Restaurant Services Blog

According to a published report, an ongoing enforcement initiative conducted by the U.S. Department of Labor focused on the restaurant industry in Massachusetts has uncovered significant violations of the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act. To date, investigations by the Boston District Office of the department’s Wage and Hour Division have found $1,307,808 in back wages due to 478 employees of multiple establishments. In addition, the division now is assessing liquidated damages, payable to employees, when employers are found in violation.


“The restaurant industry employs some of our country’s lowest paid workers, who are vulnerable to exploitation,” said Secretary of Labor Hilda L. Solis. “In response to the extensive level of noncompliance we discovered, we will expand our efforts to bring the industry into compliance to ensure that employees receive the minimum wage and overtime wages required by law.”

“Our investigations found that several restaurants violated the FLSA by paying employees flat salaries for all hours worked without overtime pay, failing to combine hours worked at multiple locations for overtime purposes, paying incorrect overtime rates to tipped employees, making illegal deductions from employees’ wages and failing to keep accurate records of employees’ hours,” said George A. Rioux, the division’s district director in Boston. “Even more serious, our investigations found an emerging trend of misclassifying restaurant workers as independent contractors in order to avoid minimum wage, overtime and record-keeping requirements of the FLSA.”

The division plans to coordinate with state agencies responsible for enforcing state laws that address such violations and may refer these types of cases to the Internal Revenue Service when appropriate. The division also plans to continue outreach and educational efforts with the Massachusetts Restaurant Association to help the organization’s members comply with the law.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees’ wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for back wages and an equal amount in liquidated damages.

The department has a smartphone application to help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users can track regular work hours, break time and any overtime hours for one or more employers. This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This and other Labor Department apps are available at http://www.dol.gov/dol/apps.

For more information about this topic, contact Rick Casmass

The following article originally appeared in Workforce.

Wage-and-hour lawsuits are becoming a major concern for employers as more suits are filed, observers say.

The complexity of federal and state laws, the relative ease of winning class action certification and workers laid off as a result of the weak economy have led to more litigation in recent years, observers say.


For example, the Department of Labor said there were 40,000 wage-and-hour complaints during fiscal 2010, up about 15% from the roughly 35,000 complaints in fiscal 2009.

Many claims fall into two major categories: misclassification of workers as exempt, and unpaid overtime, observers say.

However, employers can minimize the chances of litigation by taking steps that include periodic audits to determine whether employees are being properly classified, as well as careful recordkeeping.

When employers are sued, experts say settling the case may be the wiser course. Wage-and-hour litigation is the fastest-growing type of class action, legal experts say.

“If you asked me what was the headache that kept folks up at night five years ago when it comes to workplace-related lawsuits, I’d say employment discrimination lawsuits,” said Gerald L. Maatman Jr., a partner with law firm Seyfarth Shaw L.L.P. in Chicago.

“Today, the headache that keeps people awake at night” is wage-and-hour litigation, he said. “If you’re interested in saving money and avoiding the courthouse, I think that’s the No. 1 issue right now,” Maatman said. “Every year we think we’re at the top of the bell curve, but we haven’t reached that yet.”

“It’s one of the biggest threats to employers from an employment law standpoint,” said Brian T. McMillan, a shareholder with Littler Mendelson P.C. in San Jose, California. “Plaintiff attorneys have kind of stumbled upon what is now the litigation du jour,” which can mean “enormous liability” for employers as well as plaintiffs’ ability to recover attorney fees, he said.

Among reasons for the lawsuits’ growth is establishing a class action under the Fair Labor Standards Act is relatively easy under the federal rules of civil procedures, said Paul J. Siegel, a partner with Jackson Lewis L.L.P. in Melville, New York.

The FLSA, which was created in 1938 to protect industrial workers from exploitation, guarantees employees time-and-a-half-pay for hours worked beyond a 40-hour week, unless they are salaried and fall into one of three main exempt categories: professional, executive or administrative.

