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The White House has endorsed legislation by Senator John Kerry (D-Mass.) and Representative Jim McDermott (D-Wash.) to protect workers from losing benefits and protections as the result of a tax loophole.

According to press material issued by Senator Kerry's office, the Fair Playing Field Act of 2010, which Kerry and McDermott introduced on September 15, will close a tax loophole currently allowing businesses to misclassify workers as “independent contractors,” thereby creating an unfair environment for businesses that play by the rules and an unfair environment for workers. The bill is cosponsored in the Senate by Senators Kirsten Gillibrand (D-N.Y.), Patty Murray (D-Wash.), Sherrod Brown (D-Ohio), Al Franken (D-Minn.), Daniel Akaka (D-Hawaii), Chuck Schumer (D-N.Y.), and Patrick Leahy (D-Vt.)

Current law provides a “safe harbor” loophole allowing employers to treat a worker as not being an employee for employment tax purposes, regardless of the worker’s actual status under the common law test, unless the employer has no reasonable basis for such treatment or fails to meet certain requirements.

If passed as currently written, the Fair Playing Field Act of 2010 would:

• end the moratorium on Internal Revenue Service (IRS) guidance addressing worker classification;

• require the Secretary of Treasury to issue prospective guidance clarifying the employment status of individuals for Federal employment tax purposes;

• amend the provisions of the Tax Code that provide for reduced penalties for failure to deduct and withhold income taxes and the employee’s share of FICA taxes;

• require persons who contract independent contractors on a regular and ongoing basis to provide a written statement to each independent contractor of the Federal tax obligations of independent contractors, the labor and employment law protections that do not apply to independent contractors, and the right of the independent contractor to seek a status determination from the IRS; and

• require the Secretary of the Treasury to issue annual reports on worker misclassification.

Identical legislation was introduced in the House.

Worker misclassification has recently received increased attention by both the Administration and Congress. The President’s budget for the 2011 fiscal year includes provisions that target the misclassification of employees as independent contractors and are estimated to raise more than $7 billion in revenue over 10 years.

 

 

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Worksite immigration enforcement cases are pretty rare so when they happen they get everyone's attention.  This week, a San Antonio restaurant company, its owner and four managers have been indicted on charges they conspired to hire illegal immigrants.

In 2008 a disgruntled former employee made a report to U.S. Immigration.  After a two-year investigation, a federal grand jury Wednesday indicted the Salsalito Cantina company (which has two restaurant locations here in San Antonio), along with its owner, it human resources manager, its general manager Humberto Gonzalez, and its kitchen manager.

The indictment alleges they conspired to induce people to enter the United States illegally, hired them, completed fraudulent work verification documents and then hid them.

The company and the managers have reportedly denied the charges.  The company's lawyer has implied that the case is built on untruthful statements of scared illegal aliens who were being questioned by the feds.  It will be interesting to follow the case and see if all of the defendants maintain the same story and take the case to trial of if one them makes a deal with prosecutors. 

In case you were wondering, the potential penalties for the defendants in a case like this one: Up to 10 years in prison for the individuals.  The company faces fines of up to $500,000 per violation.

Source: You can read the whole story at the SA Express News.

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A Chicago-area man was awarded $4.2 million in total damages Thursday from the Chrysler company by a federal jury who believed the company did not do enough to stop years of religious and ethnic harassment.

According to the Rockford Register Star, the 60-year-old plaintiff filed the lawsuit against Chrysler in 2002. He is a pipe fitter at the company’s Belvidere assembly plant and has worked for Chrysler for nearly 22 years.  A Cuban-born Jew, the plaintiff took abuse for years from co-workers, including being called an “import from Cuba,” having his tires shredded by homemade spikes and having messages such as “Kill Jew. Heil Hitler” scribbled on his locker.

The jury awarded May $709,000 in compensatory damages and $3.5 million in punitive damages.  However, statutory damage caps will likely lower the amount actually awarded to the plaintiff by a significant amount. Juries are never told that the full amount that they award to a plaintiff will not be ordered by the Court due to the damage caps that have been placed on such awards by federal and state legislatures.

