WJR highly recommends that companies conduct a comprehensive employment law audit. As part of such audit Georgia companies should also revisit the restrictive covenants in their employment agreements as Georgia has passed a new noncompete law. The law has a profound impact on terms and conditions of noncompete’s and companies should conduct a thorough review to make sure company information and important company customers and supplier relationships are protected. Gordon M. Berger, our shareholder and employment law expert, is thoroughly familiar with the new noncompete law. He also cites the following examples of recent and expected increased government enforcement as support for conducting an audit:
• The EEOC has announced an increased emphasis on pursuing cases involving “systemic discrimination,” pattern and practice discrimination claims, and facially neutral policies that adversely affect women and minorities.
• The EEOC has also announced its renewed focus on combating systemic discrimination and its intent to pursue a greater number of large-scale enforcement actions through FY 2012 where it seeks relief for numerous applicants or employees. Known as a “pattern and practice” case, this type of litigation poses the greatest exposure and risk to employers through challenges to policies and practices in the workplace that allegedly have a discriminatory impact on a protected class and relies heavily on statistical evidence. In this past year, there have been a number of EEOC enforcement actions seeking relief on a class basis. Now more than ever, it is imperative for employers to be cognizant of these large-scale cases, to understand the nuances involved in the EEOC’s handling and prosecution of such cases, and to be prepared to timely challenge any attempts by the EEOC to overreach.
• The IRS will conduct over 6,000 payroll tax audits focusing on companies misclassifying workers as independent contractors, fringe benefits, and executive/deferred compensation.
• FLSA class actions continue to go up—way up. The U.S. Department of Labor (DOL) has hired 250 new investigators and has launched a new “We Can Help” campaign with a jingle, website and bilingual public service ads designed to ferret out the incorrect classification of exempt employees and other violations of wage and hour laws.
In addition, $25 million was set aside in the last Federal budget to expressly to help the DOL combat employee misclassification. This includes, specifically, identifying and litigating against employers that categorize workers as independent contractors when, in fact, they are employees, and that classify as exempt from overtime those employees who do not meet the requirements of the White Collar Exemptions under Part 541 of the Wage and Hour Regulations.
Now, more than ever, employers must have programs in place to insure the validity of their classification of workers as independent contractors or as exempt from overtime, and must have a clear strategy for handling government audits and enforcement actions.
• U.S. Immigration & Customs Enforcement and other federal agencies plan over 1,000 I-9 compliance audits.
• The OFCCP, OSHA and other agencies also have increased budgets and expanded audit task forces. For instance, The U.S. Occupational Safety & Health Administration (“OSHA”) recently launched an enforcement initiative focused on identifying employers who underreport workplace injuries and illnesses. This initiative—which OSHA has classified as a National Emphasis Program (“NEP”)—was prompted by recent government reports which found that a high percentage of workplace injuries and illnesses are not being reported by employers. Accordingly, employers should be mindful of the NEP, and that OSHA has made clear that its investigators will be paying particularly close attention to workplace policies and practices which have the effect of discouraging employees from reporting their job-related injuries and illnesses.
Federal and state agencies will be sharing information about the results of their audits and will be referring non-compliant employers and executives for criminal prosecutions.
Employers should engage in proactive self-audits, in order to seek out and eliminate vulnerability.
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