Tips For Employers to Prepare for Possible Swine Flu Outbreak As 1st U.S. Death Reported

April 29, 2009

With U.S. officials confirming the first swine flu attributed death in the U.S. today and warning Americans to take precautions to guard against a likely swine flu pandemic, U.S. employers are asking what steps they should take to defend their organization and its people against the risk of a widespread outbreak among members of their workforce and the attendant lost time, health and disability costs, OSHA and other liability exposures and other personal and financial consequences likely to result from an outbreak.

 

Whether or not the swine flu outbreak reaches the level of an official pandemic, official reports reflect a legitimate need for concern.  According to officials from the Centers for Disease Control and Prevention, victims of the virus already have been reported in 10 states, and the number of people known to be infected with the 2009 H1N1 influenza strain grew to 91 in the U.S. as of Wednesday. That number includes the first U.S. swine flu fatality: a 22-month-old child from Mexico who died of the illness Monday at a Houston, Texas hospital while visiting the United States. While swine flu victims have been reported in more than 11 countries, the majority of the incidents of the disease and deaths as of Wednesday morning had occurred in Mexico.

 

While the CDC says getting employees and their families to get a flu shot remains the best defense against a flu outbreak, it also says getting employees and family members to consistently practice good health habits like covering a cough and washing hands also is another important key to prevent the spread of germs and prevent the spread of respiratory illnesses like the flu.  Employers should encourage employees and their families to take the following steps: 

 

  • Avoid close contact with people who are sick. When you are sick, keep your distance from others to protect them from getting sick too.
  • Stay home when you are sick to help prevent others from catching your illness.  Cover your mouth and nose.
  • Cover your mouth and nose with a tissue when coughing or sneezing. It may prevent those around you from getting sick.
  • Clean your hands to protect yourself from germs.
  • Avoid touching your eyes, nose or mouth.
  • Germs are often spread when a person touches something that is contaminated with germs and then touches his or her eyes, nose, or mouth.
  • Practice other good health habits.  Get plenty of sleep, be physically active, manage your stress, drink plenty of fluids, and eat nutritious food.

 

Employers also should be sensitive to workplace policies or practices that may pressure employees with a contagious disease to report to work despite an illness and consider whether the employer should adjust these policies temporarily or permanently in light of the impending health risk.  For instance, financial pressures and the design and enforcement of policies regarding working from home and/or qualifying for paid or unpaid time off significantly impact the decisions employees make about whether to come to work when first experiencing symptoms of illness.  Employers of workers who travel extensively – may wish to delay or restrict travel for some period. 

 

Many employers may want to evaluate and appropriately revise existing policies with an eye to better defending their workforce against a major outbreak.  If considering allowing or requiring employees to work from home, employers need to implement appropriate safeguards to monitor and manage employee performance, and to protect the employer’s ability to comply with applicable wage and hour, worker’s compensation, safety, privacy and other legal and operational requirements.  They also should review and update family and medical leave act and other sick leave policies, group health plan medical coverage continuation rules and notices and other associated policies and plans for compliance with existing regulatory requirements, which have been subject to a range of statutory and regulatory amendments in recent years. 

 

To help promote health habits within their workforce, many businesses may want to download and circulate to employees and families the free resources published by the CDC at http://www.cdc.gov/flu/protect/habits.htm.  Businesses and other concerned parties also can track governmental reports about the swine flu and other pandemic concerns at http://www.pandemicflu.gov/index.html

 

Businesses also should begin preparing backup staffing and production strategies to prepare for disruptions likely to result if a significant outbreak occurs.  Employers also should be sensitive to workplace policies or practices that may pressure employees with a contagious disease to report to work despite an illness and consider whether the employer should adjust these policies temporarily or permanently in light of the impending health risk.  For instance, financial pressures and the design and enforcement of policies regarding working from home and/or qualifying for paid or unpaid time off significantly impact the decisions employees make about whether to come to work when first experiencing symptoms of illness.  Many employers may want to evaluate and appropriately revise existing policies with an eye to better defending their workforce against a major outbreak. 