Observers say even if the time at issue is just a few minutes per worker, a class action can add up to substantial costs for employers when multiplied by thousands of workers.

“While hopefully few people are discriminated against, everybody receives a paycheck, and therefore can be in a group together,” Mr. Siegel said.

“Success begets copycats,” Maatman said.

Successful litigation in the early part of this decade has attracted attorneys to the area, Maatman said. In addition, plaintiffs attorneys realized “it didn’t take money to be able to bring these sorts of cases” the way it does to bring large-scale cases alleging discrimination or violation of the Employee Retirement Income Security Act, where plaintiffs must invest in expert testimony and pay for it from their own pocket, he said.

“They can do without an expert” in wage-and-hour suits and “can get a class certified pretty quickly,” Maatman said. “So when a client walks into their office and says, “This is how I was paid,’ they can sue on behalf of that client and anyone else in the common payroll system,” he said.
Furthermore, unlike discrimination cases that must first be presented to the Equal Employment Opportunity Commission, a plaintiff attorney can see a client on Monday and file suit on Tuesday, said Maatman. It is a “much, much more user-friendly system for the plaintiffs’ system,” he said.

The weak economy also has played a role in rising litigation as laid-off workers go after their previous employers, said Lawrence S. McGoldrick, of counsel at Fisher & Phillips L.L.P. in Atlanta. The complexity of the rules, which vary among the state and federal laws and are easy to inadvertently break, also are a factor, legal observers say.

“There is no turnkey solution that you can just plug in,” said Phillip Schreiber, a partner with Holland & Knight L.L.P. in Chicago.
“It’s hard to be in full compliance, even for a good employer,” McGoldrick said.

“When you consider whether or not an individual is properly classified as an exempt vs. nonexempt for overtime, it’s nothing that they can just look up and get a definitive answer for,” McMillan said. “The decision rests upon a specific case-by-case actual analysis as to what the particular employer does day in and day out, so it’s difficult, even as a lawyer, to provide guidance.”

The nature of today’s jobs also is a factor.

“You have employees who are not working in centralized locations where they can be monitored” and their hours worked tracked easily, said Michael C. Schmidt, a member of law firm Cozen O’Connor P.C. in New York.

Working with email and BlackBerrys “tend to be outside the traditional norms, which makes it harder for employers to control and record those” specific hours worked, he said.

In addition, budget-stretched state and federal governments are targeting independent contractors to make sure the contractors pay their fair share of payroll taxes. They are not just looking to do justice but “also seeking to get back revenue,” said Schmidt.

The Labor Department also has been active on the issue, observers say.

The employer’s location also makes a difference, legal experts say.
“An employer needs to consider where in the country your facilities are located,” said Siegel. “If you’re in California, if you’re in Florida or New York City, you’re going to see far more” wage-and-hour activity than in other parts of the country. In some cases, it is a reflection of local laws; and in others, of the local bar, Siegel said.

Many point to California as being particularly difficult for employers.
McMillan said the state “has just so many specific wage-and-hour rules and regulations that a lot of employers that have all the intent of wanting to comply with the law don’t often know about all the specific rules, and therefore it’s difficult for them to comply with all the technicalities.”

Insurance coverage is not widely available, observers say. According to a December study by Sterling, Massachusetts-based Betterley Risk Consultants Inc., some insurers offer only defense coverage or defense and settlement insurance, but both often are subject to sublimits.

If you’d like more information about this topic, contact Jeff DiDomenico Valiant

By Sharrie Hajduk, Valiant Vice President of Tax Operations

I’m always excited to hear that another Valiant client has signed on to Valiant Tax Service. But what I’m puzzled about is that while the vast majority of our clients use VTS, a small minority do not. That’s why I’ve taken to the “blogosphere,” to explain the service and its value to our clients who don’t currently use it.


