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For all the media time devoted to President Trump, many of you may have missed some actual law-making going on behind the scenes. Let me take a moment to update you as to three developments which should be of interest to employers:
1-9 Audits on the Rise
Immigration and Customs Enforcement (ICE) has announced plans to increase I-9 audits this summer and focus on punishing employers who hire illegal workers and deporting of workers in the country illegally. Make no mistake – the punishment to be imposed by ICE can include civil penalties and/or criminal charges.
Accordingly, now is the time to make sure your I-9’s are in order and, if they need to be updated because the form of identification on file has expired or will be expiring soon, update them now. Not all employers are enrolled in E-Verify, but many in the know believe the aim of ICE’s aggressive tactics is to increase E-Verify enrollment.
While the audits do not include independent contractors, classifying workers as contractors when they should properly be classified as employees may expose employers to headaches beyond ICE: namely the Department of Labor and the Internal Revenue Service.
New Rules for Tips and Tip Pools
As part of the 2018 tax bill, Congress amended the Fair Labor Standards Act (FLSA) in regards to tip pools and tip ownership. First, under the new rules, employers are prohibited from keeping tips received by their employees, regardless whether the employer takes a tip credit. Second, the new rules state that employers who pay the full minimum wage (currently $8.25/hour in Florida) can allow employees who are not customarily and regularly tipped – like cooks and dishwashers – to participate in tip pools. Note that tip pools must still exclude supervisors, managers and owners.
Many employers do not pay tipped employees the minimum wage and instead take a “tip credit,” recognizing that the employee’s tips will bring the hourly rate up to and over the minimum wage. For employers who wish to include back of the house workers in the tip pool, paying the minimum wage rather than the tip credit is a way to accomplish this goal.
Arbitration Can Eliminate Class/Collective Actions
In the case of Epic Systems Corp. v. Lewis , the U.S. Supreme Court upheld an arbitration clause in an employment agreement which precluded the employee from bringing a class action against the employer. The 5-4 decision authored by Justice Gorsuch makes clear that employer-favored arbitration agreements can be used to eliminate the risk of costly class and collective actions.
Opponents of such agreements argued that arbitration could not trump employees’ rights to join together to seek common relief. Based on the holding in Epic Systems, arbitration agreements can be used to eliminate an employee’s right to participate in a class or collective action and require arbitration of the employee’s individual claims only.
Those of you who require your employees submit to arbitration to resolve any employment-related dispute should have counsel review the arbitration agreement to ensure that it precludes the employee from participating in a class or collective action. Those of you who do not have arbitration agreements with your employees – either as a stand-alone agreement or as a clause in an employment contract – may want to consider putting this type of agreement in place.
As always, if you have any questions about the foregoing or other employment-related matters, please feel free to contact me. Happy Memorial Day to all!
Board Certified Labor and Employment Partner Ellen Leibovitch
ASSOULINE & BERLOWE, P.A.
1801 N. Military Trail, Suite 160
Boca Raton, Florida 33431
Main: (561) 361-6566
Fax: (561) 361-6466