Corporate Officers Held Not Liable for Wage Violations

California's Supreme Court recently rendered a decision addressing the issue of whether corporate officers are themselves "employers" liable for wage-and-hour violations committed by their employer. The Court held that officers are not personally liable for back wages or penalties associated with wage-and-hour violations.

In this case, Reynolds v. Bement, the plaintiff employee filed a lawsuit on behalf of himself and all other similarly situated employees of a chain of Earl Scheib automobile paint shops. He alleged that eight individuals, all of whom had been officers or directors of their corporate employer, had misclassified shop managers and assistant shop managers as exempt employees, thereby depriving them of overtime pay. He sought to hold the individual defendants personally liable for the damages on the basis of regulations that define "employer" as including any individual who "exercises control over the wages, hours, or working conditions of any person." The issue was whether the individual defendants fell within the definition of "employer" for purposes of a civil wage-and-hour lawsuit.

The Court noted that under the common law, corporate agents who are acting within the scope of their employment are not personally liable for a corporate employer's failure to pay its employees' wages. "It is 'well established that corporate agents and employees acting for and on behalf of a corporation cannot be held liable for inducing a breach of the corporation's contract….' and '[d]irectors or officers of a corporation do not incur personal liability for torts of the corporation merely by reason of their official position." The Court also noted that there is no direct statutory imposition of liability for corporate agents. Therefore, the court found that there were no grounds for holding the individual defendants personally liable for the plaintiff's alleged overtime claim in a civil lawsuit.

Unfortunately, corporate agents are not entirely out of the woods on this issue. The Court stated that it was not deciding whether the Labor Commissioner could use a definition of "employer" that includes corporate agents in administrative actions before the Labor Commissioner. Further, the Court noted that some statutes, specifically Labor Code section 558, specify penalties for wage-and-hour violations that are equal to the amount of any unpaid wages, and that individuals, even beyond corporate officers and directors, can be personally liable for those penalties.

What This Means for Employers: Those people empowered to set terms and conditions of employment or to oversee wage-and-hour issues for an employer must be vigilant in assuring the employer is complying with the myriad wage-and-hour laws their employer must obey. A good start is to audit the company's payroll practices to help identify and correct any existing problem areas and to help ensure future compliance. Failure to do so can be a costly mistake.

By Patrick Moody, law firm of Barsamian, Saqui & Moody (BS&M), one of two law firms contracted by FELS to provide legal help to FELS subscribers under the FELS Group Legal Services Plan. The goal of this article is to provide employers with current labor- and employment-law information. Its contents should neither be interpreted nor construed as legal advice or opinion. The reader should consult with BS&M at (559) 248-2360 in Fresno, (916) 782-8555 in Sacramento, or toll-free at (888) 322-2573, for individual responses to questions or concerns about a given situation.Visit BS&M's Web site at www.theemployerslawfirm.com/firm/.

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FELS Licensed as Private Investigator

To better serve its Labor Management Consultant (LMC) clients, FELS recently obtained a Private Investigator License from the State of California. Under the oversight of a qualified manager, our staff may now investigate employee misconduct and report the findings to the employee's company. Examples of employee misconduct are workplace violence, theft, dishonesty, and sexual harassment. FELS personnel may also investigate unfair labor practice charges.

The California Private Investigator Act regulates the activities of those doing business as private investigators in California. Unless specifically exempted, one engaging in the business of a private investigator must be licensed as such by the Department of Consumer Affairs' Bureau of Security & Investigative Services.

"Private investigator" is someone acting to obtain information about the identity, habits, conduct, business, occupation, honesty, integrity, credibility, knowledge, trustworthiness, efficiency, loyalty, activity, movement, whereabouts, affiliations, associations, transactions, acts, reputation, or character of any person. Among other things, the term also includes one who acts to investigate, obtain, and report to an employer information about the employer's employees involving questions of integrity, honesty, breach of rules, or other standards of performance of job duties.

In 2001, the state Department of Consumer Affairs issued an administrative interpretation that a non-attorney who independently contracts with an employer to conduct investigations of alleged workplace violations of unlawful discrimination or employer policy or procedure must be licensed as a private investigator.

As FELS is often asked to have its LMCs investigate and report on the misconduct of its clients' employees, FELS may now conduct those investigations as a licensed private investigator.

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ALRB Produces Heat-Illness PSA and Flyer

The California Agricultural Labor Relations Board has developed both a 30-second Public Service Announcement (PSA) and an informational flyer to help inform farm workers of their rights under the Agricultural Labor Relations Act (ALRA) when working in extreme heat.