Valiant Tax Service is pretty much what the name implies, a tax processing unit that takes care of all of your payroll taxes. We started offering this service for a number of reasons. First of all, it’s a natural fit with the payroll services we already provide and it works seamlessly with your payroll data. Secondly, we have an extraordinarily thorough understanding of tax regulations and the complexities of tax processing. Why should your payroll department spend countless hours trying to navigate the intricacies of tax laws for all 50 states and literally thousands of municipalities when we at Valiant already have that information at our fingertips?

Here are a few highlights of Valiant Tax Service’s capabilities:

• Our software systems and human knowledge make us completely up-to-date and fully compliant with new and existing tax laws, rule changes, and form updates.

• We provide accurate and timely preparation/remittance of all returns, reports, and payments for over 10,000 federal, state and local jurisdictions throughout the U.S.

• We respond rapidly, efficiently and effectively to resolve any agency payroll tax inquiries and issues.

• We have a staff with decades of accumulated payroll tax knowledge and expertise.

I asked around to find out why some of Valiant’s clients prefer to handle tax processing themselves and the one word I kept hearing was, “float.” If that’s true, it’s an outdated notion that needs to be put to rest. If you’re reading this, you know what “float” means; it’s the cash management theory of holding onto money in your account until the very last moment so as to accrue every last cent of interest.

But think about it…with interest rates stuck at a fraction of one percent, where’s the financial gain? The simple answer is, there isn’t any. Also consider this: by handling your payroll taxes yourself, any error you make can (and will!) result in penalties, fines and interest that wipe out any benefit from “float.”

I’m available any time to talk with you in detail about how Valiant Tax Service can simplify your payroll tax processing and reduce your overhead.

For more information please email Sharrie Hajduk at Valiant or call 516.390.1133.

The following article originally appeared in The New York Times.

As the nation’s economy slowly recovers and income inequality emerges as a crucial issue in the presidential campaign, lawmakers are facing growing pressure to raise the minimum wage, which was last increased at the federal level to $7.25 an hour in July 2009.


State legislators in New York, New Jersey, Connecticut, Illinois and elsewhere are pushing to raise the minimum wage above the federal level in their own states, arguing that $7.25 an hour is too meager for anyone to live on.

Massachusetts lawmakers are pushing for a big jump, with the Legislature’s joint committee on labor approving a measure last month that would raise the minimum to $10 an hour, which would leapfrog Washington State, whose $9.04 minimum is the nation’s highest.
Voters in Missouri may be asked to vote on a minimum wage referendum in November.

These moves are giving momentum to an effort to persuade Congress to embrace a higher national minimum wage. Some liberal and labor groups, capitalizing on the energy and message of the Occupy Wall Street movement, are urging Senator Tom Harkin, Democrat of Iowa and chairman of the Senate Labor Committee, to head a Congressional effort to raise the federal minimum to $9.80 an hour by 2014.
Congress last passed a bill to increase minimum wages in 2006, phasing in higher rates over several years. Although some states raise the minimum wage automatically every year as the cost of living increases, federal law does not provides for an automatic increase.
Many Democrats and their labor allies say the time is right to push for another increase, and not just because it is hard to live on the $15,080 a year earned by a person working full time at minimum wage. They say a public debate now over the merits of increasing wages is bound to put many Republicans on the defensive during an election year and would encourage low-income Americans — an important part of the Democratic base — to go to the polls this November.

“It’s always good to surface an issue that captures voters’ enthusiasm and distinguishes the bad guys and the good guys,” said Jen Kern, minimum wage campaign coordinator at the National Employment Law Project, an advocacy group for low-wage workers.

The business community is not at all happy about these developments and has warned President Obama, Democratic lawmakers and labor groups that with weak job growth, the time is definitely not right to raise the minimum wage.

“It’s a classic election-year ploy to make the Democrats look like they’re protecting low-income workers,” said Randal K. Johnson, senior vice president for labor issues at the United States Chamber of Commerce. “I think it’s well understood that raising the minimum wage hurts workers on the lower end of the pay scale in that it does kill jobs.”

