The persistent problem of undocumented workers presenting plausible (but ultimately fraudulent) employment verification documents to employers has taken a new twist in the COVID-19 pandemic: a rise in imposter claims for unemployment insurance.

Imposter claims are a type of identity theft; someone uses someone else’s personal information, including Social Security numbers, to collect unemployment compensation. COVID-19 payments are higher than regular unemployment payments and presents more of an incentive for imposter fraud – and states are experiencing more of it. Rhode Island has reported 2,000 such claims. Oklahoma has seen a steep rise. And these are likely just the tip of the iceberg.

Imposter fraud can be discovered in several ways. Individuals who need to apply for unemployment find out that they cannot do so because someone else is already collecting under their Social Security number. Individuals might also be denied unemployment benefits because the state agency’s system sees that someone else is still working and being paid under that same Social Security number. Alternatively, employers may receive notices of claims for employees who have not been laid off. It is even possible that applicants denied unemployment could contact the employer of the imposter and thereby inform the employer of the fraud.

What should employers do if they become aware that an employee is a victim of imposter fraud?

But what if you receive information claiming that one of your employees is the “imposter”?

Employers are increasingly receiving phone calls and letters from individuals claiming that an employee is working with fraudulent documentation. Even so, employers should not take any precipitous action adversely affecting the employee’s job. The non-employee’s alarming claim may itself be false, mistaken, or part of a scam to get personal identifying information about one of your employees. Furthermore, the employee may not have intentionally provided incorrect information.

The best path before discussing the accusation with the employee is to first check the employment records.

  • Check the employee’s Form I-9 record. The Form I-9 may have errors on it that create a reason to ask the employee to update the documentation, which can then be checked. If the List A, B, or C documentation has been copied, legal counsel can assist you in examining the authenticity of the documentation.
  • Check payroll records and other company records to determine if there have been other complaints or indications that the claim has validity.

Ultimately, the decision about how to proceed will be based on all the specific facts and circumstances regarding the employee and your company’s history regarding employment verification issues. It is important to make an individualized decision and proceed cautiously to avoid violating document abuse or discrimination restrictions or creating a potential discrimination claim by the employee.

Jackson Lewis attorneys are available to help you determine the best course of action.

 

Under the California Workers’ Compensation Act (“the Act”), employers must carry workers’ compensation insurance for employee injuries or illnesses which “arise out of and in the course of” employment. The Act, first passed in 1911 and amended over the years by the Legislature, provides a comprehensive system for administering claims, including the provision of disability benefits and the payment for associated medical expenses for work-related injuries.

Now comes the COVID-19 pandemic and a panoply of emergency orders by governors across the country. On May 6, 2020, Governor Newsom signed Executive Order #N-62-20 which creates a presumption that any COVID-19-related illness of an employee shall be presumed to arise out of and in the course of the employment for purposes of awarding workers’ compensation benefits if certain conditions are met.

Those conditions include the following:

  1. The employee tested positive for or was diagnosed with COVID19 within 14 days after a day that the employee performed labor or services at the employee’s place of employment at the employer’s direction;
  2. The day referenced in subparagraph (a) on which the employee performed labor or services at the employee’s place of employment at the employer’s direction was on or after March 19, 2020;
  3. The employee’s place of employment referenced in subparagraphs (a) and (b) was not the employee’s home or residence; and
  4. Where subparagraph (a) is satisfied through a diagnosis of COVID-19, the diagnosis was done by a physician who holds a physician and surgeon license issued by the California Medical Board, and that diagnosis is confirmed by further testing within 30 days of the date of the diagnosis.

Thus, the Governor has taken the extraordinary step of presuming a workplace injury without specific evidence of job-causation.  While the scope and legality of the new Executive Order may be subject to challenge, it is incumbent upon the California employer to review and enforce workplace safety, in all areas, and to specifically protect against the risk of employee exposure to a communicable disease, thereby avoiding added liability and costs associated with job illness or injury claims.