Under the ALRA, employees have the right to act jointly to protest unsafe working conditions, including extreme heat or other weather related conditions. This protection extends to withholding labor to protest the unsafe conditions.

A print version of the PSA and a copy of the flyer appear below. Both documents have been translated into Spanish. This material is also available on the agency's website: www.alrb.ca. gov. For more inform contact Antonio Barbosa, Executive Secretary, ALRB at: jbarbosa@alrb.ca.gov or (916) 653-3741.

ALRB PSA:

Public Service Announcement

(30 Seconds)

Are you a farm worker?

You and your co-workers have the right to act together to protest working conditions that you feel are unsafe such as working in extreme heat without enough water, shade or breaks.

We are the Agricultural Labor Relations Board, a state government office that protects your rights.

Call the A-L-R-B at 1-800-449-3699 to learn more about your rights or if you think your rights have been violated. That's 1-800-449-3699.

ALRB Flyer:

Concerted Activity

The Agricultural Labor Relations Act (Act) gives farm workers the right to engage in concerted activity, which means the right to act together to improve their working lives. Under the Act, two or more employees can join together and request changes in working conditions, better wages, more benefits, etc. from their employer. It is important to note that the Act only protects workers in situations where two or more workers act together or on each others' behalf. Workers also have to right not to participate in concerted activity. It is their choice whether or not to join a group of fellow employees seeking changes in working conditions, support a union, or engage in other concerted activities.

Examples of concerted activity include:

Protesting or refusing to work in perceived unsafe conditions, such as extreme heat;

Speaking to the foreman or other representative of the employer on behalf of a group of workers about a pay raise or improved working conditions;

Talking to fellow workers about desired changes in wages or working conditions;

Assisting fellow employees who bring complaints or demands to the attention of management.

Farm Workers Do Not Have to Belong to a Union to Have a Right to Concerted Activity

Although the right to concerted activity includes the right to assist and join labor unions, a group of workers who are unaffiliated with a union may also work together to request changes in wages and other terms and conditions of employment.

It is Illegal for Employers to Fire or Otherwise Discipline Those who Engage in Concerted Activity

It is illegal for an employer to fire, lay off, demote or discriminate against a worker or group of workers because they have engaged in concerted activity. However, the Act only covers concerted activity. For example, usually an employee who does not like how he or she alone is being treated and complains to a supervisor, the Act will not provide protection from employer retaliation.

Employers Do Not Have to Meet the Employees' Demands

Employers are not required to give workers who engage in concerted activity what they ask for. However, the employer cannot punish the workers for joining together and making the requests. It also is important to note that the demands of the workers do not have to be reasonable to be protected. Also, some activities by employees such as violent acts or threats of violence may cause those employees to lose the Act's protection.

What to do if an Employer Fires or Disciplines Farm Workers Who Engage in Concerted Activity

It is an unfair labor practice (ULP) for an employer to threaten or punish workers because they have acted as a group to try to get higher wages or have engaged in other types of concerted activity. If this happens, a worker can go to the nearest Regional Office of the Agricultural Labor Relations Board (ALRB) and file an unfair labor practice charge (ULP charge). An agent from the ALRB will investigate the charge and take the proper action.

Charges are filed in the ALRB Regional Office that covers the county where the alleged ULP occurred. Forms for filing charges are available from any ALRB office. Charges must be filed no later than six months after the alleged ULP occurred.

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INS Form I-9 Mysteriously "Rebranded"

As a matter of routine, when government functions are changed and federal agencies given new monikers by act of Congress, the agencies and the affected public are often left with the detritus of stockpiled old forms bearing the former agency's official name. The logical bureaucratic solution is to publish the forms anew with the name of the successor agency at the masthead, while allowing the public a reasonable period to continue using the old form so that paper is not wasted and forests are not clear-cut any sooner than necessary.

Today, government forms are not merely published with the name of the new agency; they are instead "rebranded." Witness the June 21 proclamation by press release of U.S. Citizenship and Immigration Services (USCIS) and Immigration and Customs Enforcement (ICE) that announced the rebranding of the Employment Eligibility Verification (Form I-9) used by every U.S. employer to verify the employment eligibility of each newly hired employee. As these two units of the Department of Homeland Security (DHS) announced:

USCIS, an entity within Department of Homeland Security (DHS), presently maintains many of the immigration forms that USCIS and ICE inherited from the former INS [Immigration and Naturalization Service]. USCIS is currently rebranding these forms, including Form I-9, to reflect the transfer to DHS.

Aside from replacing outdated references to the Department of Justice and the former INS with references to DHS and its components, the current edition of Form I-9 is the same as the 11/21/91 edition.

