The SESCO Report – August 2007


Immigration Update — Final Regulations Announce Safe Harbor Procedures for Employers

Each year employers send millions of W-2 forms to the Social Security Administration (SSA) in which the combination of an employee's name and Social Security Number (SSN) does not match SSA records. In this case, the SSA sends an "Employer Correction Request" letter that informs the employer of the mismatch. This letter is commonly referred to as a "no-match" letter. There can be many causes for a no-match, including clerical error and name changes. One potential cause, however, may be submission of information for an alien who is not authorized to work in the United States or who may be using a false SSN or a SSN assigned to another person.

On August 10, 2007 the U.S. Department of Homeland Security (DHS) announced its final "no-match" regulations related to the unlawful hiring or continued hiring of undocumented workers. The regulations describe the legal obligations of an employer under the Immigration Reform and Control Act of 1986 (IRCA) when receiving a "no-match" letter from the SSA or a letter regarding employment verification forms from the DHS. The final regulation also describes "safe harbor" procedures that the employer can follow in response to receiving such letters to avoid allegations from the DHS that the employer had knowledge that the employee referred to in the letter was not authorized to work in the United States. The intent of the regulation is to make it more difficult for illegal aliens to use a fraudulent Social Security number to get a job and to help employers take appropriate action to protect themselves.

An employer should take reasonable steps to resolve a "no-match" and should apply the steps uniformly to all employees listed in a SSA letter. Immigration and Customs Enforcement (ICE) considers the following to be reasonable steps if the employer:

1. Promptly (no later than 30 days) checks its records to ensure that the mismatch was not the result of an error on the part of the employer;

2. If this does not resolve the problem, asks the employee to confirm the accuracy of the employer's records;

3. If necessary, asks the employee to resolve the issue with the Social Security Administration. The employer should inform the employee that he or she has 90 days from the date the employer received the "no-match" letter to resolve the matter with the SSA (explaining that the resolution of the mismatch could take time);

4. If able to successfully resolve the mismatch, the employer should also ensure that all of the instructions in the SSA letter have been followed. The employer also should verify that the error has been corrected by using the Social Security Number Verification Service administered by the SSA and retain a record of the date and time of verification.

5. If none of the foregoing measures resolves the matter within 90 days of receipt of the "no-match" letter, the employer should complete, within three days, a new I-9 Form as if the employee in question were newly hired, except that no document may be used to verify the employee's authorization for work that uses the questionable SSN. Additionally, the employee must present a document that contains a photograph in order to establish identity or both identity and employment authorization. The new Form I-9 will be retained for the same period as the original Form I-9. The date of hire for employment purposes is still the same date, even though the safe harbor procedure requires that the employer complete a new Form I-9, using the same procedures as if the employee were newly hired.

If you cannot confirm that the employee is authorized to work following the above procedures, you risk liability for violating the law by continuing to knowingly employ unauthorized workers. In other words, the individual's employment should be terminated at this point.

If you become aware of information that an employee is unauthorized to work, you should take reasonable steps to investigate the matter. If the employee informs you that he or she provided fraudulent identification and the employee is not work-authorized, employment must cease immediately. Otherwise, you may face sanctions for continuing to knowingly employ unauthorized workers.

Do not ignore "no-match" letters.
The punishment for ignoring no-match letters and becoming entangled in an investigation by ICE can be substantial. The fine for an employer on the first offense is $2,200, with increasing fines for subsequent offenses. Some employers have already faced criminal prosecution for systemic violations of the immigration laws.

This regulation and its "safe harbor" provisions become effective in mid-September, 2007.

SESCO authors and publishes a compliance guide to the Immigration Reform and Control Act. The manual will be revised to include new "Safe Harbor" legislation to address "no-match" letters. The fee for the compliance manual is $25.

- Phil Richards, Director of Client Services


EEOC Confirms that Advertising for "Older Workers" is Not Prohibited by ADEA

With the high demand for qualified employees and the fact that the U.S. economy for all practical purposes is experiencing full employment, an effective strategy for many SESCO clients and a SESCO Staff Recommendation has been to explore employment opportunities whether full or part-time with retired or "older" workers. This demographic of our population provides extremely high work ethics and values such as loyalty and trustworthiness. Those SESCO clients who have "tapped" into this demographic have been able to provide exceptional service while at the same time reducing labor costs associated with high turnover. One of the potential issues associated with such a strategy was the potential for reverse discrimination.

However, the Equal Employment Opportunity Commission (EEOC) issued in an advisory letter that job advertisements for "older workers" was not inappropriate or illegal. The EEOC received a letter from a senior community service employment program that complained, "The legality of placing job advertisements for applicants age 55 or older" was illegal.

The EEOC stated, "The Age Discrimination in Employment Act (ADEA) permits employers to advertise for older workers." The assistant legal counsel further stated that favoring older over younger workers does not violate the ADEA. As a result, the EEOC issued:

"Employers may post help wanted notices or advertisements expressing a preference for older individuals with terms such as over age 60, retirees, or supplement your pension."

