Friday, October 30, 2015

Sometimes it pays to Fight “City Hall” - Employer Successfully Challenges OSHA Citation Arising from a Workplace Fatality

November 2015

Employers are becoming more and more aware of just how aggressive federal agencies have become in recent years with their enforcement efforts as well as their interpretation of the laws and regulations they enforce. Most of the time this does not bode well for employers.  However, in one recent case an employer challenged an OSHA citation in which the Secretary of Labor assessed a very large penalty of $490,000.00 as a result of a single workplace accident. The citation claimed that an incident where a large piece of metal broke off and was ejected from a lathe, killing its operator, violated an OSHA barrier guard safety regulation.  The employer appealed OSHA’s sizable fine and prevailed in court.

The Eighth Circuit Court of Appeals agreed with the employer that while serious, this unfortunate accident was the result of the catastrophic failure of the lathe, not a safety regulation violation.  In other words the court found that, even though an employee was killed, the employer was not at fault. The pertinent part of the OSHA regulation relied on for the citation expressly referred to the type of hazards related to the routine operation of machinery, such as flying chips and sparks. The court determined that it was quite a stretch for the Secretary of Labor to apply such a limited regulation to an event that was anything but routine.    

Generally courts will defer to an agencies’ interpretations of its own regulations.  However, in this case neither the language of the regulation nor the agency’s prior interpretation of the regulation would put the company on notice that it needed to install a safety guard specifically to protect against this type of catastrophe.  Unfortunately, many employers lack the resources to challenge a federal agency in court when it has misapplied its own regulations to come down hard on the company.  Yet where the stakes are worth the battle, as they were in this particular case, it can pay to take them on.

Questions? Contact our Minneapolis attorneys at (952) 746-1700 or email Chrissy Beggan at chbeggan@wesselssherman.com.

Tuesday, October 27, 2015

Union Organizing

By Richard H. Wessels
Firm Founder


Concerned about ambush elections (they're here) and the uptick in union organizing? Wessels Sherman can make you as bullet-proof as possible. A simple three step approach will work:

  1. Someone in your organization understands and is responsible for Wessels Sherman's ABC's of Staying Union Free;
  2. Your front-line supervisors are trained on the issue of union organizing, and they are not afraid of it;
  3. You have a simple one-page union-free action plan. 

Call me here at our St. Charles office at (630) 377-1554 if you would like to talk about this or send me an email at riwessels@wesselssherman.com.

Wednesday, October 21, 2015

Al Piemonte Chevy Strike – 6th Longest On-going Strike in America

October 2015
By Richard H. Wessels, Esq.

The Al Piemonte Chevrolet dealership in East Dundee is now on the list of longest on-going strikes in America. The strike is America’s 6th longest. The Mechanics Local 701 strike has now been going on for about 15 months. It is a first contract situation. The scenario is pretty typical.

In late March of 2014, Automobile Mechanics Local 701 petitioned for an election to try to represent the Al Piemonte mechanics. There were nine auto mechanics in the unit. In May of 2014, a majority of the men voted for the union. The negotiations lasted only a few months. Local 701 called a strike on July 9, 2014.

Over Labor Day weekend 2014, after the strike had gone on then for about nine weeks, Local 701 put together a Labor Day rally with other unions to try to pep up the mechanics. There is a lengthy YouTube video of this which you can see on the internet. There is an interview with a couple of mechanics who you can clearly see are starting to get a bit tired of nine weeks of striking. If only they knew one year later they would still be walking the picket line!

The strike went on and on and on. Finally, at the end of January, 2015, the union made what is known as an unconditional offer to return to work. This means that the union is giving up. The men wanted to return to work at their old terms and conditions. But the dealership said it was too late. The men had already been permanently replaced.
NLRB litigation followed and is on-going. The issue, of course, is whether or not this is technically an unfair labor practice strike. And, if it is, the strikers would have a right to displace those mechanics who were hired to replace them. In any event, as of today, the strike is continuing and is going into its 16th month.