But backers of a higher minimum wage disagree on the economics, pointing to studies that found that an increase in minimum wages did not result in a reduction in jobs. Ms. Kern argued that raising the minimum wage would even stimulate the economy. “You ask business why they’re not hiring. They say it’s because no one is buying anything,” she said. “Well, a higher minimum wage would give people more money to spend.”

In 2010, 1.8 million hourly workers earned exactly the prevailing federal minimum wage of $7.25 an hour, according to federal data. About 2.5 million had wages below the minimum, in part because of exemptions under the law for certain categories of workers like many students.

Analysis by the Economic Policy Institute, a left-leaning research organization, suggests that raising the federal minimum wage to $9.80 would lift pay for more than 28 million Americans, increase the gross domestic product by more than $25 billion and create the equivalent of more than 100,000 full-time jobs.

Advocates for a higher wage note that the issue receives strong public support. In a Quinnipiac University poll released last week, 78 percent of New Yorkers polled supported an increase, while 20 percent opposed it. Even Republicans favored an increase, 53 percent to 43 percent.

Ms. Kern’s group along with other labor organizations like Interfaith Worker Justice, the Service Employees International Union and Restaurant Opportunities Centers United are mobilizing to press Congress to take action.

Supporters of a higher minimum are urging Mr. Harkin to break out the minimum wage provisions from a broader bill that would bolster workers’ positions by strengthening numerous labor and safety laws.

Mr. Harkin said, “Establishing a reasonable minimum wage is the simplest thing we can do to help hard-working families make ends meet, join the middle class, and help move the economy forward.” However, he is waiting to attract more support for a wage increase before proposing separate legislation.

Advocates for a higher minimum wage say they are disappointed that President Obama, after supporting an increase in the minimum to $9.50 during the 2008 campaign, has done little to advance the idea since he was elected.

“The Occupy movement put inequality on the radar,” said Dan Cantor, the executive director of the New York State Working Families Party. “If we’re serious as a society about poverty and work and decency, the minimum wage needs to eventually become a living wage.”
Ms. Kern said Mr. Obama would be smart to champion the idea to mobilize his base, although a top A.F.L.-C.I.O. official said some Democrats in the White House and on Capitol Hill felt uneasy about pushing for a higher minimum wage when the job market was so wobbly.

Mitt Romney, the front-runner for the Republican presidential nomination, has called for letting the minimum wage rise with inflation, but has said he sees no need to increase the minimum wage right now.

Isabel Tartaglia, the owner and operator of five American Steakhouse restaurants in Connecticut, said that raising the minimum wage did a disservice to everyone. “If you raise the minimum wage, what happens is companies, especially small businesses, will not hire any extra people,” she said. Moreover, “now that you’re raising the costs, restaurants will have to raise the costs of their products.”
In New York, Assembly Speaker Sheldon Silver, a Democrat, is pushing a bill to raise the state’s minimum wage, currently $7.25, to $8.50 an hour. Michael R. Bloomberg, the independent mayor of New York City, has endorsed that legislation, although the Republican-led Senate opposes it. Gov. Andrew M. Cuomo, a Democrat, has taken no formal position.

In New Jersey, the Senate and Assembly leaders, both Democrats, support raising the state minimum to $8.50 an hour from $7.25, and Gov. Chris Christie has urged them to sit down with him to discuss the issue.

In Connecticut, the House labor committee voted to approve a bill that would raise that state’s minimum, currently $8.25, in two 50-cent increments to $9.25 an hour by 2014. The administration of Gov. Dannel P. Malloy has expressed concerns about the bill but has not said he will oppose it.

Jack Mozloom, a spokesman for the National Federation of Independent Business, an advocacy group for small businesses, said: “On this issue, our members tell us overwhelmingly everywhere they hate it.”

“It’s interesting that the Democratic governors of New York and Connecticut are ambivalent, even cool to the idea,” Mr. Mozloom said. “They seem reluctant to create an additional burden for small businesses in their state.”

If you’d like more information about this topic, contact Jeff DiDomenico at Valiant.

