Huge Crackdown on H-1B visas!!! Not really.

For a moment, it looked like the H-1B filing deadline was going to pass without much change from the previous administration. Other than a shot across the bow the Trump administration did little to indicate any real changes to the program. Yesterday’s announcements didn’t really change that in any substantive way, although they did add a new sense of concern over whether – and how – the administration would go after companies it perceives are putting US workers in a “disfavored status.” DoNotEnter

After all, the tests for obtaining an H-1B visa don’t really measure, or even attempt to measure, whether an available US worker was overlooked. Rather, the goal is to ensure that there is no wage incentive to hire foreign workers over similarly qualified US workers, the idea being that market forces would do the rest. In some sense, that’s a very Republican approach to regulation, and for some time it worked pretty well.

Since the late nineties, however, the H-1B visa program has become much more controversial. For many it’s seen as a vehicle to bring in cheaper workers with lesser qualifications to unfairly complete for US jobs. The tech industry, on the other hand, insists that these visas are critical for the US IT industry.

There’s no doubt that there is abuse in the H-1B program (and, as a result, the L-1B visa program as well), and that the program could readily be improved. There’s also little doubt that the pool of ready, willing, and qualified US workers looking to step into these positions is limited. Indeed, many of my clients, coming in from overseas to start doing business in the United States, have been extremely frustrated to find that the pool of qualified workers in their area is made up largely of other non-US workers for whom expensive and time-consuming visa applications are required. The program would definitely benefit from a balanced review by Congress and some smart modifications, as have been proposed by any number of practitioners and law professors. A good start might be limiting the use of H-1B visas and L-1B visas by so-called body shops, since those employers have the market power to push down H-1B wages significantly over time.

Unfortunately, that’s not what’s happening, and the administration’s ad hoc method of changing immigration law is sowing uncertainty while giving companies neither the time nor the tools to plan for change. Had this announcement been made in January, companies whose use of the H-1B visa was perhaps unnecessary or improper would have at least had the chance to test the US market and determine whether the non-US worker was actually needed. As with the travel ban, however, this most recent announcement comes after all of the applications have been prepared, checks have been cut and, frankly, most everything was already in the mail. As with the travel ban, that’s not fair to the companies or the people who are planning on those visas for their livelihood.

‘Tis The Season To Be Wary

As we look forward to the upcoming holiday season, it is important to remember that with the joyous occasions there can also be some potentially disastrous pitfalls for employers that can quickly turn the holiday fun into complaints and lawsuits. This blog covers some of these liability risks and offers suggestions and guidelines for employers to help minimize these risks.

Part 1: Deck the Halls … With Some Carefully Considered Decorations

The upcoming holiday season can be an especially tricky time when it comes to religious discrimination. Many employees are celebrating and observing different religious holidays and some may not be celebrating any holiday at all. It is important for an employer to be sensitive to all of these varying beliefs, not just out of political correctness and tolerance, but to avoid a potential discrimination claim. When it comes to anti-discrimination laws, religion is a protected class in the United States. This means that it is against the law for an employer to discriminate in any way against an employee based on religion or religious beliefs (or lack thereof). An employer may not even realize that something at work is making an employee feel discriminated against and may be genuinely surprised when that employee complains or files a lawsuit.

Discrimination claims comes in all shapes and sizes. An employee may feel discriminated against because he is the only non-Christian in an office decked out in Christmas decorations. Or he may feel discriminated against because he was told to remove the mini nativity scene from his desk. Or maybe he takes offense to being invited to a Christmas party or partake in a Secret Santa gift exchange when he is Jewish. Or perhaps you have gone out of your way to represent all major world religions in your holiday decorations and, in doing so, have unwittingly offended your one employee who you did not realize observes no religion.

Outlined below are some measures employers can take to help ensure that no employee feels discriminated against on the basis of religion. Following these simple steps can decrease the likelihood of your company being hit with a religious discrimination lawsuit.

• Avoid religious decorations in the office. If you want to decorate your office in celebration of the season, stick to non-religious decorations, like winter scenes and snowmen. Avoid overtly religious symbols like crucifixes and nativity scenes. If you do decide to have some “moderate” religious decorations, like wreaths or Christmas trees, try to include symbols of other religions represented in the office, like a menorah or dreidel if you have (or think you may have) any Jewish employees. You may also want to consider having decorations during other non-religious holiday times (such as Valentine’s Day, Independence Day, and Thanksgiving) to lesson the appearance of a religious undertone during the Christmas season. Although there is no federal law that bans private employers from putting up religious decorations in the common areas, you do not want to be seen as “endorsing” a particular religion and risk offending people who do not subscribe to that religion. You also want to be careful about prohibiting employees, who might normally be permitted to display family photos and artwork, from decorating their own personal office spaces with religious decorations, as that could be interpreted as religious discrimination. Any policies about displaying holiday decorations in personal office spaces should be carefully considered before being issued.