As a practical note for those interested in countering union organizing campaigns, the potential for strikes is a powerful argument for employers to persuade voters to vote no. Most studies have shown that the two most powerful arguments used by employers in organizing campaigns are the obligation to pay union dues and the potential for strikes. You might want to check out a video that we took of the Al Piemonte strike. We used it in a recent successful counter-organizing campaign in metro Chicago. It is certainly not professionally done and the audio is hard to hear, but you might want to take a look at it nonetheless. It’s only a couple of minutes long. Contact us if you would like to view the video.

Questions/Comments? Contact Dick Wessels at the St. Charles office of Wessels Sherman at riwessels@wesselssherman.com or (630) 377-1554

Illinois Equal Pay Act Expanded to Cover ALL Employers!

October 2015
By Anthony J. Caruso, Jr., Esq.

Unfortunately for employers in Illinois, the Illinois Equal Pay Act has sharper teeth!

On August 20, 2015, Illinois Governor Bruce Rauner signed an amendment to the Illinois Equal Pay Act expanding coverage to all employers, instead of employers with four or more employees.

In addition, the revised Illinois Equal Pay Act increases the maximum civil penalties for Illinois employers as shown below:



Less than Four Employees
Four or More Employees
First Violation
Not to exceed $500
Not to exceed $2,500
Second Violation
Not to exceed $2,500
Not to exceed $3,000
Third or subsequent violation
Not to exceed $5,000
Not to exceed $5,000

The above changes in Illinois law will become effective on January 1, 2016.

Questions? Contact Attorney Anthony J. Caruso Jr. of Wessels Sherman's St. Charles office at (630) 377-1554 or via e-mail ancaruso@wesselssherman.com.

Warning to Illinois Employers: Don’t Confuse the IDES Notice of Determination & Assessment with the IDES Audit Findings Letter or Audit Results Letter!!

October 2015
By Nancy E. Joerg, Esq.

Confusion Alert!! Over the many years in which I have been assisting Illinois companies who are audited by the Illinois Department of Employment Security (IDES), some of the most tragic circumstances are when the company being audited inadvertently fails to protest the IDES Notice of Determination and Assessment (tax bill) because they did not recognize the document itself!

The purpose of this article is to warn the unsuspecting reader that there are several kinds of confusing letters that the IDES will mail to the company being audited after the IDES audit has concluded.


EXIT INTERVIEW: The “exit interview” as given by the auditor signals the true end of the IDES audit. The “exit interview” is usually conducted by phone (the auditor speaks in detail to the individual whom the auditor has been working with during the audit). The auditor goes over all of his or her conclusions from the audit. For example, the auditor might explain why he or she believes ten of the independent contractors in the audit year should have been reported as employees to the IDES. Surprisingly, the auditor does not give a dollar figure as to money now owed!

After the exit interview, several poorly explained letters come in the mail to the company over approximately four weeks, and this process is extremely confusing to the company.

AUDIT FINDINGS LETTER: After an IDES audit is concluded, usually the first letter that comes in the mail from the IDES is called the “Audit Findings” letter. The Audit Findings letter cannot be protested by the Company and is purely informational and often confusing!

The Audit Findings Letter contains a chart which shows the taxable wages that have resulted from the “unreported payroll.” The unreported payroll is the payroll the company should have reported to the IDES for the audit year, but failed to do so (either because the company made a mistake or because the company was in error (per the auditor!) using independent contractors who should have been treated as employees for IDES purposes).

Below is a sample chart from an Audit Findings Letter:


Reported
Per Audit
Unreported
Over-Reported
Net Change
Total
Payroll
$48,511.01
$78,062.51
$29,551.50
$0.00
$29,551.50
Taxable Wages
$12,900.00
$40,145.50


$27,245.50
# Workers
 1
 4
 3



Surprisingly, the Audit Findings letter does not tell how much money the company will be required to pay as a result of the audit. The Audit Findings letter is very limited -- it really only communicates the amount of wages that the company should have treated as taxable wages for purposes of sending in contributions to the IDES for the year in question. Clients find this letter very unsatisfactory.

AUDIT RESULTS LETTER: The next letter that usually comes in the mail is called the “Audit Results” letter. It is sent by an IDES Revenue Supervisor. Be aware that often the Audit Results letter is a cover letter of explanation to the Notice of Determination and Assessment (in other words, you may receive both the Audit Results letter AND the Notice of Determination and Assessment at the same time!).