California’s Supreme Court has ruled that employers are under no obligation to ensure that workers take legally mandated lunch and rest breaks, according to The Associated Press.

The ruling came after workers’ attorneys argued that abuses are routine and widespread when companies aren’t required to issue direct orders to take breaks.

But the high court sided with business when it ruled that requiring companies to order breaks is unmanageable and that those decisions should be left to workers.

The case was initially filed nine years ago against Brinker International, the parent company of Chili’s and other eateries, by restaurant workers complaining of missed breaks in violation of California labor law.

The workers’ lawyers said that by not ordering breaks at regular intervals throughout the workday, employers are taking advantage of employees who don’t want to leave colleagues during busy times.

In 2001, California became one of only a few states that impose a monetary penalty for employers who violate meal and rest break laws, requiring the employer to pay one hour of wages for a missed half hour-meal break. There is no federal law requiring employers to provide such breaks.

Joan Fife, a San Francisco labor lawyer who represents employers, said uncertainty over the law’s requirements have already led many California businesses to implement internal policies designed to make certain that employees take their breaks.

For more information about this topic, contact Jeff DiDomenico at Valiant.

According to Waiterpay, “Graham Elliot,” a popular Chicago restaurant owned by Celebrity Chef Graham Elliot, has been sued by a former waiter who claims that the restaurant maintained an illegal tip pool which included cooks and food runners, positions which do not customarily receive tips.

According to the Complaint, Gregory Curtis, who worked as a server at the restaurant, alleges that the restaurant violated the Fair Labor Standards Act by requiring waiters and waitresses to share a percentage of their tips with employees who do not customarily and regularly receive tips because they have little to no interaction with customers. As a result of the illegal tip pool, Curtis claims that his minimum wage should have been at the full minimum wage rather than at the tipped minimum wage, which is at a reduced rate. In other words, lawyers for the waiter argue that the restaurant should not be entitled to take a tip credit because it maintained an illegal tip pool. The lawsuit seeks to recover unpaid wages, compensatory damages and attorneys’ fees.

For more information about this topic, contact Rick Casmass at Valiant.

According to an article in Nation’s Restaurant News, the California Supreme Court is expected to rule in mid April on a landmark case about meal and rest breaks that could have a significant impact on all employers in the state.

Restaurant operators across the country who operate in California hope the long-awaited ruling, which is expected by April 12, will clarify what many see as ambiguous state laws regarding meal and rest breaks.

“For more than a decade, California employers have been left to guess what their legal obligation is,” under the state’s meal- and rest-break regulations, said attorney Julie Dunne of Littler Mendelson in San Diego.

Restaurant companies have been sued often, spending millions on legal battles and settlements, she noted. “This case is anticipated to finally offer some clarity … and it should bring a significant reduction in the lawsuits.”

A key question before the state Supreme Court is whether employers must ensure meal breaks for employees, or simply make them available. The court is also expected to determine whether such cases can be filed as class actions.

The case, Brinker v. Superior Court, stems from a lawsuit filed in 2004 against Chili’s parent Brinker International. The original lawsuit, Hohnbaum v. Brinker Restaurant Corp., was filed by five employees who claimed the company illegally denied them meal breaks for every five hours worked, as required by California law.

The complaint was later certified as a class-action lawsuit that was estimated to include potentially up to 63,000 current and former employees.

Brinker officials have declined to comment on the pending case, but attorneys for Dallas-based Brinker have argued that meal periods need only be provided, allowing workers the right to pass on their breaks if they choose.

How a manager handled a break period should also be decided on an individual basis, the company’s attorneys argued, not as a class action.
Timing of the break period is of particular interest to restaurants, as servers may not want to take a mandated 30-minute meal break if it means missing out on a tip.

Awaiting the state Supreme Court ruling are several pending meal- and rest-break lawsuits involving restaurant companies, including one filed in 2010 against Chipotle Mexican Grill.