Read the News Account.

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Here are some of the most interesting employment law related articles and blog entries I came across in the last seven days. 

• ADA Amendments redefine cancer as a disability.
  
  • Ohio Employer's Law Blog - Jon Hyman writes: "I think the cancer-is-not-an-ADA-disability cases are a thing of the past. Effective January 1, 2009, Congress amended the ADA to reinstate “a broad scope of protection.” Specifically, Congress found that the United States Supreme Court had narrowed the protections intended by the ADA, and rejected the holdings of Sutton v. United Air Lines, Inc. and Toyota Motor Manufacturing, Kentucky, Inc. v. Williams. The ADAAA did not change the statutory definition of “disability,” but made significant changes in how it is interpreted. Importantly, the ADAAA clarified that the operation of “major bodily functions,” including “functions of the immune system,” constitute major life activities under the ADA. Moreover, the ADAAA provides that 'an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.'"
    

• Hurd, HP, and Inevitable Disclosure
  
  • Smooth Transitions Blog - Rob Radcliff writes about the recent suit filed by HP against its former CEO, Mark Hurd, asserting that he cannot go to work for competitor Oracle. HP essentially claims that it is impossible for Hurd to take the job without breaching his contract with HP and without missapropriating HP's trade secrets. Radcliff notes that "Texas Court do not recognize the inevitable disclosure doctrine but have come close – California does not appear to either."

• Federal Employees May Pick & Choose Which Title VII Claims to Appeal
  
  • Daily Developments in EEO Law - Paul Mollica notes the Seventh Circuit's recent decision in Payne v. Salazar, in which the court holds that federal employees who adjudicate their Title VII claims through the agency route have a choice, if they are dissatisfied with the result, between appealing to the EEOC or refiling the claims in federal district court. Mollica notes that this case becomes the first to hold that an employee with multiple Title VII claims may accept the results of a winning claim while also proceeding to federal court with the losing ones.

If you come across an article that you think should make the weekly round-up, drop me a line at chris[at]mckinneylaw.net.

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Here are some of the most interesting employment law related articles and blog entries I came across in the last seven days. 

• Can Employers Prohibit Employees From Expressing Their Religious Views in the Workplace?
  • New York Labor & Employment Law Report - Interesting article on the topic.  Employers cannot generally prohibit all forms of religious expression at work.  However, many courts have held that an employer can prohibit employees from attempting to proselytize co-workers, especially when the co-workers are unwilling and are being harassed by the conduct. 

• When Can an Employer Ask for a Second Opinion for FMLA Leave?
  • FMLA Insights - Article addressing when an employer may seek a second opinion to verify an employee's serious health condition for purposes of Family Medical Leave Act ("FMLA") leave. Short answer, if the employer has a solid reason to doubt a medical certification then it may request a second opinion.  But the process should not be used to harass employees seeking FMLA leave.

• COBRA Subsidy Still Available
  
  • Remember that that the American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through May 31, 2010. There may not have been an extension of subsidies to individuals terminated after 5/31/10, but the effects of the subsidy are still with us for at least a few more months. Recall that individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare. Those individuals who qualified for the premium reduction were only required to pay 35 percent of the COBRA premium otherwise due to the plan.  You can review more details about this issue at Fox Rothschild's Employee Benefits Legal Blog.

If you come across an article that you think should make the weekly round-up, drop me a line at chris[at]mckinneylaw.net.

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Can Employers Prohibit Employees From Expressing Their Religious Views in the Workplace?

New York Labor & Employment Law Report has an interesting article on the topic this week.  Employers cannot generally prohibit all forms of religious expression at work.  However, many courts have held that an employer can prohibit employees from attempting to proselytize co-workers, especially when the co-workers are unwilling and are being harassed by the conduct.

Click through to see the full post and the case discussed.

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