The Audit Results letter re-states some of the information provided in the Audit Findings letter by once again showing the total wages under-reported and the taxable wages under-reported. Enclosed with the Audit Results letter are the Field Contribution Reports. The Field Contribution Reports show, quarter by quarter, the taxable wages and the contributions due. The Field Contribution Reports also show the individual worker changes per the audit.

The company does not have to respond in any way to the Audit Results letter (again, informational only!), but the company can (and usually should) protest the IDES Notice of Determination and Assessment (tax bill) when it does come in the mail—and the Notice of Determination & Assessment often comes with the Audit Results letter.

NOTICE OF DETERMINATION & ASSESSMENT: The IDES sends the Notice of Determination and Assessment (tax bill) via certified mail so that the IDES has solid proof that the company was served on a certain date.

Then, the company has only 20 short days from the mailing date of the Notice of Determination & Assessment in which to timely protest the Notice of Determination and Assessment.

The Notice of Determination and Assessment (tax bill) shows 1) how much the company owes the IDES for back contributions that were not paid, 2) how much the company owes in interest (24% per year, 2% per month), and 3) the total amount due.

Note that the company can pay and also protest. Paying the Determination & Assessment to the IDES does not in any way impact the ability to effectively protest the Determination & Assessment and go forward to an Administrative Hearing.

On the other hand, if the company decides to protest and doesn’t wish to pay, the company can make that business decision. The amount owed to the IDES will continue to accrue at the 2% per month interest rate. Of course, if the company decides not to protest, then the contributions and interest which resulted from the audit will be due and owing to the IDES. If the company does not pay, a collection agency for the IDES starts making phone calls to the company.

There are payment plans that companies can sometimes arrange with the IDES. These payment plans are developed on a case-by-case basis with the IDES and usually require some money up front.

WARNING ABOUT MULTIPLE DETERMINATIONS & ASSESSMENTS: It used to be that just one Determination & Assessment would be issued to cover the entire time frame of the audit. However, sometimes the IDES sends (with no warning or notice!) multiple Determinations & Assessments to the Company for different quarters, years, etc.

Some poor folks have mistakenly thought that the multiple Determinations & Assessments were merely duplicative, and they therefore did not protest each Determination & Assessment. They therefore lost all rights to appeal the audit results covered by the time periods that were not protested. Because they could no longer appeal, the Determination & Assessment became final, due and owing to the IDES. A terrible experience!

Be sure to timely protest EACH AND EVERY Determination & Assessment. Even one day late is fatal to the ability to appeal.

The real message of this article is for companies to immediately open any and all mail that comes from the IDES. Look to see whether or not it is correspondence that needs to be protested in a timely manner. Scrutinize the documents for due dates.

For assistance with an IDES audit or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Monday, October 19, 2015

The Holiday Season Will Be Here Soon

October 2015
By Walter J. Liszka, Esq.

It is not too early to begin “thinking and preparing” for the Holiday Season and the inevitable “Business Holiday Party.” There is no doubt that the festive season of November and December calls out every year for a business celebration and it is incumbent upon all Employers to be well prepared. Do not forget that in our highly litigious society, individuals are always looking to “stick it to someone” and enhance their financial standing. Employers may be liable for injuries caused to third parties under the legal doctrine of Respondeat Superior and therefore, any Employer related activity must be well planned and controlled.

Here are a few suggestions for your “Holiday Festivities” for this calendar year:

Alcohol:

Alcohol consumption is considered to go hand in hand with any party and if you were to eliminate alcohol completely, you could (would?) dampen the morale and spirit of those attending. This does not mean that you have to have an “open bar for six hours.” You can limit the consumption of alcohol by eliminating hard spirits completely, having wine and beer as your “alcohol,” or further limit the consumption of alcohol through the issuance of drink tickets (remember employees can exchange their drink tickets with their friends) with a large number of non-alcoholic beverage tickets. You can also assure that sufficient food is available and passed around to help control alcohol consumption and absorption. As well, some employers consider the “use of incentives” to individuals to act as designated drivers or provide cab fare. As a final suggestion put an exact time schedule on the event (12:00 PM - 3:00 PM; 4:00 PM – 7:00 PM) to limit the drinking time.