• Avoid using the term “Christmas” (or any other religious holiday) with respect to any employer sanctioned event or program. For example, do not call your annual party a Christmas Party, your annual gift exchange a Secret Santa, or your annual bonus a Christmas Bonus. Instead, refer to them as a Holiday Party or End of Year Party, a Secret Gift Exchange or White Elephant Gift Swap, and a Holiday Bonus or Annual Bonus.

• If your place of business is closed for Christmas (as most offices and many retail establishments are), make sure to also respect the wishes of non-Christian employees to take off to observe their holidays. If your company is open for Christmas, make an effort to accommodate those employees who want to request the day off. While the law does not obligate you to accommodate all such requests if it would cause undue hardship to your company, reasonable accommodations should be made as much as reasonably possible to accommodate an employee’s religious beliefs. For example, if all of your employees observe Christmas and wish to have the day off, have and enforce a policy to decide which employees get the day off, such as one based on seniority or a lottery system, and perhaps offer those employee who must work on Christmas an extra two vacation days in exchange. You may find that by simply offering two extra vacation days, some employees are willing to work on Christmas.

• Be supportive of an employee’s unease. For example, if an employee expresses discomfort over any holiday decorations in the office, do not ridicule the employee for her concerns. Instead, listen respectfully to the employee and do your best to accommodate her concerns, perhaps by removing Christmas decorations from her work space and/or placing a decoration of her own religion in the office. If the employee sees that you are understanding of her religious (or non-religious) beliefs and are making an effort to accommodate her concerns, she will be less likely to feel discriminated against.

Part 2: O Holy (What a) Night!

The month of December is considered the “holiday season” because of so many holidays of various religions falling during December. Offices often use this opportunity to throw an annual office party in an effort to gather all of its employees together for a fun and festive occasion. A common feature at these parties is alcohol. It is served to increase the festive mood and “loosen up” stressed-out employees after a year’s worth of hard work. Unfortunately, when it comes to employer liability, alcohol is like a loaded gun aimed straight at the good cheer.

If one of your employees becomes intoxicated at your office party, you could be held liable for any injuries that employee causes to himself or others. An extreme example, but one that, unfortunately, does happen, is if one of your employees drinks at your holiday party, drives home, and kills himself or someone else in a drunk driving accident. There is a possibility that your company could be held liable for that person’s death. Even if your company is located in a state that does not impose liability on employers serving alcohol to adults (so-called “social host” liability), your company could still be held liable for third party injuries on the theory that the employees are acting within the scope of their employment.

Another issue that often accompanies alcohol consumption is inappropriate behavior. Claims of sexual harassment are often an unfortunate outcome following an office party where the alcohol was flowing a little too freely.

There are steps you can take to prevent these kinds of tragedies and inappropriate behaviors from occurring and minimize your company’s liability. The obvious one is to not serve any alcohol. However, if you decide to serve alcohol, there are measures you can take to decrease the risks. Some suggestions are outlined below.

• Have someone in a supervisory position be in change of serving alcohol, rather than allowing employees to self-serve. Better yet, hire a professional bartender.

• Designate some or all supervisors as non-drinkers to be on the look out for inappropriate behavior and have a plan of intervention for such supervisors to follow if they see someone behaving inappropriately or appearing intoxicated. Ideally, there should be at least a couple of designated non-drinkers to keep an eye on things and take care of anyone who has had too much to drink.

• Instruct those serving alcohol to refuse to serve anyone who is visibly intoxicated and to report it to a designated non-drinker.

• Limit the number of drinks each person can have by giving each person two drink tickets with the employees’ names on their tickets. Instruct employees that ticket-swapping or “purchasing” a drink for someone else is prohibited.

• Limit the amount of time alcohol is served (e.g. have a cocktail hour before dinner and then do not offer any more alcohol once dinner is served).

• Check personnel records to ensure that no one under 21 is permitted to drink. (This is particularly important from a liability standpoint as most states, including Pennsylvania, do impose liability on “social hosts” who serve alcohol to those under the legal drinking age.)