 

If considering allowing or requiring employees to work from home, employers need to implement appropriate safeguards to monitor and manage employee performance, and to protect the employer’s ability to comply with applicable wage and hour, worker’s compensation, safety, privacy and other legal and operational requirements.  They also should review and update family and medical leave act and other sick leave policies, group health plan medical coverage continuation rules and notices and other associated policies and plans for compliance with existing regulatory requirements, which have been subject to a range of statutory and regulatory amendments in recent years. 

 

Employers should begin preparing backup staffing and production strategies to prepare for disruptions likely to result if a significant outbreak occurs.  Whether or not the disease afflicts any of its workers, businesses can anticipate the swine flu outbreak will impact their operations -either as a result of occurrences affecting their own or other businesses or from workflow disruptions resulting from safeguards that the business or other businesses implement to minimize swine flu risks for its workforce or its customers.

 

Businesses, health care providers, schools, government agencies and others concerned about preparing to cope with pandemic or other infectious disease challenges also may want to review the publication “Planning for the Pandemic” authored by Curran Tomko Tarski LLP partner Cynthia Marcotte Stamer available at http://www.cynthiastamer.com/documents/speeches/20070530%20Pan%20Flu%20Workplace%20Privacy%20Issues%20Final%20Merged.pdf.  Schools, health care organizations, restaurants and other businesses whose operations involve significant interaction with the public also may need to take special precautions.  These and other businesses may want to consult the special resources posted at  http://www.pandemicflu.gov/health/index.html. 

 

Cynthia Marcotte Stamer and other members of Curran Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters.  Ms. Stamer in particular has worked extensively with health care providers, government officials, and businesses to plan for and deal with pandemic and other disease management and disaster preparedness concerns.  If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402, or your favorite Curran Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see the www.cttlegal.com.


DOJ Antitrust Enforcement Actions Signal Need to Audit Adequacy of Employment, Ethics & Internal Controls Policies & Practices To Minimize Rising DOJ & Other Antitrust Exposures

April 23, 2009

U.S. businesses should review the adequacy of their existing antitrust Federal Sentencing Guidance Compliance policies and internal controls in light of a series of recently announced antitrust enforcement actions recently announced by the Department of Justice (“DOJ”).  U.S. and other businesses and their employees and agents who engage in prohibited antitrust activities face substantial criminal and civil penalties in actions brought by the DOJ, civil judgments brought by private plaintiffs, or both.  To effectively manage these exposures, businesses and leadership must ensure that their organization has in place appropriate employment, corporate ethics and internal controls and procedures for preventing, investigating and redressing potential violations.  The management and discipline of employees and other service providers that violate these and other compliance policies is an increasingly important responsibility of human resources and other management leaders.

 

On Monday (April 20, 2009), DOJ announced that two subsidiaries of the Swedish company Trelleborg AB, one based in Virginia and the other in France, have agreed to plead guilty and pay a total of $11 million in criminal fines for participating in separate conspiracies affecting the sales of marine products sold in the United States and elsewhere.  The plea agreements are among at least 9 major antitrust enforcement actions announced by the DOJ since the first of the year, including the longest sentence yet imposed for an antitrust criminal conviction.

 

Trelleborg Engineered Products Inc. &

Trelleborg Industries S.A.S. Plea Agreements

The plea agreement resolves a two-count felony charge filed in U.S. District Court in Norfolk, Va., against Virginia Harbor Services Inc., formerly known as Trelleborg Engineered Products Inc. (VHS/TEPI), a manufacturer of foam-filled marine fenders, buoys and plastic marine pilings headquartered in Clearbrook, Va.  Foam-filled marine fenders are used as a cushion between ships and either fixed structures, such as docks or piers, or floating structures, such as other ships. Foam-filled buoys are used in a variety of applications, including as channel markers and navigational aids. Plastic marine pilings are substitutes for traditional wood timber pilings and are often used in port and pier construction projects in conjunction with foam-filled fenders. According to the charges, VHS/TEPI participated in a conspiracy between December 2002 and August 2005 to allocate customers and rig bids for contracts to sell foam-filled marine fenders and buoys, and also participated in a separate conspiracy between December 2002 and May 2003 to allocate customers and rig bids for contracts to sell plastic marine pilings. Under the terms of the plea agreement, which is subject to court approval, VHS/TEPI has agreed to pay a $7.5 million criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation. To date, six individuals and two corporations have pleaded guilty or agreed to plead guilty in the Antitrust Division’s ongoing investigation of fraud and collusion in the marine fenders and pilings industries.