Jackson Lewis’ Coronavirus Task Force will continue to monitor changes in the law pertaining to COVID-19. Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

It has been five years since Save Jobs USA, a group of technology workers who claim to have been displaced by foreign nationals with H-4 EADs challenged the Obama Administration’s authority to enact the H-4 EAD Rule. In the years since that filing, the case has gone back and forth between the D.C. District Court and the U.S. Court of Appeals for the D.C. Circuit. The Trump Administration (which did not really want to defend the rule) requested more than six “pauses” in the litigation based on its assertions (starting in 2017) that a new rule rescinding H-4 EADs would soon be published. That new rule has been stuck in the Office of Budget Management (OMB) review process for more than a year, but it remains on the DHS Regulatory Agenda with an expected spring 2020 publication date.

So, DHS’s opposition to a motion for an injunction that would have stopped the agency from issuing or renewing H-4 EADs appeared to be an about face. It is possible OMB is telling the Administration the Rule does not make sense from an economic standpoint – even during high unemployment and the Administration’s other ongoing efforts to limit immigration. But the Trump Administration may have something else in mind.

In its brief opposing the injunction, DHS argued the elements for granting an injunction had not been met. The brief stated:

  • There is no showing of irreparable harm because Save Jobs’ supporting affidavit says nothing about the present job market or threat of impending economic harm;
  • There is no showing of a likelihood of success on the merits because the court had indicated it “’would likely conclude that DHS’s interpretation of its authority under the INA is not unreasonable, and the H-4 Rule is a valid exercise of this rulemaking authority.’”
  • The balance of harms and public interest prongs are not met because “[i]njunctions to the enforcement of such regulations ‘severely undermine . . . USCIS’s authority to make regulatory determination about the issuance of [employment-based] visas’”; and
  • There is a negative consequence where the court is being asked to “substitute its judgment for that of the appropriate agency.”

In order to enact more restrictions on immigration and work authorization, the Administration may want to ultimately argue that:

  • The H-4 Rule is a valid exercise of rulemaking authority, because it wants its new rule (rescinding H-4 EADs) to be a valid exercise of rulemaking authority;
  • USCIS has the authority to make regulatory determinations about visas;
  • Courts should not substitute their judgment for that of the agency; and
  • In these times of COVID-19, the current economic picture must be kept in view.

The Trump Administration’s strategy remains to be seen, but Jackson Lewis will continue to follow this case and provide updates as they become available.

The Puerto Rico Senate has approved unanimously Senate Bill No. 1577 (SB 1577), which seeks to amend Section 9 of Puerto Rico Act No. 44 of July 2, 1985, known as the “Law Prohibiting Discrimination Against Disabled Persons,” to expand its protection and confer certain types of employees the right to a reasonable accommodation in the workplace during the COVID-19 pandemic. The House of Representatives is considering the bill.

SB 1577 would give employees the right to request a reasonable accommodation if the employee has a disease or health condition identified by the Centers for Disease Control and Prevention (CDC) or the Department of Health as one that increases the individual’s risk of becoming seriously ill or dying if they contract COVID-19.

For more information please see our full report.

Many employers facing economic challenges because of COVID-19 have considered several possibilities for reducing their contributions to their 401(k) plans.  Whether freezing safe harbor matching or nonelective contributions or deciding against making discretionary matching and/or profit-sharing contributions, the goal has been the same: reduce their employee benefits costs.

What many employers have not focused on doing, however, is ensuring that employee contributions (elective deferrals and loan repayments) to their 401(k) plans (“Employee Contributions”) continue to be deposited into the plans in a timely manner.  The United States Department of Labor (the “DOL”) requires that an employer remit Employee Contributions to a 401(k) plan “on the earliest date on which such amounts can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the amounts were paid to or withheld by the employer.”  In the case of a “small” plan, i.e., a plan with fewer than 100 participants, the DOL has established a safe harbor under which the remittance of Employee Contributions is deemed timely if made within seven business days following the pay date.  In the case of a “large” plan, i.e., a plan with at least 100 participants, the DOL generally will look at all deposits made for the plan year and, absent unusual circumstances, generally will take the position that the quickest remittance is what is required for all remittances.  The 15-business day outer limit is reserved for circumstances truly beyond the control of the employer.