• Arrange transportation to take employees home, either with designated drivers, car services, or a van.

• Hold the party on a Sunday afternoon or during lunch. (Times when people are less likely to overindulge in alcohol).

• Make the party a family affair by including spouses and children. People tend to be less likely to act inappropriately when their family is present.

• Be sure to have plenty of non-alcoholic beverages and food available.

• Lead by example. Even if you don’t have designated non-drinkers, encourage supervisors and all members of upper management to set the tone by either voluntarily not drinking or drinking in moderation. 

• Send a memo to all employees in advance of the party warning them not to drink too much and advising them of the measures the company is taking to ensure everyone’s safety, such as providing for free transportation home. Remind them that while the party is a time to have fun, it is still important to maintain a level of professionalism and the company will not look kindly upon anyone who drinks too much. You may even want to consider having employees sign a form promising to moderate their drinking and behavior and releasing the company of liability.

• Check your company’s general liability policies to determine what, if any, kind of coverage you have for this kind of event. Many policies specifically exclude coverage for events where alcohol is served. If your policies do not cover your holiday party, you may want to consider purchasing a “special events” or “dram shop” policy to cover the event.

Taking the time now, before the decorations go up, bonuses are paid, and the holiday party is planned, can make the holiday season fun and safe for your company and for all of your employees.

The Basics of US Employment Law Part V: Overtime Pay

This final blog in the series on United States Employment Law Basics discusses the how to determine which employees are entitled to overtime pay. The determination is based on whether an employee is “exempt” or “non-exempt”. Only non-exempt employees are entitled to overtime pay.

The concept of “exempt” versus “non-exempt” is an important one in United States employment law. One of the biggest issues employers often face is the determination of whether a particular employee or class of employees is exempt or non-exempt. The terms “exempt” and “non-exempt” relate to whether an employee is covered by the Federal Labor Standards Act (the “FLSA”) or whether he is “exempt” from coverage. Being covered (i.e. being non-exempt) provides employees with certain protections beyond federal and state law and subjects employers to additional requirements, one of the most important being overtime pay.

The FLSA provides that “non-exempt” employees who work more than a certain number of hours per week are entitled to “overtime pay”, which is generally one and a half times their normal hourly rate. Accordingly, it is generally advantageous to employers to have their employees to be considered “exempt” so that they do not have to pay them overtime and abide by the other FLSA requirements.

There are very specific (and often complex) rules to determine whether an employee or class of employees is exempt. In the most general of terms, professional employees (such as lawyers, accountants, doctors, and business executives) are usually exempt. These are the kinds of professions where long workdays are common, salaries are competitive, and higher education is usually a job requirement. It is assumed that individuals with a higher education level have more bargaining power and therefore do not need the protection of the FLSA. On the other end of the spectrum are the unskilled laborers, such as a clerk in a store or a maid in a hotel. These kinds of workers are generally paid by the hour, often at minimum wage, and do not need to be college-educated. These workers are typically covered by the FLSA. However, just because a worker receives a salary (as opposed to an hourly wage) does not automatically mean that he is exempt. There are a lot of companies that pay all their employees salaries, but just because you pay your file clerk a salary does not mean you can get away with not paying him overtime. It is a common mistake to assume that salaried workers are exempt and that only hourly workers are entitled to overtime pay and other FLSA benefits. Although hourly workers are often non-exempt and salaried workers are often exempt, the manner in which an employee is paid is in no way determinative of whether the employee is FLSA-exempt. Figuring out whether an employee or class of employees is exempt often involves a great deal of factual and legal analysis in consultation with your legal department or outside counsel.

The Basics of US Employment Law Part IV: Healthcare and Retirement Plans

It is widely known that unlike many countries in Europe, the United States does not have universal healthcare coverage for its citizens. This issue has been at the forefront of many political debates and was even the subject of the 2007 Michael Moore documentary, Sicko. Even with the passage of the Affordable Care Act, most US citizens must still pay to receive healthcare coverage.