Compensation and Bonuses:

Based on recent NLRB decisions that suggest that you cannot prohibit employees from discussing wage related issues, consider year end salary adjustments and bonuses after the conclusion of the holiday party. No one needs a scene or confrontation related to “Joe got a bigger raise (or bonus) than me.”

Selfies:

In our current society and the prevalence of cell phone cameras, make sure that your employees are cognizant that there may be privacy issues involving other employees and that the snapping of a picture or video of themselves and/or others may be inappropriate. Also, on the party invitation (more about this later in the article) suggest to employees that this is a festive, but private event, and social posting may not be appropriate.

Time of Party and Location:


Give strong consideration to having the party at a public facility rather than your office. The public location has professional employees who provide food service and drinks and also will provide a potential “barrier to liability” with regard to third party liability. If it is your belief that the party should be at the office locale, it is strongly recommended that the party be during the week and during normal business hours so that “office policies and protocols” would still apply. Based on the author’s experience, a “during the week and on normal business hours” event drastically cuts back on “bad behavior and unfortunate incidents.”

Spouses and Significant Others:

There is no doubt that the presence of a spouse or significant other may ameliorate certain behaviors. In fact, it may be an adjunct to boosting the morale of your employees and rewarding them for a job well done if the spouse or significant other is there to celebrate with them. This may provide the correct atmosphere to keep the party disciplined and professional.

Company Policies:

Whether the holiday party is held at your location or a public facility, with the party invitation make sure that you remind employees of the workplace policies and procedures that will apply and that the company will not tolerate inappropriate behavior and violations of its policies. As previously suggested, this is the appropriate place to also suggest social media controls.

Holiday seasons are always festive and any event is set up to bring “good cheer.” A well planned and controlled holiday party will add, rather than detract, from these festivities.

Questions? Contact Walter J. Liszka, Managing Shareholder of the Chicago office of Wessels Sherman at waliszka@wesselssherman.com or (312) 629-9300.

ACA FAQ of the Month: What is the PACE Act, and How Will It Affect Our Business?

October 2015
By Peter E. Hansen, Esq.

The Protecting Affordable Coverage for Employees (“PACE”) Act, passed unanimously by both the House and Senate and signed by President Obama on October 7, 2015, effectively amends the ACA’s definition of “small employer” in 2016 – for the purpose of purchasing health insurance coverage only. In brief, employers with fewer than 101 employees were classified as part of the small group market, which is subject to several requirements that do not apply to the large group market. This means that employers with more than 50 but fewer than 100 employees would be subject to penalties for failing to offer coverage to their employees, but would not receive the benefits of purchasing coverage in the large group market. Fortunately, the PACE Act changed that.

So, how will the PACE Act affect your business? In terms of ACA compliance, it will not – rather than impact employer obligations, the PACE Act impacts health insurance market reform provisions. The PACE Act’s primary purpose is to protect employers with more than 50 but fewer than 100 employees from market reforms that likely would have significantly increased the cost of coverage – meaning that such employers will not face the expenses they otherwise would have.

Questions? Suggestion for a future ACA FAQ of the Month? Please contact WS Attorney Peter E. Hansen at (262) 560-9696, or email pehansen@wesselssherman.com.

Documenting an Employee Termination: Better Late than Never!!!


October 2015
By Nancy E. Joerg, Esq.

Many clients call me and apologize for the fact that they have failed to document the poor performance of an employee who has, in fact, now been fired. Now, the client is starting to worry that they have no documentation of any kind to show how terrible this ex-employee’s performance was (and why the client finally fired the employee in question).

My response is almost always the same: “Don’t worry. It is not too late. You can create a post-termination record of the disappointing work history, persistent performance issues, attempts to counsel, and reasons for termination.”

The goal of documentation is to show, optimally “pre-litigation”, that the company had a “legitimate business reason” for firing the employee. This can still be done effectively AFTER the employee has been fired.

