Accountable Plan

Based on analysis provided to congressional leaders, the Government Accountability Office ("GAO") found that while Federal Motor Carrier Safety Administration’s ("FMCSA") resources are limited, it could take steps to identify more "chameleon" carriers that attempt restart business after sanctions for safety violations.

Currently, the process is lengthy and involves screening applicant data against poorly performing carriers dating back to 2003, and reviewing each application.  The process can take from a couple of weeks to a couple of months. However, the increased enforcement only affects buses and movers, a mere 2% of the approximately 66,000 carriers that apply for certificates every year.

While GAO acknowledged the FMCSA does not have the staff to conduct investigations on applicants, it does believes the FMCSA could use its current data screening methods more effectively. GAO derived and tested a method that can identify applicants that have chameleon attributes. It wrote an algorithm that searched the data for matching registration information, and for previously registered carriers that had a motive to evade detection, such as a history of safety violations. GAO said it identified 1,136 new applicant carriers in 2010, an increase from 759 in 2005.  These carriers were three times more likely than other new carriers to be involved in a severe crash, GAO found.

GAO recommended the FMCSA develop a system to screen applicant data against carriers that have chameleon attributes, and apply it to all applicants. It also recommended that the agency strengthen its new entrant safety assurance program by training auditors to identify chameleon carriers.

FMCSA said it will implement the recommendations, although it is not clear when.

The Federal Motor Carrier Safety Administration ("FMCSA") announced planned improvements to the implemented in December 2010 as part of the agency’s Compliance, Safety, Accountability initiative. A preview is currently available to motor carriers and law enforcement. During this data preview period, FMCSA requests comments on the possible impact of the changes.  To comment, go to www.regulations.gov; the docket number is FMCSA 2012-0074. The changes will be available to the public in July 2012.

FMCSA says the SMS improvements are based on ongoing analysis and feedback from enforcement personnel, the motor carrier industry and other stakeholders, and are designed to more effectively identify and prioritize high-risk and other unsafe motor carriers for enforcement interventions designed to reduce commercial motor vehicle crashes and hazardous materials incidents.

 FMCSA will provide motor carriers with the ability to preview how the improvements impact their individual safety data in SMS. These improvements include:
• Changes to the SMS methodology that identify higher-risk carriers while addressing industry biases;
• Better applications of SMS results for agency interventions by more accurately identifying safety-sensitive carriers – such as carriers transporting people and carriers hauling hazardous materials – so that such firms can be selected for CSA interventions at more stringent levels; and
• More specific fact-based displays of SMS results on the SMS Website.

A number of new California employment laws are set to take effect January 1, 2012. Many of these new laws will have a significant impact on businesses operating in California. The following is a summary of a few of the more notable laws taking effect in the New Year: 

Wage Theft Prevention Act

Effective January 1, 2012, California Labor Code 2810.5 will require that employers provide the following information, in writing, to new employees upon hire:

1.    The rate or rates of pay and the basis for pay, i.e., whether the employee will be paid by the hour, shift, day, week, salary, piece, commission, or otherwise. The rate information must also include overtime rates.

2.    Any allowances claimed as part of the minimum wage, including meal or lodging allowances.

3.    The regular payday designated by the employer.

4.    The name of the employer, including any "doing business as" names used by the employer.

5.    The physical address of the employer's main office or principal place of business. The mailing address must also be provided if it differs from the principal physical address.

6.    The telephone number of the employer.

7.    The name, address, and telephone number of the employer's workers' compensation insurance carrier.

8.    Any other information the Labor Commissioner deems material and necessary.

These requirements apply to all non-exempt, non-union employees, and the duty to disclose this information continues after hiring.  When any of the information listed in this statute changes, employers must notify employees in writing within seven calendar days of the change.  The California Labor Commissioner posted a template for the required notice on the California Department of Industrial Relations’ web site:  http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html
 

Retention of Payroll Records

California also changed the time frame that payroll records must be kept under Cal. Labor Code section 1174 from two to three years (we recommend four years because there is a four-year statute of limitations for many Labor Code violations).

Misclassification of Independent Contractors

California Senate Bill 459, signed into law by Governor Jerry Brown on October 9, 2011,

penalizes employers who willfully misclassify workers as independent contractors. The law defines “willful misclassification” as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.” The law makes it illegal to charge a willfully misclassified worker a fee or to make pay deductions where such a fee or deduction would have violated the law if the worker had not been misclassified. 

Employers in violation of the law are subject to civil penalties between $5,000 and $15,000 for each violation, in addition to any other penalties or fines permitted by law. Violators may also be ordered to display (either on the employer’s website or, if there is none, at every location where a violation occurred) a notice for an entire year advising, among other things, that (1) the employer has committed a serious violation of the law by engaging in the willful misclassification of employees; (2) the employer has changed its business practices in order to avoid committing further violations; and (3) any employee who believes that he or she is being misclassified as an independent contractor may contact the California Labor and Workforce Development Agency (“LWDA”).

Under other similar California statutes that prohibit “knowing,” “intentional,” and “voluntary” violations, courts have found that actions taken on the basis of a good faith belief in their legality do not give rise to liability. It is unclear whether this “good faith” defense will apply under the new misclassification law. Regardless, employers must be cautious when classifying employees as independent contractors, and must be able to explain and demonstrate the validity of the classification. 