Under the current system in the United States, without universal free healthcare, the burden of providing healthcare coverage  falls largely on employers, including many small businesses. Much like the vacation time I discussed in my last blog post, even though healthcare coverage of employees is not mandated, most companies offer their employees some form of healthcare coverage. In fact, it has come to be expected that if you are employed, you (and your family) will have the option of joining your employer’s healthcare plan. However, this does not mean that all employers pay all the costs of covering their employees. Many companies ask that the employees pay all or a percentage of the insurance premiums and other costs for their (and their families’) coverage. There are also a wide range of healthcare plans for employers to chose from of varying degrees of quality and price. One of the benefits employees look for when choosing a job is the type of healthcare plan and coverage an employer offers. Therefore, even though healthcare coverage is not required, many employers, especially larger ones, offer generous healthcare plans in order to attract high quality employees.

Additionally, employers with 20 or more employees who offer healthcare coverage are subject to a federal law known as COBRA, designed to make sure there is no break in healthcare coverage when an individual is between jobs. COBRA requires employers with 20 or more employees to allow former employees to stay on the employer’s healthcare plan for a certain period of time after the employment relationship has ended. COBRA does not normally mandate continuation of any payments the employer may have been making towards the coverage. Accordingly, even if an employer covers 100% of the costs of its employees’ healthcare, it does not have to cover any costs of former employees’ healthcare under COBRA and can require former employees to pay for up to 102% of the costs (the extra 2% being meant to cover the employer’s administrative costs of keeping the former employee on the plan). Many states, including Pennsylvania, have similar laws known as “mini-COBRA” that apply to employers with fewer than 20 employees.

In addition to healthcare plans, many (if not most) larger companies and many smaller companies offer their employees some type of retirement savings plan. The most common type of retirement plan is known as a 401(k) plan, named after the section in the Internal Revenue Code governing the taxation of this type of retirement plan. In addition to offering a 401(k) plan for its employees to contribute money to, employers will sometimes offer a “matching” contribution. For example, an employer might offer to match up to 3%, meaning that if the employee elects to contribute 3% of her salary to her 401(k) plan, the employer will match that contribution with an equal amount of money contributed to the employee’s 401(k) plan. As with healthcare coverage, retirement plans are a benefit employees look for in deciding whether to accept a job offer. Employers seeking to attract and retain top quality employees generally find it necessary to offer their employees a competitive benefits package that includes both a group healthcare plan and a retirement plan.

The Basics of US Employment Law Part III: Vacation Time

This blog in the US Employment Law series focuses on vacation time.

One of the key differences between United States employees and employees in most of Europe is the amount of vacation time employees have come to expect. American employees think that four weeks vacation is extremely generous. Europeans, on the other hand, commonly enjoy four or more weeks of vacation even at entry-level jobs, and many European countries mandate a minimum amount of vacation time.

In the US, there are no federal laws mandating how much paid time off an employee must receive. Absent a collective bargaining agreement or other employment contract, most US employers do not have to offer any paid time off to their employees. However, some local laws mandate a certain amount of paid time off, including my home city of Philadelphia, which requires employers with a minimum number of employees to offer a certain amount of paid sick leave. There are also laws governing unpaid time off, such as the federal Family and Medical Leave Act. So employers should be sure to check with their legal counsel about their particular requirements.

It is also important for employers to understand that although they may not be legally required to offer any paid time off, a certain amount of paid time off has come to be expected in the US as a matter of practice. One might say that vacation time in the US is largely governed by custom. Most salaried (i.e. non-hourly) employees expect to receive one to two weeks of paid time off per year. This paid time off may be in the form of some combination of vacation time, sick days, and personal days. As employees advance in their careers, they expect to receive more vacation time. In general, it is customary for employees to receive between two and four weeks of vacation time per year, depending on their level of experience and years of service, with more senior executives enjoying more generous paid time off packages. Most entry-level jobs provide up to two weeks vacation. Six or more weeks of vacation time is generally reserved for the most senior executives – those who have worked hard, proven their loyalty, and are being rewarded towards the end of their career.

A common problem multi-national companies face is when they bring over an employee from Europe to work in the US office. The European employee often expects to continue to receive her four to six weeks of vacation. This, however, may not go over too well with her US colleagues working in the same office at the same level, but who are only getting two weeks of vacation. Employers need to be sensitive to this potential land mine.

The Basics of US Employment Law Part II: At-Will Employment

This blog on US employment law focuses on the concept of “at-will” employment.

One of the key elements of United States employment law is the idea that an employer can fire an employee at any time without notice and without cause. In other words, an employee is employed at the will of the employer and can be fired at the will of the employer without the employer needing a justification for the firing. This is what is known as being an “employee-at-will”.

