Government Agencies Stepping Up Enforcement Tactics

At a recent NE Florida SBRN monthly meeting, I joined SBRN experts Mark Addington and Lucy Markert to discuss the current HR legal and regulatory environment surrounding small business.

These skilled specialists discussed how agencies such as Immigration and Customs Enforcement (ICE), the Equal Employment Opportunity Commission (EEOC), the Wage and Hour Division of the Department of Labor (W&HD) and even some plaintiff attorneys seem to be taking direct aim at small businesses. According to some on the panel, the enforcement tactics of these government agencies have proven to be the most aggressive they’ve been in more than 30 years. For example:

ICE Isn’t Playing Nice

ICE is checking businesses with the supposed intent of finding employees who aren’t authorized to work in the country. Nobody should have a problem if a company is fined or even shut down when they hire unauthorized people, but a major problem exists with agencies that fine companies for simple paperwork errors.

Many companies that aren’t properly completing an I-9 form when a new employee is hired are being fined up to $1,000 for each incomplete form. Unfortunately, in many cases, the fines are so high that small businesses are forced to shut down.

Employers should audit all I-9 forms at least once a year to ensure they have up-to-date, properly completed documents.

The EEOC is in a Frenzy

Panel members said the EEOC investigators appear to have been given marching orders to conduct virtually intrusive investigations before submitting their recommendations—a practice that’s causing them to go beyond the scope of their authority by asking for documentation unrelated to the case. Other investigators are questioning the business practices of companies the charges were filed against.

You can fight the requests and question the investigators’ motives, but in reality you have little choice but to comply and wait for a decision, a wait that’s getting longer and longer. Sometimes more than two years may lapse before you get a decision…for, what used to be, a simple case.

EEO laws apply to companies with 15 or more employees. So if you qualify, or are moving in this direction, ensure your policies and procedures regarding Equal Employment Opportunity are in place to protect you.

Wage and Hour Laws – Easy Money?

Wage and hour laws apply to any company doing business that affects interstate commerce, which means if you send an Email, make a telephone call or pay a bill to an out-of-state organization, the wage and hour laws apply to you, regardless of your revenue or number of employees. Department of Labor’s Wage & Hour Division (W&HD) holds the primary duty of investigating complaints about violations of the Fair Labor Standards Act, of which 75% of the companies in the country are in violation.

There’s also a provision in the law that states a plaintiff can go straight to court and sue a company and if the company loses, it’s required to pay the reasonable and customary fees of the plaintiff’s attorney plus back wages and other damages.

Think about it this way: a 75% chance of winning and making some extra cash on top of that, encourages people to take advantage.

The most common violations are:

  • Misclassifying employees as “salaried” when their job doesn’t qualify as a salaried position under the law
  • Not paying an employee who works unauthorized overtime
  • Allowing or demanding employees to work “off the clock.”
  • Granting compensatory time off instead of paying overtime

Extra Pressure from W&HD

W&HD announced it developed an app for smart phones that employees can use to track their hours worked and ensure they’re being paid properly. This way, if a complaint is filed, the employee has a record of the time worked outside the official records of the company.

In another interesting twist, if a complaint is filed with the W&HD and it’s too backlogged to take the case quickly, the complainant is now referred to a lawyer referral website with plaintiff attorneys who can take the case for them. Fortunately, complainants no longer need to ait until the investigators work through their heavy case load.

Small Businesses Just Don’t Know the Rules

Most small businesses aren’t aware of the rules and regulations they need to follow and, unfortunately, often find out too late. Small business owners should know the following to protect themselves:

1) Don’t assume you know what’s required.

2) Ask for help from someone who knows the rules and get a check-up to ensure you’re in compliance.

3) Take preventative action. Ensure you institute policies and procedures. Communicate to your employees and encourage employees to come to you first with complaints so you can take corrective action.

4) Knowledge is power and ignorance is not a defense. Don’t get caught in the trap of not knowing your compliance requirements. Protect yourself and/or your company. With so many agencies and individuals trying to collect money off your unintentional faults, there’s no room for error.

Bob McKenzie, SPHR, is president of McKenzieHR. He can be reached at 904-861-2903 or bobm@mckenziehr.com.