Restriction on Use of Credit Checks

Starting in 2012, California employers may not, subject to certain exceptions, use consumer credit reports to evaluate candidates for employment. The use of credit reports to screen candidates for the following types of positions is not prohibited:

• Managerial positions covered by California’s executive exemption
• Positions involving regular access to certain personal financial, proprietary, or trade secret information
• Positions involving regular access to at least $10,000 of money belonging to the employer or its clients or customers
• Positions in which the applicant would be a signatory on the employer’s financial accounts or would have authority to transfer money or enter into financial agreements for the employer
• Positions for which credit information is required to be disclosed by law

Workers Compensation Notices

Among other amendments to California’s workers compensation laws, new legislation now requires that workers compensation notices posted by employers include the website address and contact information for employees to obtain further information about the workers compensation claims process.

These and several other new laws add additional layers of compliance for California employers already struggling to persevere in an extraordinarily difficult business climate. We recommend California employers take time to review their employment policies and practices to ensure compliance with California’s employment laws, both new and old. Questions should be directed to Jim Hanson, Chris McNatt, Bob Browning, and Adam Smedstad.

The Firm recently became aware of an initiative by the New York State Department of Taxation and Finance whereby civil penalty assessment notices are being issued to New York Highway Use Tax (“HUT”) account holders that previously filed HUT reports during reporting periods in which the carrier’s vehicles lacked 20th Series Certificates of Registration (i.e., per vehicle HUT permits).  Since the 19th Series Certificates expired on or about September 30, 2009, the Department views such non-renewing motor carriers as having operated vehicles in New York without valid HUT permits.  The civil penalty assessment is issued in the amount of $2,000 for each vehicle previously permitted with a 19th Series Certificate.

Any motor carrier in receipt of a civil penalty assessment notice must act quickly in order to contest the assessment.  This can be done by providing a written response to the Department within 30 days of the issuance date of the civil penalty assessment notice in the form of a request for abatement of the civil penalty, e.g. for reasonable cause.  The Department’s audit division will review all requests and it remains to be seen how stringently the Department will enforce the civil penalty provisions related to invalid HUT permits.  Any motor carrier in receipt of a civil penalty assessment notice should also take immediate steps to obtain 20th Series Certificates for all its vehicles subject to the HUT.   

The Ninth Circuit on Monday affirmed a lower court's grant of summary judgment to Dollar Tree in a lawsuit brought by former employee  who was given less paid leave than she requested in order to tend to her ailing mother, saying the company was not a successor to her previous employer and she had not worked at Dollar Tree long enough to be eligible for leave under the FMLA.

The question of when a new employer is a successor-in-interest to a former employer under the statute had only been addressed by a handful of district courts.  The definition matters because an employee is not eligible for the protections of the FMLA until he has worked for a particular employer for at least 12 months, the Ninth Circuit's opinion stated.

According to the Ninth Circuit's ruling, Dollar Tree opened its store after four weeks of renovations and hired Sullivan and only one other former Factory 2-U employee to work there after Sullivan filled out a job application.

Considering Sullivan's appeal, the Ninth Circuit weighed the eight factors laid out by the Department of Labor to determine whether a company is a successor-in-interest under the law.

The court concluded that some factors slightly suggested successorship, but that on balance the factors strongly demonstrated that, as a matter of law, Dollar Tree was not a successor-in-interest to Factory 2-U — noting that when it opened its store Dollar Tree brought in many of its own employees, trained employees in its own methods, changed the plaintiff’s job title and responsibilities and brought in all new inventory.

Taking into account the regulatory factors as a whole, the interests of the plaintiff and Dollar Tree and the policy goals of the FMLA, the appeals court found that Dollar Tree is not a successor-in-interest to Factory 2-U, and upheld the summary judgment ruling.

Experts testifying before a U.S. House of Representatives committee Tuesday made competing arguments about whether the Paycheck Fairness Act would close the gender pay gap that, a new Government Accountability Office ("GAO") study says, persists across all industries and skill levels.

The hearing is on the heels of recently released report that the pay gap between women and men working full-time had closed only slightly since 2000 through 2007, and had not budged at all for mothers in management positions.

Opponents (chifly Republicans) argued that the Paycheck Fairness Act won't close the earnings gap and will only result in more lawsuits. The potential for inecreased law suits results from some of the bill's provisions such as a section that requires class members to opt out instead of opt in, and another measure that would impose heavier penalties against employers who are found guilty of pay discrimination.

Others argued that the law would help to require strict accountability of promotion and pay decisions.  

Sen. John Kerry, D-Mass., has introduced legislation aimed at preventing employers in industries, including trucking, from misclassifying workers as "independent contractors" in order to avoid paying taxes or benefits.

The Taxpayer Responsibility, Accountability and Consistency Act of 2009 would amend the Internal Revenue Code to address Section 530 "safe harbor" provisions. Part of the Revenue Act of 1978, these provisions allow workers to be classified as "independent contractors" rather than "employees" in industries where such designations are part of long-standing, recognized practice.
 

1. increase DOL’s focus on misclassification of employees during targeted investigations
2. encourage sharing of information regarding misclassification between the DOL’s wage and hour division and OSHA (also within the DOL), and that cases outside of DOL’s jurisdiction should be referred to the relevant agency
3. establish a joint interagency effort between the DOL, IRS, and other federal and state agencies to address the misclassification of employees as independent contractors
4. conduct worker outreach efforts, including the development of a standardized document on worker classification
5. create an IRS forum to regularly collaborate with states to identify and address data sharing efforts relating to the QETP initiative
6. extend the IRS Classification Settlement Program to include employers that volunteer to prospectively reclassify employees. Additionally, the report included discussion of limiting the “industry practice” prong of the reasonable basis test to establish Section 530 safe harbor.