 

In addition, a one-count felony charge was filed today in U.S. District Court in Fort Lauderdale, Fla., against Trelleborg Industries S.A.S. (TISAS), a manufacturer of marine hose headquartered in Clermont-Ferrand, France. TISAS is charged with participating in a conspiracy from at least as early as 1999 and continuing until as late as May 2, 2007, to allocate market shares, fix prices and rig bids for contracts to sell marine hose to purchasers in the United States and elsewhere. Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. Under the terms of the plea agreement, which is subject to court approval, TISAS has agreed to pay a $3.5 million criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation. To date, three corporations have pleaded guilty or agreed to plead guilty in the Antitrust Division’s ongoing investigation in the marine hose industry. Twelve individuals have also been charged to date, nine of whom have pleaded guilty.

 

The plea agreements announced this week are part of a continuing DOJ investigation, which already lead to five former executives of TISAS and VHS/TEPI entering guilty pleas to participating in the conspiracies charged. Former VHS/TEPI president Robert B. Taylor was sentenced in January 2008 to serve 24 months in prison and pay a $300,000 criminal fine. Former VHS/TEPI chief financial officer Donald L. Murray was sentenced in March 2008 to serve 18 months in prison and pay a $75,000 criminal fine. William Alan Potts, a former vice president of VHS/TEPI, was sentenced in June 2008 to serve six months in prison and six months in home detention, and to pay a $60,000 criminal fine. Former TISAS executives Christian Caleca and Jacques Cognard were each sentenced in December 2007 to serve 14 months in prison and to pay criminal fines of $75,000 and $100,000, respectively.

 

Other Recent Antitrust Enforcement Activities

The plea agreements announced this week are the latest in a series of antitrust enforcement actions recently taken by the DOJ.  Since the first of the year alone, DOJ also has announced a series of other major antitrust enforcement actions, including, for instance:

 

On April 9, 2009, DOJ announced that Cargolux Airlines International S.A., Nippon Cargo Airlines Co. Ltd. and Asiana Airlines Inc. plead guilty and agreed to pay a total of $214 million in criminal fines to settle price fixing charges.