Recently, and in light of COVID-19, the DOL, in EBSA Disaster Relief Notice 2020-01 (the “Notice”), issued guidance intended to relax the timely remittance requirement for employers unable to satisfy the general rules described above: “The Department [DOL] recognizes that some employers and service providers may not be able to forward participant payments and withholdings to employee pension benefit plans within prescribed timeframes during the period beginning on March 1, 2020, and ending on the 60th day following the announced end of the National Emergency. In such instances, the Department will not – solely on the basis of a failure attributable to the COVID-19 outbreak – take enforcement action regarding a temporary delay in forwarding such payments or contributions to the plan. Employers and service providers must act reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.”  (Emphasis added.)

The Notice requires that failing to remit Employee Contributions to the plan in a timely manner be “solely on the basis of a failure attributable to the COVID-19 outbreak.”  Given this language, we recommend that an employer that cannot deposit or have its payroll provider deposit Elective Deferrals into the plan in a timely manner solely due to a COVID-19 issue document the existence thereof and how the Employee Contributions were deposited into the plan as soon as possible after the COVID-19 issue was resolved.  Potential examples of COVID-19 failures that, in and of themselves, might cause untimely deposits under the general rules include furloughing the employer’s payroll staff or staffing shortages at the payroll provider.

Any employer sponsoring a 401(k) plan should care deeply about ensuring the timely remittance of Employee Contributions.  First, an untimely remittance must be reported on the plan’s annual IRS Form 5500 filing.  Depending on the amount reported, a DOL or Internal Revenue Service (“IRS”) audit of the plan could be triggered, as late remittances are higher audit risk items on the Form 5500.

Second, an untimely remittance of Employee Contributions is deemed to be an interest-free loan from plan participants to the employer sponsoring the plan.  Such a deemed loan constitutes a prohibited transaction under both the Internal Revenue Code (the “Code”) and the federal pension law, the Employee Retirement Income Security Act of 1974 (“ERISA”).  Penalties under the Code amount to 15% of the earnings that the late Employee Contributions would have generated each year, compounded annually; this penalty increases to 100% of the foregone earnings if the IRS discovers the untimely remittance before the employer remits the Employee Contributions and required earnings to the plan.  The ERISA penalty would be 20% of the foregone interest.

Third, employees participating in the 401(k) plan tend not to look kindly upon untimely remittances of Employee Contributions (it’s their money!), especially if the employer is a “repeat offender.”  Not only does this outlook increase audit risk, it creates employee relations issues that can be difficult to navigate.

Please contact your Jackson Lewis P.C. employee benefits attorney to discuss whether you qualify, and how to document your qualification, for the relief provided in the Notice, and certainly if you have untimely remittances of Employee Contributions.

The Department of Homeland Security announced that on May 14, 2020, a new temporary rule will go into effect giving employers in the food processing industry more flexibility to hire H-2B workers who are essential to maintaining the food supply chain.

Work essential to the food supply chain includes, but is not limited to, work related to:

  • Processing, manufacturing, and packaging of human and animal food;
  • Transporting human and animal food from farms, or manufacturing or processing plants, to distributors and end sellers; and
  • Selling of human and animal food through a variety of sellers or retail establishments, including restaurants.

Recognizing the need to keep the food supply operating, DHS is doing for some H-2B employers what it previously did for agricultural employers who rely on H-2A workers.

Until at least September 11, 2020:

  • Workers in the U.S. in valid H-2B status may start working for new employers while the new employers’ petitions are pending with USCIS;
  • The temporary employment authorization will last for up to 60 days or until the start date of the petition, whichever is later;
  • The employer must attest that the work performed will be temporary and essential to the U.S. food supply chain; and
  • The Department of Labor must have acknowledged receipt of a labor certification from the employer for the position.

The new rule will also allow H-2B workers who are essential to the U.S. food supply chain to work and stay in the U.S. beyond the usual three-year time limit. Without this dispensation, H-2B workers would have to leave the U.S. for at least three months before returning.

H-2B visas are for temporary, seasonal, non-agricultural workers and are used primarily in the tourist, hospitality, landscaping, and construction industries. Early in 2020, demand for H-2B visas was very high. The 33,000 visas available for the spring/summer period ran out as soon as they became available. Congress authorized DHS to make more H-2B visas available, but in April, DHS announced that extra H-2B visas had been put on hold because of skyrocketing unemployment claims in the U.S. due to the COVID-19 pandemic. Given the Administration’s growing concern about the U.S. food supply chain, flexibility has become necessary.