When USCIS first issued its new version, the published Form I-9, despite the quote above, indeed contained a substantive change in Section 1 (the employee attestation portion of the form). The newly-released version of the form split a two-part attestation which every eligible employee could choose (namely, that he or she is "a citizen or national of the United States") into two separate choices. Under this new version, the employee could attest to being a U.S. citizen, a U.S. national , a Lawful Permanent Resident (or green card holder), or an alien with a time limit on the right to work in the United States. Thus, the employee could no longer equivocate in answering by checking the combined box (U.S. citizen or national) and must instead affirmatively choose one of the four options. The combination of both the "citizen" and "national" options into a single attestation box is significant because some aliens were able to avoid criminal responsibility for falsely claiming U.S. citizenship and the resulting loss of green-card eligibility.

So, where's the mystery? Well, it seems that from its original publication of the new Form I-9 to today, the USCIS quietly switched forms without providing an explanation. The new "new" Form I-9 again combines U.S. "citizen or national" into a single selection. To see for yourselves, take a look at the Form I-9 recently posted on the Web sites of two universities, the New Jersey Institute of Technology, and the University of Oklahoma -- both of which break out "citizen" and "national" as separate choices -- and compare it with the official version now published by USCIS, which inexplicably resumes the confusing combination of the two selections.

What did the USCIS and its sister enforcement agency, ICE, intend by this form-based sleight-of-hand? Surely, it would have been reasonable had the agencies announced an intention to rebrand Form I-9 and eliminate a loophole that allowed some unqualified individuals who falsely claimed U.S. citizenship to obtain green cards.

One possible explanation is that the agencies belatedly realized that a different form had mistakenly been published, perhaps one that had not yet been formally approved by the Office of Management and Budget under the Paperwork Reduction Act.

(By Angelo A. Paparelli. This article originally appeared on http://www.nation ofimmigrators.com, a public policy blog)

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ICE Farm Searches & Document Verification

In an effort to focus its resources on searching for terrorists, the Department of Homeland Security (DHS) requires its immigration agents to seek prior approval before opening any investigation of a worksite that is not related to the nation's "critical infrastructure," according to a report released June 21 from the Government Accountability Office.

In 2003, DHS's office of U.S. Immigration and Customs Enforcement (ICE) issued a memo "requiring field offices to request approval from ICE headquarters before opening any worksite enforcement investigation not related to the protection of critical infrastructure sites, such as investigations of farms and restaurants," the report said.

The report was issued in conjunction with a hearing on worksite enforcement of immigration law held by the House Judiciary Committee's Subcommittee on Immigration, Border Security, and Claims.

Witnesses at the hearing agreed that employers have very little chance of being caught or severely punished if they employ illegal immigrants.

According to Richard Stana, GAO's director of Homeland Security and Justice Issues, ICE "has discouraged worksite enforcement" of immigration law that does not relate to national security. Although the agency has apprehended about 1,000 illegal aliens employed at airports and nuclear power plants, Stana noted that ICE officials have not found as many terrorists as expected.

Stana said ICE's focus on critical infrastructure sites is part of the agency's policy in how to use its limited resources. He characterized the agents' focused worksite enforcement as "dispirited" and said morale is low.

When ICE does take action against an employer, "it's not worth much," Stana told the subcommittee. Often the fines, which can be as high as $11,000 per illegal employee, are reduced to the extent that "employers might view this as a cost of doing business." Subcommittee Chairman John Hostettler (R-Ind.) presented charts illustrating ICE's lack of enforcement of worksite immigration law.

The charts showed that in fiscal year 2004, ICE issued only three "notices of intent to fine" employers for worksite enforcement, compared with between 1,000 and 2,000 in fiscal years 1992 through 1998.

Stana confirmed that ICE has not collected those fines.

Employment Verification Pilot Program 'Shows Promise' The GAO report said ICE's voluntary pilot program allowing employers to electronically verify work authorization documents "shows promise for enhancing the employer verification process." Under the program, employers can check new hires' Social Security numbers against DHS and Social Security Administration databases to determine if those workers' documents are valid But, the report added, the pilot program system cannot detect cases of identity theft, in which an unauthorized worker presents an employer with a valid document owned by a different individual.

About 2,300 employers have registered to use the system, according to the GAO. Some lawmakers, including Senate Immigration Subcommittee Chairman John Cornyn (R-Texas), have proposed making the program mandatory for all employers as part of a broader immigration bill.

If the basic pilot program were to be expanded and become mandatory, DHS would need to devote significantly more resources to it than it currently has, Stana told the subcommittee. The system is run by DHS's office of U.S. Citizenship and Immigration Services and is funded through filing fees for various visa applications, he said.