  • On March 31, a San Francisco federal grand jury indicted Hitachi Displays Ltd. executive Sakae Someya with conspiring with unnamed co-conspirators to suppress and eliminate competition by fixing the price of Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels sold to Dell Inc. for use in notebook computers.  With this indictment, four companies and eight individuals have been charged in the Department’s ongoing antitrust investigation into the TFT-LCD industry and more than $585 million in fines have been imposed as a result.
  • On March 10, Somey’s employer, Japanese electronics manufacturer Hitachi Displays Ltd., agreed to plead guilty and pay a $31 million fine for its role in a conspiracy to fix prices in the sale of TFT-LCD panels sold to Dell Inc.
  • On February 10, 2009, a federal grand jury in San Francisco indicted former Chairman and Chief Executive Officer of Chunghwa Picture Tubes Ltd. with conspiring with others to suppress and eliminate competition by fixing prices, reducing output and allocating market shares of color display tubes (CDTs) to be sold in the U.S. and elsewhere.  The indictment also charges C.Y. Lin with conspiring with others to suppress and eliminate competition by fixing prices for color picture tubes (CPTs) to be sold in the U.S. and elsewhere.
  • On February 3, 2009, a San Francisco federal grand jury indicted two former executives from Chunghwa Picture Tubes Ltd. (Chunghwa) and one former executive from LG Display Co. Ltd. (LG) for participation in a global conspiracy to fix prices of Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels.
  • On January 1, 2009, former high-level shipping executive Peter Baci was sentenced to serve the longest jail sentence ever imposed for a single antitrust charge, 48 months in jail, and to pay a $20,000 criminal fine for his role in an antitrust conspiracy involving the transportation of goods to and from the continental United States and Puerto Rico by ocean vessel by agreeing to allocate customers, agreeing to rig bids submitted to government and commercial buyers, and agreeing to fix the prices of rates, surcharges, and other fees charged to customers. Related antitrust charges remain pending in the U.S. District Court in Jacksonville against three other shipping executives: R. Kevin Gill and Gregory Glova, of Charlotte, N.C. and Gabriel Serra, of San Juan, Puerto Rico. A related obstruction of justice charge is also pending against a fifth shipping executive, Alexander Chisholm, of Jacksonville. 
  • On January 22, 2009, three air cargo carriers, LAN Cargo S.A. (LAN Cargo), Aerolinhas Brasileiras S.A. (ABSA), and EL AL Israel Airlines Ltd. (EL AL), plead guilty and agreed to pay criminal fines totaling $124.7 million for their roles in a conspiracy to fix prices in the air cargo industry, the Department of Justice announced today. Under the plea agreements, LAN Cargo, a Chilean company, and ABSA, a Brazilian company that is substantially owned by LAN Cargo, have agreed to pay a single criminal fine of $109 million. EL AL, an Israeli company, has agreed to pay a criminal fine of $15.7 million. According to the charges against the airlines, each airline engaged in a conspiracy in the United States and elsewhere to eliminate competition by fixing the cargo rates charged to customers for international air shipment.
  • Under a plea agreement announced January 15, 2009, Chang Suk “C.S.” Chung, a Korean LG executive, Chieng-Hon “Frank” Lin, a Taiwanese former executive from Chunghwa, and Chih-Chun “C.C.” Liu and Hsueh-Lung “Brian” Lee, Taiwanese current employees of Chungwha, agreed to serve a term of imprisonment, pay a criminal fine and assist the government in its ongoing TFT-LCD investigation.  

Businesses & Business Leaders Must Have

Effective Internal Controls & Compliance Practices

These DOJ actions and a host of others in recent years document provide examples of DOJ’s willingness to investigate and prosecute price-fixing, bid-rigging and other antitrust violations.  The felony penalties associated with federal antitrust violations bring antitrust sanctions within the purview of the Federal Sentencing Guidelines.  As a result, businesses that fail to take adequate steps to prevent or redress antitrust violations risk vicarious liability for violations committed but their employees or agents.  Furthermore, business leaders investigating suspected violations must exercise caution to appropriately investigate and redress alleged or suspected violations to both protect themselves and their organization against liability based on allegations of endorsement by tolerance, potential cover up or other misconduct in connection with the investigation and redress process. At the same time, timely investigation, oversight and redress can substantially mitigate these liability exposures under the Federal Sentencing Guidelines.  Accordingly, to prevent and position themselves and their organizations to defend against potential antitrust complaints, businesses and businesses leaders should both adopt appropriate policies prohibiting their organizations and its employees and agents from engaging in price-fixing, bid rigging and other anticompetitive practices prohibited by federal or state antitrust laws, as well as establish and administer well-documented training and oversight practices to prevent, detect and redress potential or attempted violations of these policies.

 

To effectively manage these exposures, businesses and leadership must ensure that their organization has in place appropriate procedures for preventing, investigating and redressing potential violations.  Among other things, businesses and their leaders should be certain their organization: 

  • Has up to date policies in place and a process to monitor regulatory and enforcement developments for necessary updates;
  • Can demonstrate that it is appropriately administering well-documented audit, training and enforcement practices to prevent and redress potential violations as part of its corporate ethics and human resources practices;
  • Uses appropriate vendor selection, contracting, audit and oversight processes to promote compliance by business partners, agents and others with which it does business;
  • Has identified experienced counsel and developed a process for engaging counsel to assist in the audit of ongoing compliance efforts as well as the timely conduct of internal investigations of possible infractions within the scope of attorney-client privilege;
  • Designated an ethics or compliance officer, or other appropriate party to receive and investigate suspected compliance concerns and reports;
  • Has effective privacy, investigations, employment and other policies and procedures to enable the business to investigate, discipline and defend employment actions against employees or other workers for improper conduct;
  • Has appropriate processes and procedures for responding to government investigations and private compliance complaints; and
  • Promptly investigates and responds to reports of infractions or other compliance concerns in an appropriate and well documented manner.