Please contact your Jackson Lewis attorney if you have questions about how the new rule will apply.

 

New York Governor Andrew Cuomo’s Executive Order No. 202.30 (EO 202.30) implements significant changes for nursing homes (NHs) and adult care facilities (ACFs) in the state, including the testing of all personnel for COVID-19 twice a week.

The changes include:

  • NHs and ACFs must test or arrange testing all personnel, including all employees, contract staff, medical staff, operators, and administrators, for COVID-19 twice per week. The facility’s implementation plan must be filed with the Department of Health (DOH) no later than 5:00 p.m. on May 13, 2020. Reportedly, filing may be done by a survey in the Health Electronic Response Data System application on the Health Commerce System.
  • The operator and the administrator of all NHs and ACFs must submit to the DOH a certification of compliance with EO 202.30, all other applicable Executive Orders, and the directives of the Commissioner of Health. This Certification must be filed with the DOH no later than May 15, 2020.
  • Any NH/ACF personnel who refuse to be tested will be considered to have outdated or incomplete health assessments and, therefore, be prohibited from providing services within the NH or ACF.
  • General hospitals must perform a diagnostic test for COVID-19 and obtain a negative result before discharging a patient to a NH and the NH operator or administrator must certify it is able to properly care for such patient before any discharge from a general hospital to a NH.

DOH Guidance

The DOH has issued Dear Administrator Letter (DAL) ACF #20-14 / NH-20-07 to provide additional guidance on the testing and certification requirements.

The DAL requires positive test results be reported to the DOH by 5:00 p.m. the day following the receipt of the test results and the personnel must remain at home in accordance with DOH guidelines and those of the Local Health Department (unless the local requirements are inconsistent with DOH guidelines). The current guidelines provide that asymptomatic employees are ineligible to return to work for 14 days from the date of the first positive test, and symptomatic employees may not return to work until 14 days after the onset of symptoms, provided at least 72 hours have passed since resolution of fever without the use of fever-reducing medications and respiratory symptoms are improving.

The DAL also confirms that a NH/ACF may conduct the testing itself, contract for testing, or direct personnel to community test sites, although if it directs personnel elsewhere, the NH/ACF must implement procedures to obtain the test results to remain in compliance with EO 202.30. The DAL also provides the certification form that must be submitted by May 15th.

The DOH’s FAQ #1, among other things, clarifies that employees working at NH/ACF three days per week or less need only be tested once per week and that the testing requirement does not apply to home health and hospice agency staff serving patients who reside in a NH/ACF. It also points out that employees who have documentation of a positive diagnostic test for COVID-19 or a positive serologic test for IgG against SARS-CoV-2 are exempt from the testing requirement.

Critically, the FAQ states that NHs/ACFs are responsible for providing testing for their employees, including the costs of testing. While the DOH points out that a NH/ACF may be able to make use of community testing sites operated by the state at no charge, this raises administrative, legal and indirect cost issues that may preclude it being a realistic option.

As of early this week, nearly 70 class actions have been filed by students against colleges and universities challenging their institutions’ responses to the COVID-19 crisis. The students argue they are entitled to refunds because the institution failed to provide them with all the benefits of an on-campus education for which they paid. These putative class action lawsuits generally allege: (i) the students paid for amenities such as room and board, dining plans, and access to facilities, which they cannot receive because they are not on campus; (ii) the quality of their education has been lessened by the forced, online curricula because studies show that students learn better in classrooms than online and because they are unable to gain the benefit of personal connections with faculty and classmates; (iii) their degree will be less valuable to them in the marketplace because a degree from an online program is not as valuable as a degree from an in-person program.

To read more about these cases, including potential defenses, please click here.

Jackson Lewis’ team dedicated to defending these claims for higher education clients nationwide consists of members from the Class Actions and Complex Litigation and Higher Education Groups. Our team includes seasoned class action litigators, as well as higher education attorneys with decades of experience defending claims brought by students against colleges and universities. If you have any questions, please reach out for more information.