DRAFTING POST-TERMINATION FILE MEMO: A post-termination file memo should be carefully drafted by someone in the company who is fully familiar with the facts. Such a memo should recount many of the serious performance issues, any attempts at discipline and counseling, any verbal warnings, etc. The memo should include dates (even if approximate), witnesses (co-workers or supervisors), what was said (if appropriate), what was done, etc.

When it comes to describing the decision to finally terminate the employee, it is very helpful and important to list the name of the decision-maker (or, if, there were several, who were they and what were their job titles and their roles in the decision). If there were several meetings or discussions about the termination, give those dates, participants, and who said what and why.

LEGITIMATE BUSINESS REASON: All of this detail in the memo will help to make it clear that the employee was terminated for a “legitimate business reason” and not because the employee was a whistle blower, or a certain age, or a certain religion, or because of a disability etc.

INTENTIONAL AND WILLFUL MISCONDUCT: Another function of a post-termination memo is to state the “intentional and willful” nature of the misconduct, if this is in fact the situation. If the misconduct was not negligent but rather intentional, be sure to emphasize this. Deliberate misconduct, rather than careless or negligent misconduct, can be the central legal issue in a battle over unemployment insurance benefits. Of course, in some cases, the poor performance is not deliberate misconduct, so this issue may not be included in every post-termination memo.

For assistance with drafting a post-termination memo or to discuss the surrounding issues of a termination, contact Attorney Nancy E. Joerg, Managing Shareholder of the St. Charles, IL office at (630) 377-1554 or najoerg@wesselssherman.com.

NLRB-At it Again!

October 2015
By Walter J. Liszka, Esq.

Since the “packing of the NLRB” by President Obama, long established precedents of the National Labor Relations Board have been falling like flies as President Obama’s union protection agenda runs full force (joint employer standards; representation issues; etc.). There is no doubt in the author’s mind that President Obama deserves his union card!!

In a recent decision issued by the NLRB (June 26, 2015) in the case of American Baptist Homes of the West d/b/a Piedmont Gardens and Service Employees International Union, United Healthcare Workers-West, 32 NLRB No. 139 (32-CA-063475) the Board has rent asunder a thirty-eight (38) year precedent that established a bright line rule that allowed employers not to provide to a union copies of witness statements taken by an employer during an investigation regarding employee workplace misconduct. The Democratic NLRB has seen fit to invalidate this bright line standard established in Anheuser-Busch Inc., 237 NLRB 982 (1978) and replace it with a “balancing test” that would balance the needs of the union for the alleged requested information (actual employee statements) against any “legitimate and substantial confidentiality interests” established by the involved employer. Based on the overly “pro union bent” of the NLRB, how many cases will find “legitimate and substantial confidentiality interest” in favor of an Employer? In the opinion of the author, not very many!!

It is indeed interesting to note that this decision in June 2015 is, in reality, the second decision of the NLRB in this case. In point of fact, the exact same decision was made by the “Obama packed NLRB” in December of 2012 that was later overturned by the United States Supreme Court in NLRB v. Noel Canning, 134 S. Ct. 2550 (2014) which held that this decision, as well as approximately three hundred (300) other NLRB decisions, were illegal predicated on the fact that certain Obama appointments to the NLRB were unconstitutional. Unfortunately, in this case, the time from 2012 to 2015 has not been a sufficient time passage to allow the “Obama NLRB” to come to a better decision.

What this decision basically means is that it is going to be difficult, if not impossible, for an employer to investigate workplace misconduct and procure from its employees information and written statements detailing what they observed. The employer will not be able to promise “confidentiality of the statement” to any employee! Which employee, in his/her right mind, would present a statement identifying workplace misconduct by another employee if, in fact, that statement must be given to the union for their review? Again, the NLRB’s lack of business sense comes to the fore.

Simply stated, this decision goes a long way of making a thorough employer investigation of work place misconduct (think sexual harassment or intentional destruction of product) impossible!

Questions? Contact Walter J. Liszka, Managing Shareholder of the Chicago office of Wessels Sherman at waliszka@wesselssherman.com or (312) 629-9300.