 

Curren Tomko and Tarski LLP and its attorneys have significant experience assisting businesses and business leaders to establish, administer, enforce and defend antitrust and other compliance and internal control policies and practices to reduce risk under federal and state antitrust and other laws covered by the Federal Sentencing Guidelines.  If you need assistance with these or other compliance concerns, wish to inquire about arranging for compliance audit or training, or need legal representation on other matters please contact Cynthia Marcotte Stamer, CTT Labor & Employment Section Chair, at cstamer@cttlegal.com, 214.270.2402; Edwin J. Tomko, CTT White Collar Crime Section Chair, at etomko@cttlegal.com, 214 270-1405 or any of the other following members of the Curren Tomko Tarski LLP team experienced in these and other internal controls matters.

 

 

 

For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the Curren Tomko Tarski Website or Cynthia Marcotte Stamer, P.C. Website.

More Information

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com.  For additional information about Ms. Stamer and her experience, see CynthiaStamer.com or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com or registering to receive these Solutions Law Press HR & Benefits Update at the above link.

 


Texas Supreme Court Broadens Circumstances Where Texas Non-Competes May Be Enforced But Employers Must Still Exercise Care

April 23, 2009

Many Texas businesses view non-competition agreements as a critical component to their strategy to protect their trade secrets and other intellectual property.  In its April 19, 2009 decision in Frankfort Stein & Lipp Advisors, Inc. v. Fielding (“Frankfort Stein”), the Texas Supreme Court gave a another boost to the ability of Texas employers to enforce non-compete agreements signed by existing at-will employees during their employment under the Texas Covenants Not To Compete Act (the “Act”) Section 15.50, which governs the enforceability of employee agreements not to compete in Texas. Despite this helpful ruling, however, Texas employers still must exercise care to comply with all requirements of the Act if they want to position their non-compete agreements for enforceability in Texas.

 

Building on its prior October 20, 2006 employer-helpful decision in Alex Sheshunoff Management Services, L.P v. Johnson (“Sheshunoff”), the Texas Supreme Court in Frankfort Stein clarified that an employer’s implied covenant to provide confidential information to an at-will may constitute adequate consideration to support enforcement of a non-compete under the Act..  The holding expands the Supreme Court’s prior holding in Sheshunoff to apply to both express or implied employer covenants to provide confidential information.

 In Sheshunoff, the Texas Supreme Court previously ruled that that an employer’s express promise to provide confidential information to an at-will employee in exchange for the employee’s express promise not to disclose or use such information, may create an enforceable non-compete covenant under the Act. However, the Supreme Court made clear that employers that desire enforce non-competition agreements still must fulfill the Act’s requirement to provide access to confidential information, training or other appropriate consideration for the employee’s promise not-to compete and the other requirements of the Act before Texas courts will enforce an at-will employee’s agreement not to compete in Texas.

 

The Frankfort Stein decision further clarifies the Court’s interpretation of the Act in Sheshunoff by holding that an implied promise to provide confidential information to an at-will employee also can constitute the required consideration for the employee’s promise to disclose serve as the provision of confidential information required to support enforcement of a non-compete under Texas law.   

The Frankfort Stein decision may offer an additional opportunity for employers that have provided at-will employees access to confidential information to enforce a less than optimally drafted or implemented written non-competition agreement that otherwise complies with the Act under circumstances where the employer can establish it provided the information subject to an implied promise by the employee not to disclose the information.  To avoid the cost and uncertainty of proving the existence and scope of such an implied promise, however, Texas employers desiring to best position their non-compete agreements for enforceability should consult with experienced employment counsel for assistance in reviewing their existing non-competition agreements and practices.  These (and as appropriate, the employer’s employee handbook) should be written and administered:

ü       To require employees to sign non-competition agreements that expressly and appropriately set forth the employers promise to provide the confidential information conditional upon the employee’s agreement not to compete and to protect the confidential information;

ü        To ensure that the agreement appropriately defines confidential information and expressly requires that the employee protect and maintain the confidentiality of trade secrets and other confidential information;

ü       To ensure that the agreement incorporates other procedural provisions that can help minimize the cost and burden to the employer to enforce its provisions;

ü       To ensure that the agreement between the employer and the employee otherwise clearly fulfills all otherwise applicable conditions of the Act and to maintain the confidentiality of the information the requirements of the Act; and

ü       To position the employer to be able to easily prove that it actually engaged in the sharing of confidential information that the Sheshunoff decision identifies as a necessary step to enforce the non-competition agreement under Texas law.