The National Labor Relations Board (NLRB) has lifted its stay of a mail ballot election ordered by a Regional Director and denied the employer’s Request for Review of the Regional Director’s decision, based on the COVID-19 pandemic, to order a mail, rather than manual, ballot election. Atlas Pacific Engineering Company, 27-RC-258742 (May 8, 2020).

On May 1, 2020, the NLRB had granted the employer’s Emergency Motion to Stay the Election “to allow the Board time to fully consider the issues presented by the Regional Director’s direction of a mail ballot election.” Atlas Pacific Engineering Company, 27-RC-258742 (May 1, 2020). The employer also had filed a Request for Review (appeal) of the Regional Director’s decision.

In its May 8 decision, the NLRB relied on San Diego Gas & Electric, 325 NLRB 1143, 1145 (1998), where it held that, although manual ballot elections normally should be held, “there may be other relevant factors that the Regional Director may consider in making this decision” and that “extraordinary circumstances” could permit a Regional Director to exercise their discretion outside of the guidelines in that decision.

The NLRB once again noted its interest in “addressing the normal criteria for mail balloting in a future appropriate proceeding.” For more on this, see our blog post, NLRB Open to Changing Criteria for Mail Ballot Elections.

The employer was an essential business, so its employees were reporting for work during the COVID-19 pandemic. The employer had laid out a detailed plan for conducting a manual election in a safe manner.

In the NLRB’s view, the Regional Director’s main concern about conducting a manual ballot was NLRB employees’ safety. The NLRB acknowledged that it had “not previously found, under San Diego Gas & Electric, that internal Agency considerations constitute extraordinary circumstances that would warrant conducting a mail-ballot election outside of the guidelines specified therein.” The NLRB appeared to sidestep that issue, and decided that a mail-ballot election was warranted on other grounds:

the extraordinary federal, state, and local government directives that have limited nonessential travel, required the closure of nonessential businesses, and resulted in a determination that the regional office charged with conducting this election should remain on mandatory telework. Mandatory telework in the regional office is based on the Agency’s assessment of current Covid-19 pandemic conditions in the local area. Under all of the foregoing circumstances, we are satisfied that the Regional Director did not abuse her discretion in ordering a mail-ballot election here.

As we noted in our Special Report, Plan Ahead, Employers: NLRB Ordering Mail Ballot Elections Because of COVID-19 Pandemic, employers will have a difficult time convincing Regional Directors that NLRB representation elections during the COVID-19 pandemic should be by manual, rather than mail, balloting. Indeed, a review of the Regional Director Decisions and Directions of Election confirms that. Atlas Pacific Engineering Company appears to ensure that pattern will continue.

Please contact a Jackson Lewis attorney with any questions.

Recent statements by Small Business Administration (SBA) and Treasury Department officials have confused many Paycheck Protection Program (PPP) borrowers and led many to return PPP funds or consider doing so. Finally, the SBA has issued FAQ 46, which should assuage many borrowers’ concerns.

Previously, the SBA notified borrowers through a number of pronouncements that they must consider “their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business” in determining whether their certification was made in good faith. This was a surprise as the certification in the PPP loan application that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant” did not appear problematic during the COVID-19 pandemic. This guidance, along with statements by Treasury officials (including Secretary Steven Mnuchin), led many employers to have serious reservations about their use of PPP funds.

The SBA’s FAQ 46 provides clear and welcome relief to PPP borrowers. The SBA has created a safe harbor for PPP borrowers of less than $2 million:

SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

SBA stated the safe harbor was appropriate because:

  • Such borrowers are generally less likely to have had access to adequate sources of liquidity;
  • It will promote economic certainty as PPP borrowers endeavor to retain and rehire employees; and
  • It will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.

Larger borrowers also got welcome relief, at least regarding the prospect of administrative enforcement. PPP borrowers of $2 million or more will need to demonstrate they had an “adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.” However, if a borrower lacked an adequate basis for the required certification about the necessity of the loan request, SBA will seek no relief beyond the repayment of the outstanding PPP loan balance with no loan forgiveness. Significantly, FAQ 46 provides, “[I]f the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning the necessity of the loan request.” This comes as a big relief with many borrowers concerned with civil (and possibly criminal) sanctions under the False Claims Act and other federal laws.

If you have questions about this latest guidance or any other aspect of the PPP, please contact Jackson Lewis.