However, the EEOC cautioned that while the ADEA does not prohibit advertising for workers age 55 or older, state or local law may prohibit such advertisements. Accordingly, SESCO recommends a review and confirmation of your fair employment practices where such recruitment strategies are implemented.

- Joel Cullum, Specializing in Representing Employers with EEOC Charges

Family and Medical Leave Confusion Persists

A recent SHRM study revealed that nearly forty percent (40%) of all HR professionals report confusion over implementation of Family Medical Leave has lead to illegitimate leave being granted to employees. The two (2) most challenging FMLA related activities identified by organizations are 1) tracking/administering intermittent Family and Medical Leave and 2) determining the overall cost incurred with complying with the requirements of FMLA. And, according to the survey, in an open comment portion of the study, many HR professionals noted that the timing of the intermittent FMLA leave request (re: weekends, holidays, pleasant weather) raised suspicions of abuse.

In considering the survey results, 59% of leaves taken were for the employee's medical reasons, 38% was for family related reasons and 38% was for an employee's episodic condition or intermittent leave. HR professionals who responded to the study admitted that Family and Medical Leave can have a negative impact on employee absences (63%), employee productivity and business productivity.

An interesting policy trend from the survey revealed that 55% of the organizations responding now offer a "PTO" type of sick leave program that also includes vacation and personal days ? while 37% offer traditional sick leave time as a separate benefit.

SESCO publishes and sells administrative compliance manuals including forms, policies and procedures as well as tips for compliance. The manual costs $35 ? compliance forms and the manual can be ordered online, or by calling 423-764-4127.

Drug Use on the Rise — SESCO Clients Should Challenge Policy

Illegal drug use among full-time employees is on the rise according to a Substance Abuse and Mental Health Administration study. According to the study, one (1) in twelve (12) full-time workers in the U.S. has used illegal drugs sometime within the past month. The current usage rate in the U.S. is 8.2%, up from the 7.6% rate found in a previous 1994 government survey.

Illegal drug use and abuse of prescription drugs are realities in the workforce. To make matters worse, employers do not receive support from attorneys and physicians. Attorneys are constantly threatening lawsuits and physicians are not helping the matter with the increase of prescription pain medications and lack of interest in ensuring an employee is able to perform the essential functions of the job.

SESCO tips to address substance abuse in the workplace include:

? Clearly written and communicated policies.
? Consent to testing forms, particularly to address random testing.
? Policy restricting not only illegal drug use, but abuse of prescription medication.
? Question multiple strike policies ? statistics are very disheartening as 85% of offenders will be second or third offenders. Rehab doesn't work most of the time.
? Policy should address possession, convictions, refusal to submit to an exam, etc.
? Establish not only in your workplace but a reputation in your community that your organization has established a zero tolerance stance. Eventually applicants who may have a problem will not apply. Additionally, such a culture creates a much more professional and highly productive workplace.

SESCO prepares and reviews substance abuse policies for our clients. We would welcome the opportunity to review policy to ensure that your policy is not only compliant to federal and state employment regulations, but also effective in addressing this dangerous and costly epidemic.

Federal/State Posters — Are You In Compliance?

State and federal regulations require that labor law posters are displayed in conspicuous areas, where all employees will see them (such as an employee lounge, break room, or cafeteria).

Federal and State Posters Must be Updated

After years of debate, Congress finally passed (and President Bush signed) legislation to increase the federal minimum wage. The increase will occur in three steps:

July 24, 2007 — $5.85 per hour
July 24, 2008 — $6.55 per hour
July 24, 2009 — $7.25 per hour

To ensure compliance with the federal labor law posting requirements, employers need to obtain new posters. SESCO provides to clients specially- priced federal (and state) posters that reflect the minimum wage change. These posters will ensure compliance for the next three (3) years. The special price for SESCO clients is $15.00 for federal posters and $15.00 for state posting kits. Order online, or call 423-764-4127 to place an order by phone.

SESCO Client Inquiry — Staff Response

Question: Under what circumstances may we terminate a participant's COBRA coverage prior to the end of the coverage period?

Answer: While minimum coverage periods are set by the COBRA statute, employers are permitted to terminate a participant's coverage before the expiration of an applicable 18, 29 or 36-month period under the following circumstances:

? The employer ceases to maintain any group health plan for employees.

? The participant fails to make a timely payment of any required COBRA premium. Employers must provide at least a 30-day grace period for payment of any late premiums before terminating the coverage.

? Coverage may be terminated when a qualified participant becomes covered under any other group health plan, provided the new plan contains no limitations for coverage of any "pre-existing conditions."

? Participants who have been granted the 11-month extension for disability and who are determined by the Social Security Administration to no longer be disabled.

? Participants who subsequently are enrolled in Medicare.

COBRA regulations require that the employer or the plan administrator provide notice to each qualified participant of any termination of continuation coverage that takes effect prior to the end of the maximum period of coverage applicable to the qualifying event.