Dunne said the Supreme Court could issue a decision on a prospective basis, which essentially would hold employers harmless for actions in the past, when the regulations were considered unclear.

For example, if the court decides that employers must ensure that meal and rest periods are taken at a certain time within the work day, the decision could apply from this point forward. Current cases in trial court would essentially be nullified because actions occurred before the law had been clarified.

For more information about this topic, contact Rick Casmass at Valiant.

“An ounce of prevention is worth a pound of cure.” Benjamin Franklin

Spring is a time of renewal; it is a good time to dig into our files and clean up any messes. Below are some tips from our employment, immigration and employee benefits attorneys to assist you in making a fresh start and getting your workplace practices organized.

1.Refresh/Reinvigorate Your Annual Discrimination/Harassment-Prevention Training With A Focus on Retaliation-Avoidance and Reasonable Accommodation.
Training managers and employees, annually, is one of the most important preventive measures an employer can take to reduce the risk of an employee lawsuit. Many managers have no idea what constitutes unlawful retaliation and even the best managers unwittingly may engage in unlawful retaliation. Now– more than ever– your annual training should focus on retaliation prevention and reasonable accommodation of disabilities and religious practices. Here’s why:

A. Retaliation tops all charges filed with EEOC. For the 2nd year in a row, retaliation charges were the largest category of charges filed with the EEOC—approximately 1/3 of the nearly 100,000 charges filed in Fiscal Year 2011 (more than any category of discrimination charge). Remember that even where a discrimination claim is meritless, an employer may still face exposure on a retaliation claim arising from a complaint about alleged discrimination.

B. Damages for successful retaliation and discrimination claims can be costly.
In 2012:

• $168 Million – California jury verdict in a case where a former employee alleged that, among other things, her employer fired her in retaliation for complaining about sexual harassment.

• $417,955 – damages award upheld by the 2nd Circuit Court of Appeals (which includes New York) against an employer for retaliating against a former employee by suspending and threatening to prosecute her for making unauthorized copies of pay stubs for use as evidence of gender discrimination, and by falsely implying to reporters that the former employee was a poor performer who stole co-workers’ paychecks.

C. Reasonable Accommodation Claims Are Also On the Rise. Many managers do not realize that they must reasonably accommodate disabled job applicants and employees unless doing so would pose an undue hardship on the business (or the individual poses a direct threat of harm). Some employers may not realize that inflexible attendance and leave of absence policies may violate the Americans with Disabilities Act (ADA) by not taking into consideration that an employee may need a variance from the policy (like an extended leave of absence) as a reasonable accommodation for a disability.
The EEOC has been vigorously targeting employers for violating the ADA due to alleged failure to reasonably accommodate disabilities. In 2011 and already this year, the EEOC has brought multiple ADA lawsuits. Among the most notable was the EEOC’s largest settlement in a single disability discrimination case—a $20 million settlement last year in a lawsuit alleging violation of the ADA based on an employer’s inflexible “no fault” attendance policy. The EEOC alleged that the Company failed to reasonably accommodate individuals with disabilities by refusing to make exceptions to its “no fault” attendance policy for employees whose “chargeable absences” were caused by their disabilities and, in some cases, disciplining or terminating those employees.

The “take-away”: Train managers on the concept of reasonable accommodation and on properly handling requests for reasonable accommodation for disabilities (and religious practices). Make sure your attendance and leave of absence policies comply with the law and contain flexibility to accommodate a disabled employee.

2. Review Your Hiring Practices. Conduct a self-audit of your hiring practices (with your legal counsel to be able to invoke the attorney-client privilege; otherwise it is discoverable in a litigation). Examine whether your neutral policies may be adversely impacting a legally protected group. The EEOC has been targeting employers that create barriers to hire—for instance, use of criminal background checks and credit histories in hiring that adversely impact applicants in legally protected categories (like minorities); exclusion of women from consideration for hire in traditional male occupations (like mechanic); use of job requirements that may adversely impact a legally protected group.
• The EEOC recently settled a lawsuit for $3 Million in which the EEOC alleged that a Company’s criminal background checks policy had a disparate, discriminatory impact on African-Americans.

