS, however, maintains that hospital-acquired infections currently cost taxpayers an additional $30 million a year. CMS hopes to curtail this tax burden through its new regulations. More importantly, though, it hopes to encourage hospitals to eliminate the burden entirely by providing the highest standards of care possible to all patients.

The National Labor Relations Act (“NLRA”) is generally not a consideration for employers adopting employee handbook and personnel policies. Recent court decisions, however, make it clear that limitations imposed on employer rights by the NLRA must be considered, specifically when adopting policies related to employee fraternization and confidentiality. Employers, whether union or non-union, may be subject to unfair labor practice charges if the policies restrict employees from engaging in union organizing or other concerted activity protected under the NLRA.

Anti-fraternization policies are often included in employee handbooks or policy manuals to prevent personal relationships between employees that may damage the work environment, and to avoid conflicts of interest with customers and vendors. Guardsmark, LLC, a nationwide company providing security guard services, maintained an anti-fraternization rule in its employee handbook that directed employees not to “fraternize on or off duty, date[,] or become overly friendly with the client’s employees or with co-employees.” An unfair labor practice charge was filed with the National Labor Relations Board (“NLRB”) and a complaint was issued. A majority of the NLRB, however, found that the rule would not “reasonably tend to chill protected employee activity.” The union that brought the charge sought judicial review.

The U.S. Court of Appeals for the District of Columbia disagreed with the NLRB’s analysis of the policy and reversed the Board’s decision. The court focused its analysis on the meaning of the word “fraternize” and determined that the foundation of the NLRB’s analysis was incorrect. The court explained that “fraternize” must have an independent meaning from “date” or “become overly friendly,” otherwise the inclusion of “fraternize” in the rule would be meaningless. The court rejected the NLRB’s conclusion that employees would understand the rule to prohibit “only personal entanglements rather than activity protected by the Act.” The court concluded, rather, “that employees would reasonably interpret the rule to prevent them from discussing terms and conditions of employment.”

Confidentiality policies have recently come under similar attack. Cintas Corp., a workplace uniform supplier to businesses throughout North America, described its “principals and values” in a section of its employee handbook titled “Cintas Culture.” The section included a discussion of how employees were expected to treat confidential information: “We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its [employees], new business efforts, customers, accounting and financial matters.” In another section, titled “Discipline Policy,” employees were warned that they may be sanctioned for “violating a confidence or [for the] unauthorized release of confidential information.” Cintas, similar to Guardsmark, was charged with an unfair labor practice and a complaint was issued by the NLRB, alleging employer interference with the employees’ right to discuss the terms and conditions of their employment with others.

Cintas argued that there was no evidence that the handbook language had a chilling effect on employees’ rights and offered testimony that pictures and names of employees had appeared, along with their wage rates and other terms and conditions of employment, on union flyers, yet the company had taken no disciplinary action. The NLRB, however, described Cintas’s rule as an “unqualified prohibition of the release of any information regarding its [employees] that could be reasonably construed by employees to restrict discussion of wages and other terms and conditions of employment.”

The NLRB distinguished the Cintas rule from company rules that had been previously approved as sufficiently limited by specific context or language so as to be clear to employees that their rights to organize were not restricted. For example, the NLRB has upheld an ophthalmology clinic rule banning discussion of “office business” in which the phrase appeared at the end of a discussion of patient confidentiality. The NLRB has also approved a hotel rule banning discussion of “policies and procedures” that did not include “information concerning employees” and followed a list of “customer or marketing lists or strategies, financial information, computer files or programs, recipes, and personnel files.”

Based on these and prior decisions, employers should carefully review all personnel policies to ensure they do not restrict employees’ rights protected by the NLRA, specifically the right to discuss terms and conditions of employment, including compensation, with co-workers and third parties. Such policies provide the basis for unfair labor practice charges which may be used as weapons by labor organizations in organizing campaigns.

The issue of “bullying” in the workplace has recently come to the forefront, as 13 states, specifically Oregon, Vermont, New York, New Jersey, Washington, Montana, Connecticut, Hawaii, Oklahoma, Kansas, Missouri, Massachusetts, and California, have proposed legislation to address this issue. The impetus behind this recent legislative push is The National Coordinators of U.S. State Legislative Initiatives to Stop Workplace Bullying, an advocacy group more commonly referred to as the “Bully Busters.” The Bully Busters have drafted a model bill and spearheaded a campaign to disseminate this bill to individual states.

Workplace bullying, as defined by the Bully Busters, is “repeated, health-harming mistreatment of one or more persons by one or more perpetrators” that takes the form of verbal abuse, as well as threatening, humiliating or offensive behavior/actions and work interference. The bills that were previously introduced do not seek to outlaw bullying, but instead encourage the cessation of bullying by allowing victims of this behavior to seek civil damages against their employers. Although no state legislature has yet passed such a bill, the potential for considerable damages coupled with the subjective definition of proscribed conduct makes any campaign for such legislation an important issue for employers. We will keep you abreast of any developments in Arkansas with regard to legislation of this nature.