Employers also should position themselves to best investigate possible breaches of these protections by securing written background check consents in accordance with the Fair Credit Reporting Act and ensuring that their handbooks and employment agreements include appropriate privacy, investigations and other policies.

Cynthia Marcotte Stamer and other members of Curren Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402; or your favorite Curren Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the www.cttlegal.com.


Military Leave Differential Payments Subject To Income Tax, Not FICA or FUTA

April 17, 2009

Employers that pay differential pay to employees absent on active duty military leave job must withhold income tax, but need not withhold or pay Federal Insurance Contributions Act (“FICA”) or Federal Unemployment Tax Act (“FUTA”) taxes on those payments, according to an Internal Revenue Service (IRS) ruling to be published May 4, 2009.

According to Revenue Ruling 2009-11, employers must withhold income tax and include military duty differential pay in wages reported on the recipient employee’s Form W-2. It also states employers may use the aggregate procedure or optional flat rate withholding to calculate the amount of income taxes required to be withheld on these payments.

Proper tax withholding and reporting is one of the expanding responsibilities that employers must juggle when a member of their workforce is a current or former members of the military and their family members including, for example, federal and state military leave mandates and new military caregiver and other family leave requirements for family members of members of the military that took effect during the past year. Employers should review their employment and employee benefit practices to confirm they are up to date with these expanded requirements.

Cynthia Marcotte Stamer and other members of Curren Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at e-mail, (214) 270-2402; or your favorite Curren Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the Curren Tomko Tarski Website or Cynthia Marcotte Stamer, P.C. Website.

More Information

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see here or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com.  If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog here.

 

 


250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For Employers

April 15, 2009

U.S. employers should audit existing wage and hour practices and documentation and take other steps to defend against the heightened emphasis on enforcement of federal wage overtime, minimum wage, child labor and other wage and hour laws announced by the U.S. Department of Labor Wage & Hour Division (WHD). In a March 5, 2009 WHD Press Release, recently appointed Obama Administration Secretary of Labor Hilda Solis announced that WHD is adding 250 new field investigators and taking other steps to strengthen its enforcement of federal minimum wage, overtime and child labor laws.  In her March 5, 2009 Press Release, Secretary Solis stated, “The addition of these 250 new field investigators, a staff increase of more than a third, will reinvigorate the work of this important agency, which has suffered a loss of experienced personnel over the last several years.”

The announced expansion of staffing comes in part in response to two reports made to Congress by the Government Accounting Office (GAO) over the past year, which were highly critical of the enforcement activities of the WHD under the Bush Administration.  In a 2009 GAO Report To Congress released March 25, 2009, the GAO reported that a recent GAO audit of WHD enforcement found that sluggish response times, a poor complaint intake process, and failed conciliation attempts, among other problems left workers vulnerable to wage theft.  The 2009 Report followed up on a 2008 GAO Report To Congress that case studies showed that WHD inadequately investigated minimum wage and overtime complaints by inappropriately rejecting complaints based on incorrect information provided by employers, failing to make adequate attempts to locate employers, not thoroughly investigating and resolving complaints,  and delaying initiating investigations for over a year and then dropping the complaint because the statute of limitations for assessing back wages was close to expiring.