There is no federal law that mandates at-will employment or that protects employees against being employed at-will. At-will employment is governed by state law. Most states, including Pennsylvania, are “at-will” states, meaning that these states have embraced the concept that an employer may fire an employee without cause. When an employee is employed “at will”, an employer is free to fire that employee “without cause”. In other words, an employer can fire an employee even if the employee has adequately performed his duties and has done nothing wrong. Perhaps, for example, the employer wants to reduce its staff for business reasons. Or perhaps a particular employee is doing an adequate job, but the employer knows of someone else whom the employer believes will do a better job. Or perhaps, even, a particular employee is doing an outstanding job, but the employer’s son needs a job and there isn’t enough work for both of them. Or maybe the employer just does not like the employee’s personality. Although a particular state may have more protective laws, under federal law, none of the foregoing would be illegal reasons for firing someone, and most “at-will” states would allow an employee to be fired for any of those reasons.

However, as discussed in Part I of this series, an employer cannot fire an employee on the basis of race, gender, age, or any other classification protected by federal law (or applicable state and local law). So while an employer may fire an employee to replace her with his own child, or because he did not like her personality, he could not fire her simply because she is a woman, or because she is old, or because she is Muslim. As one might imagine, even if the employer’s motivation behind the firing were perfectly legal (e.g. the employer wanted to downsize or make room for his relative), a terminated employee might not see it that way and may try to claim that the firing was motivated by prohibited discrimination. Therefore, even if your business is in an at-will state, it is still a good idea to document disciplinary actions taken against any employees and to have a valid business reason for firing someone.

It is also important to keep in mind that just because your business is located in an at-will state does not mean that all your employees are automatically at-will. If an employee and the employer enter into an employment contract, that contract can override the at-will status. This can happen if, for example, the contract provides for a set term of employment or requires cause or notice for termination. Employers need to be wary when they give the employee anything in writing or even verbally (such as an offer letter, a verbal job offer, or even an employee handbook) that they are not inadvertently creating an employment contract with terms that could override the at-will status.

The Basics of US Employment Law Part I: Protected Class Discrimination at the Federal, State, and Local Levels

For the next few weeks I will be doing a blog series on some of the key elements of United States employment law and how they differ from European employment law. This blog series is meant to familiarize Europeans (and others) who may be breaking into the US market and employing people in the United States. Topics covered in this series will include whether and how employees can be fired, vacation time, group benefit plans, and overtime pay.

Employment law in the United States is quite different than in most European countries. In general, the laws in Europe are considered much more protective of employees. For example, it is generally more difficult to fire an employee in most European countries than it is in the United States. While this may appear to benefit European employees, there is a flip side: an employer who does not have the ability to easily fire someone, may be more reluctant to hire in the first place, making the job market more competitive for employees. When employees are less willing to leave one job in search for another, the result is a more stagnant job market. While this may be great for people with good jobs, it may not be so great for those trying to break into the job market or make career changes. Proponents of United States employment law might argue that our less restrictive employment laws create a more productive work force as well as more job opportunities for the American worker. However, this blog series is not meant to be a commentary on the merits of one country’s employment laws over another’s. The purpose of this series is to explore some of the core principles of United States employment law.

One of the first concepts to understanding employment law in the United States is to understand that employment law is governed by both federal and state law. Accordingly, an employer located in Pennsylvania will be governed by both Pennsylvania employment law and United States federal law. In addition to state laws, there may be additional laws and ordinances for the city or township in which your business is located. While cities and states have a significant amount of authority to govern the laws that employers and employees are subject to, there are certain federal laws that trump any state or local law. The general rule of thumb is that while state and local laws can and often do provide additional protections for employees, state and local laws are not going to be less protective of employees than federal law.

One of the most notable categories of federal laws that apply to all employers and employees regardless of the state in which the business is located are the laws that protect employees against discrimination on the basis of certain protected classifications. These classifications include race, gender, religion, national origin, disability, and age. Accordingly, no state law can permit an employer to fire an employee, or chose not to hire a job applicant, on the basis of any of these protected classifications. State and local law can, and often do, go further and provide additional protections to employees. For example, while federal law does not prohibit private employers from discriminating against an employee on the basis of sexual orientation, many states and cities have enacted such prohibitions. Pennsylvania does not include sexual orientation in its listing of protected classes, but the City of Philadelphia (along with Pittsburgh and several other Pennsylvania cities) does prohibit employment discrimination on the basis of sexual orientation.

The next blog will examine the concept of employment at will.