Russell Gunter spoke on July 18th for the Rogers-Lowell Chamber of Commerce on "Return to Work Issues" and at an August 9th seminar in Little Rock on "ADA Basics." He discussed "Dealing with Problem Employees" at a firm luncheon in Rogers on August 14th.  On August 21st, Mr. Gunter also presented the program discussing problem employees at the West Central Arkansas SHRM meeting in Hot Springs.

Carolyn Witherspoon will speak at the Arkansas Public Transportation Conference in Little Rock on October 17th. Her topic will be “Dealing with Difficult Employees.”  She will also be speaking at the Arkansas Public Employers Human Resources Association's Annual Training Conference on September 13th discussing "Computer/ High Tech Privacy and Legal Issues."  On September 21st, Ms. Witherspoon will present "Technology Issues In The Workplace: Blogs? My Space? What Is Happening?" at the Employment Law & Legislative Affairs (ELLA) Conference. 

Scotty Shively will present a speech entitled "Complying with a Subpoena, Authorization, or Request for Medical Information" for the Arkansas Psychological Association's 2007 Fall Convention on October 25th.  On August 28th, Ms. Shively hosted an Open House at the CGWG offices for the Central Arkansas Executives Association.

Steve Bingham was elected Secretary for the Arkansas Association of Defense Council at its annual meeting in August.

Allen Dobson has spoken at two seminars recently. On July 18th he spoke in

Springdale at a Construction Lien Law seminar. His topic was “The Arkansas Contractor Licensing Law."  On August 9th, Mr. Dobson spoke in Little Rock at a seminar discussing "ADA, FMLA, and Workers’ Compensation Overview." 

Rick Roderick will present a speech, "We Don't Have A Union So Why Do We Have To Worry About the NLRB?" at the Employment Law & Legislative Affairs (ELLA) Conference on September 21st. 

Mark McCarty made a presentation at a Health Reimbursement Accounts, Health Savings Accounts, Section 125 Cafeteria Plans, and COBRA seminar in Springdale on July 19th.

Brian Vandiver will be speaking at the DataPath Administrative Services' Annual Conference on September 26th.  He will present a seminar discussing employee handbooks. 

Danna Young spoke on I-9 compliance and performance appraisals at the 2007 Associated Builders and Contractors State Convention on August 17th.  

Jess Sweere will be speaking at the Arkansas Public Employers Human Resources Association's Annual Training Conference on September 13th discussing "Tattoos, Piercings, and Gender Identity Issues in the Workplace."  Mr. Sweere will also present a program on how to deal with problem employees at the monthly member lunch for the Associated Builders and Contractors on September 21st. 

Problem Employees Lunch Program  Do you have an employee with an attendance problem?  An insubordination problem?  An attitude problem?   Join us on Thursday, September 13th, 2007 at the offices of Cross, Gunter, Witherspoon & Galchus, P.C. in Little Rock located at 500 President Clinton Avenue, Suite 200 to learn how to deal with problem employees. The presentation, which includes lunch, will begin at 11:30 a.m. and end at 1:00 p.m. The cost is $30.  Contact Kelly Davenport at kdavenport@cgwg.com or 501-371-9999 to register. 

A Breakfast Bulletin program will be presented by Donna Galchus on Thursday, September 27 discussing "No-Match" Letters.  The program starts at 8:00 a.m. and ends at 9:15 a.m. at the offices of Cross, Gunter, Witherspoon & Galchus, P.C. at 500 President Clinton Avenue, Suite 200 in Little Rock.  The cost is $25 and includes a continental breakfast.  To register, contact Suzanne Bilello at sbilello@cgwg.com or 501-371-9999.    

Join us for a lunch training session entitled Sex, Drugs and Rock & Roll on Tuesday, October 2 presented by Rick Roderick covering various employer issues including workplace romances, drugs and alcohol, and dress code policies.  The lunch will take place from 11:30 a.m. until 1:00 p.m. at the J. Q. Hammons Center in Rogers, Arkansas.  The cost to attend is $30 and lunch will be provided.  Please contact Suzanne Bilello at sbilello@cgwg.com or 501-371-9999 to register.     

CGWG has scheduled a Basic Supervisor Training for Wednesday, October 10, 2007 at our Little Rock offices from 8:00 a.m. until 4:30 p.m.  Topics discussed include: Fair Labor Standards Act – FLSA; Discipline, Termination, and Documentation; Performance Appraisals; Harassment Prevention; Interviewing and Hiring; and Overview of the ADA, FMLA, and Interaction with Workers Comp.  If you would like to attend, contact Suzanne Bilello at sbilello@cgwg.com or 501-371-9999.  The cost to attend is $125.