The continuing emphasis of the DOL upon FLSA enforcement, coupled with the growth in FLSA enforcement actions by private plaintiffs, provides an important warning to employers of low wage workers specifically, as well as employers generally, of the importance of being prepared to defend their worker classification and overtime practices against DOL and/or private litigant investigations.  When it updated its regulations governing the classification of workers as exempt versus non-exempt under the FLSA in 2004, the DOL urged employers to review and update their worker classification and overtime practices to comply with the updated regulations.  At the same time, the DOL announced its intention to vigorously enforce its FLSA regulations against employers failing to adhere to these updated rules.  Despite these widely publicized compliance efforts, DOL studies of employer compliance with overtime rules continue to reflect that 50 percent of employers are not in compliance with these mandates. Therefore, in addition to adjusting existing rates of pay to comply with the increased minimum wage, employers also should:

Audit overtime pay practices to verify they comply with applicable federal and state requirements,

Review workers classified as exempt employees and/or non-employee contractors in light of the FLSA and applicable state wage and hour laws to assess the sustainability of these characterizations against a legal challenge; and

Audit the adequacy of current practices for tracking and documenting time worked by non-exempt workers in light of the FLSA and applicable state wage and hour laws.

 

Employers are cautioned to keep in mind that employers generally bear the burden of proving that their existing worker classification, wage and overtime practices meet or exceed the minimum standards imposed by the FLSA and any applicable state wage and hour law.


 

Cynthia Marcotte Stamer, and other members of Curren Tomko and Tarski LLP are experienced with assisting businesses to audit, administer and defend minimum wage, overtime and other wage and hour practices under federal and state wage and hour laws, as well as with other labor and employment, employee benefits and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, , please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402; or your favorite Curren Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see www.cttlegal.com or CynthiaStamer.com.


New IRS’ 2009 “Dirty Dozen” Tax Scams List Invites Whistleblower Claims Against Employers, Others Engaged In Listed Transactions

April 14, 2009

The release yesterday (April 13, 2009) by the Internal Revenue Service of its 2009 “Dirty Dozen” Tax Scams List reminds businesses of the need to act to minimize exposures to tax related whistleblower or other retaliation claims by employees and other service providers that allege the potential involvement of the business in tax scams or other improper tax transactions.

 

Businesses face whistleblower, tax fraud prosecution, additional tax and penalty liability and other sanctions for involvement in tax shelters or other tax schemes.  Employees and other service provider reports to the Internal Revenue Service (IRS) are the leading means through which the IRS identifies and proves fraudulent tax activities.

 

Yesterday’s IRS announcement of its 2009 “dirty dozen” list of tax scams heightens whistleblower risks for businesses by encouraging employees and others who may have knowledge of a business or other taxpayer’s involvement in these or other prohibited tax practices to report their suspicions to the IRS and sharing instructions on how to report suspected tax fraud to the IRS as a whistleblower.  As part of these instructions, the announcement notes that “[w]histleblowers also may provide allegations of fraud to the IRS and may be eligible for a reward.”

 

The 2009 “dirty dozen” list of tax scams warns businesses about getting involved in 12 tax transactions that the IRS views as likely to create tax fraud and whistleblower risks. The tax schemes that made the 2009 Dirty Dozen List include:

  • Hiding Income Offshore
  • Filing False or Misleading Forms
  • Abuse of Charitable Organizations and Deductions
  • Return Preparer Fraud
  • Making Frivolous Arguments 
  • Making False Claims for Refund and Requests for Abatement
  • Abusive Retirement Plans
  • Disguised Corporate Ownership
  • Zero Wages
  • Misuse of Trusts
  • Fuel Tax Credit Scams

Taxpayers participating in the 2009 Dirty Dozen Tax Scams and other tax transactions listed as tax scams by the IRS risk exposure to additional taxes and penalties, prosecution for tax fraud, and potential whistleblower claims.  The Dirty Dozen list singles out for special attention some of the many tax transactions that the IRS views as tax shelters or tax fraud.  Depending on the nature of a business and its tax and compensation activities, businesses also may need to be concerned about scrutiny by the IRS for involvement in various other types of transactions that the IRS has identified as suspect. The IRS is urging U.S. businesses and other taxpayers to avoid participation in these common schemes.