Cornyn has said the measure would include provisions to phase in mandatory employment authorization checks, applying the law first to employers with prior immigration law violations.

Other witnesses testifying before the subcommittee offered different suggestions for ICE officials to improve the enforcement of workplace immigration law, such as:

• investigating employers who frequently file IRS Form W-2 for employees with invalid Social Security numbers.

• teaming up with U.S. attorneys' offices throughout the country to create "special assistants" who focus on document fraud; the objective being to "ramp up prices" for fraudulent work authorization documents.

(Source: National Council of Agricultural Employers)

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Acceptable I-9 Documents; Re-verifying Form I-551

Appearing in the June issue of FELS Newsletter was an article reporting the elimination of various documents from the lists of acceptable documents to verify work edibility or identity when completing Form I-9.

Several FELS subscribers questioned why the Lists of Acceptable Documents on the reverse of Form I-9 wasn't modified at the same time. One possible explanation is the agency didn't want to go though the formal process to have the modified form approved by the Office of Management and Budget under the Paperwork Reduction Act since it anticipating a major overhaul in the near future.

Actually, the agency has been saying this for more than seven years. The agency's Employer Bulletin 101 states: "Are changes anticipated in the Form I-9? Changes in the Form I-9 are expected in late 2005 or early 2006, including a reduction in the number of documents that can be submitted by new employees to demonstrate their employment eligibility. (The interim rule of September 30, 1997, reduced the number of documents that are acceptable for the I-9; however these changes are not reflected on the Form I-9. See 8 C.F.R. 274a.2(b)(1)(v) for the most up-to-date list of acceptable documents.)" See http://uscis.gov/graphics/services/emplo yerinfo/employerinfo_EIB101RD.pdf

To help FELS subscribers, an unofficial "Lists of Acceptable Documents" appears on page 6 of this issue. On the modified form, deleted documents are indicated by strikeover, and a new document has been added.

Here is a summary of the acceptable documents from 8 CFR 274a.2(b)(1)(v):

Sec. 274a.2 Verification of employment eligibility.

(A) The following documents, so long as they appear to relate to the individual presenting the document, are acceptable to evidence both identity and employment eligibility:

(1) United States passport (unexpired or expired);

(2) Alien Registration Receipt Card or Permanent Resident Card, Form I-551;

(3) An unexpired foreign passport that contains a temporary I-551 stamp;

(4) An unexpired Employment Authorization Document issued by the Immigration And Naturalization Service which contains a photograph, Form I-766; Form I-688, Form I-688A, or Form I-688B;

(5) In the case of a nonimmigrant alien authorized to work for a specific employer incident to status, an unexpired foreign passport with an Arrival-Departure Record, Form I-94, bearing the same name as the passport and containing an endorsement of the alien's nonimmigrant status, so long as the period of endorsement has not yet expired and the proposed employment is not in conflict with any restrictions or limitations identified on the Form I-94.

(B) The following documents are acceptable to establish identity only:

(1) For individuals 16 years of age or older:

(I) A driver's license or identification card containing a photograph, issued by a state (as defined in section 101(a)(36) of the Act) or an outlying possession of the United States (as defined by section 101(a)(29) of the Act). If the driver's license or identification card does not contain a photograph, identifying information shall be included such as: name, date of birth, sex, height, color of eyes, and address;

(ii) School identification card with a photograph;

(iii) Voter's registration card;

(vi) U.S. military card or draft record;

(v) Identification card issued by federal, state, or local government agencies or entities. If the identification card does not contain a photograph, identifying information shall be included such as: name, date of birth, sex, height, color of eyes, and address;

(vi) Military dependent's identification card;

(vii) Native American tribal documents;

(viii) United States Coast Guard Merchant Mariner Card;

(ix) Driver's license issued by a Canadian government authority;

(2) For individuals under age 18 who are unable to produce a document listed in paragraph (b)(1)(v)(B)(1) of this section, the following documents are acceptable to establish identity only:

(I) School record or report card;

(ii) Clinic doctor or hospital record;

(iii) Daycare or nursery school record.

(3) Minors under the age of 18 who are unable to produce one of the identity documents listed in paragraph (b)(1)(v)(B) (1) or (2) of this section are exempt from producing one of the enumerated identity documents if:

(i) The minor's parent or legal guardian completes on the Form I-9 Section 1--``Employee Information and Verification'' and in the space for the minor's signature, the parent or legal guardian writes the words, ``minor under age 18.''