Additionally, when recruiting job candidates, critically analyze whether all of the requirements in a job posting are job-related and consistent with business necessity (i.e., is a high school diploma truly a necessary and job-related requirement?).

3. Update Job Descriptions. Ensure job descriptions are current, contain the essential functions of the job, reflect the duties employees are actually performing, and are job-related and consistent with business necessity. Accurately identifying and documenting the essential functions of all jobs can be helpful in many ways: managing a disabled employee’s/applicant’s request for a reasonable accommodation for a disability, assisting in defending against claims of unlawful pay disparity or other forms of discrimination, providing some basis of objectivity in evaluating performance, and assisting in defending against a wage-and-hour audit or lawsuit challenging the exempt status of an employee.

On that note, clean up your worker classifications. There were more than 7,000 wage-and-hour lawsuits filed in federal court last year, up 32% from 2008. In fiscal year 2011, the U.S. DOL recovered $225 million in back wages for employees, up 28% from fiscal year 2010. The U.S. DOL also has increased the number of wage-and-hour investigators by 40%, to 1,050. In light of the increasing wave of lawsuits alleging misclassification of workers as exempt from overtime laws and increased federal and state government enforcement of wage and hour laws, your organization should review all of its worker classifications for accuracy with legal counsel (employee versus independent contractor and exempt versus nonexempt from overtime pay).

4. Internally Audit Personnel Files. Regularly conduct and complete performance appraisals and ensure they are reviewed and signed by both the employee and the reviewing supervisor. Ensure that I-9s for all employees are complete and kept in a separate file that can be produced in the event of a government audit. Ensure that medical records are not kept in employees’ personnel files, but instead in a separate set of secured medical files accessible only on a need-to-know basis.

5. Examine the Likely Effects of Any Group Terminations and Retirement Practices. In March, 2012, the EEOC issued its final rule on disparate impact and the “reasonable factors other than age” defense to claims of age discrimination under the Age Discrimination in Employment Act (ADEA). According to the EEOC, the final rule clarifies that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, unless the employer can show that the policy or practice is based on a reasonable factor other than age.

Review the impact of reductions-in-force on legally protected groups, including any mandatory retirement practices that may violate the Age Discrimination in Employment Act (ADEA). The EEOC recently sued an employer alleging that the Company unlawfully laid off workers over the age of 45 in a series of reductions-in-force in violation of the ADEA. It also claimed that the Company denied workers over the age of 45 leadership training and then laid them off to make way for younger leaders. The Company settled the case with the EEOC for approximately $3 million. The EEOC also recently sued and settled with a national law firm for allegedly violating the ADEA because of a firm policy requiring partners to relinquish their equity stake in the partnership at age 70.

6. No Requirement To Post NLRB Notice Regarding Workers’ Right to Unionize (At This Time): You may recall that the NLRB issued a final rule requiring employers subject to the NLRB’s jurisdiction– most private-sector employers (even if they do not have union workers) — to post a notice of workers’ right to unionize. The NLRB’s rule had been scheduled to take effect on April 30, 2012. On April 13, 2012, however, a federal district court judge in South Carolina struck down the posting rule, in its entirety, as unlawful, finding that the NLRB lacked the authority to promulgate the rule. On April 17, 2012, the D.C. Circuit Court of Appeals temporarily enjoined the NLRB from enforcing its final rule. Thereafter, the NLRB announced that it would not implement its final rule pending resolution of the issues by the D.C. Circuit Court. The NLRB also plans to appeal the South Carolina District Court decision and a portion of the D.C. District Court’s decision which invalidated certain of the rule’s enforcement sanctions (although it upheld the posting requirement). Stay posted for further developments because the ultimate fate of this posting rule is uncertain. Contact your employment counsel to find out what labor postings your State requires.

Lisa M. Brauner, FSB Partner– Employment Law