 

Businesses engaged or accused of engaging in these or other transactions listed as tax scams or tax shelters by the IRS should exercise caution to confirm the appropriateness of the proposed transaction, to document their investigation of allegations of improper tax activities.  For profit and non-profit businesses should include appropriate tax compliance oversight in their internal controls and federal sentencing guideline compliance programs.  Businesses should review their activities in light of lists of IRS abusive transactions, should evaluate whether any of their transactions may be subject to scrutiny by the IRS, and take other appropriate steps to mitigate their exposure to prosecution for tax fraud, to tax related whistleblower liability and other risks.   Businesses also should exercise care when dealing with employees or service providers who make allegations that the business may be involved in improper tax activities.   Businesses also need to be prepared to demonstrate that they have not retaliated against individuals who report suspected tax fraud.  The best defense to retaliation claims is a consistent, well documented legitimate performance and discipline record.  Businesses should strengthen and consistently apply their employee performance and discipline processes to improve performance and deter whistleblower or other retaliation judgments.  As part of this process, businesses also should adopt and enforce policies requiring employees and other service providers to report suspected tax or other compliance concerns, administer documented processes for receiving and investigating allegations of potential fraud or other noncompliance, and should document their conclusions and any corrective actions in response to these investigations.

 

Cynthia Marcotte Stamer, and other members of Curren Tomko and Tarski LLP are experienced with assisting establish and administer employment, corporate compliance, internal and external fraud and other controls; to investigate potential fraud or other misconduct; to defend employment, whistleblower, Federal or state criminal or civil investigations, audits and prosecutions and to address other employment, employee benefits and corporate compliance matters.  If your organization needs assistance with assessing or managing its risk management and compliance responsibilities or liabilities under health care, employment, environmental, antitrust, securities or other federal or state laws, wishes to inquire about compliance audit or training or other services; or would like to review or engage and experience of Ms. Stamer, or other Curren Tomko Tarski LLP attorneys, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402;  or see CTTLegal.com or CynthiaStamer.com.

More Information

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see http://cynthiastamer.com/human_resources.asp or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com.  If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog at http://slphrbenefitsupdate.wordpress.com.

 

 

 


Businesses Face Stepped Up ADA Public Accommodation Enforcement Risks

April 7, 2009

A federal Fair Housing Act lawsuit recently filed by the U.S. Justice Department against a large Dallas-based construction and development company  and a series of its other releases signal that Department of Justice is gearing up for stepped up enforcement of the Public Accommodations and other provisions of the Americans With Disabilities Act.  To defend against this risk, all U.S. businesses should evaluate the adequacy of their existing business practices. 

 

On Tuesday, March 10, 2009, JPI Construction L.P. (JPI) and six JPI-affiliated companies in U.S. District Court in Dallas for failing to provide accessible features allegedly required by the Fair Housing Act and the Americans with Disabilities Act at multi-family housing developments in Texas and other states. Today, the Justice Department followed up by

 

 The Justice Department’s proclamation in its announcement of its filing of the suit against JPI that “Fighting illegal housing discrimination is a top priority” affirms this commitment under the Fair Housing Act. See “Justice Department Sues Large Multi-Family Housing Developer Alleging Disability-Based Housing Discrimination, U.S. Justice Department (March 10, 2009) at http://www.usdoj.gov/opa/pr/2009/March/09-crt-187.html.  According to the complaint, the JPI defendants failed to design and construct accessible dwelling units and public and common use areas at Jefferson Center Apartments in Austin, Texas; Jefferson at Mission Gate Apartments in Plano, Texas; and additional multi-family housing complexes in other states. The complaint alleges certain complexes designed and constructed by the JPI defendants have inaccessible steps and curbs leading to units, steeply sloped routes leading to units, and no accessible routes to site amenities, including inaccessible trash facilities, barbeque grills and cookout tables. In addition, certain housing units have narrow doors and hallways; kitchens that lack accessible clear floor space at the sinks, ranges and refrigerators; bathrooms that lack accessible clear floor space at the toilets and tubs; and thermostats that are mounted too high to be accessible to a person using a wheelchair. The Justice Department complaint asks the court to order monetary damages to victims of the alleged discrimination, to issue a court order requiring the defendants to modify the complexes to bring them into compliance with federal law, to prohibit future discrimination by the JPI defendants, and to assess civil penalties.

 


Follow

Get every new post delivered to your Inbox.

Join 528 other followers