(ii) The minor's parent or legal guardian completes on the Form I-9 the ``Preparer/Translator certification.''

(iii) The employer or the recruiter or referrer for a fee writes in Section 2--``Employer Review and Verification'' under List B in the space after the words ``Document Identification '' the words, ``minor under age 18.''

(4) Individuals with handicaps, who are unable to produce one of the identity documents listed in paragraph (b)(1)(v)(B) (1) or (2) of this section, who are being placed into employment by a nonprofit organization, association or as part of a rehabilitation program, may follow the procedures for establishing identity provided in this section for minors under the age of 18, substituting where appropriate, the term ``special placement'' for ``minor under age 18'', and permitting, in addition to a parent or legal guardian, a representative from the nonprofit organization, association or rehabilitation program placing the individual into a position of employment, to fill out and sign in the appropriate section, the Form I-9. For purposes of this section the term individual with handicaps means any person who

(I) Has a physical or mental impairment which substantially limits one or more of such person's major life activities,

(ii) Has a record of such impairment, or

(iii) Is regarded as having such impairment.

(C) The following are acceptable documents to establish employment authorization only:

(1) A social security number card other than one which has printed on its face ``not valid for employment purposes'';

(2) A Certification of Birth Abroad issued by the Department of State, Form FS-545;

(3) A Certification of Birth Abroad issued by the Department of State, Form DS-1350;

(4) An original or certified copy of a birth certificate issued by a State, county, municipal authority or outlying possession of the United States bearing an official seal;

(5) Native American tribal document;

(6) United States Citizen Identification Card, INS Form I-197;

(7) Identification card for use of resident citizen in the United States, INS Form I-179;

(8) An unexpired employment authorization document issued by the Immigration and Naturalization Service.

(vi) Special rules for receipts. Except as provided in paragraph (b)(1)(iii) of this section, unless the individual indicates or the employer or recruiter or referrer for a fee has actual or constructive knowledge that the individual is not authorized to work, an employer or recruiter or referrer for a fee must accept a receipt for the application for a replacement document or a document described in paragraphs (b)(1)(vi)(B)((1) and (b)(1)(vi)(C)((1) of this section in lieu of the required document in order to comply with any requirement to examine documentation imposed by this section, in the following circumstances:

(A) Application for a replacement document. The individual:

(1) Is unable to provide the required document within the time specified in this section because the document was lost, stolen, or damaged;

(2) Presents a receipt for the application for the replacement document within the time specified in this section; and

(3) Presents the replacement document within 90 days of the hire or, in the case of reverification, the date employment authorization expires; or

(B) Form I-94 indicating temporary evidence of permanent resident status. The individual indicates in section 1 of the Form I-9 that he or she is a lawful permanent resident and the individual:

(1) Presents the arrival portion of Form I-94 containing an unexpired ``Temporary I-551'' stamp and photograph of the individual, which is designated for purposes of this section as a receipt for Form I-551; and

(2) Presents the Form I-551 by the expiration date of the ``Temporary I-551'' stamp or, if the stamp has no expiration

date, within 1 year from the issuance date of the arrival portion of Form I- 94; or

(C) Form I-94 indicating refugee status. The individual indicates in section 1 of the Form I-9 that he or she is an alien authorized to work and the individual:

(1) Presents the departure portion of Form I-94 containing an unexpired refugee admission stamp, which is designated for purposes of this section as a receipt for the Form I-766, Form I-688B, or a social security account number card that contains no employment restrictions; and

(2) Presents, within 90 days of the hire or, in the case of reverification, the date employment authorization expires, either an unexpired Form I-766 or Form I-688B, or a social security account number card that contains no employment restrictions, and a document described under paragraph (b)(1)(v)(B) of this section.

(vii) If an individual's employment authorization expires, the employer, recruiter or referrer for a fee must reverify on the Form I-9 to reflect that the individual is still authorized to work in the United States; otherwise the individual may no longer be employed, recruited, or referred. Reverification on the Form I-9 must occur not later than the date work authorization expires. In order to reverify on the Form I- 9, the employee or referred individual must present a document that either shows continuing employment eligibility or is a new grant of work authorization. The employer or the recruiter or referrer for a fee must review this document, and if it appears to be genuine and to relate to the individual, reverify by noting the document's identification number and expiration date on the Form I-9.

Re-verifying Form I-551: According to CIS Employer Information Bulletin 102, confusion exists about an expired Form I-551. Here is an excerpt from that bulletin - "Source of Confusion: ... The actual Form I-551, or "green card," should not be reverified even if it contains an expiration date." However, an expired Form I-551 may not be used as proof of work eligibility at the time of hire.

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