Workshop C: Immigration and Employment in the New Administration

Transcription

1 Workshop C: Immigration and Employment in the New Administration Patricia Gannon, Esq. Wormer, Kiely, Galef & Jacobs LLP, NYC Elizabeth I. Hook, Esq. Braxton Hook PLLC, Melville, NY

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3 IMMIGRATION POLICY AND EMPLOYMENT LAW IN THE ERA OF TRUMP By Patricia Gannon, Marcela Bermudez, and Elizabeth I. Hook 1 Since President Donald Trump took office on January 20, 2017, he and his administration have made it abundantly clear that two major efforts affecting U.S. employers will dominate his time in office: (1) strictly enforcing the nation s immigration laws and creating more employment opportunities for American workers, and (2) rolling back perceived burdensome regulations and executive orders issued under the Obama administration. While designed to help American workers and businesses, these efforts may in fact create some administrative headaches and uncertainties as well. Following are a few of the major issues raised and how they affect employers. I. HIRE AMERICA FIRST: WHAT S AN EMPLOYER TO DO? Employers are rightfully confused about what their obligations are in the current immigration enforcement atmosphere, and by all the views expressed by pundits and news media regarding immigration. Aside from any political position, fundamentally employers are looking to hire the most talented workforce they can 1 Patricia Gannon is a partner, and Marcela Bermudez is of counsel, with Wormser, Kiely, Galef & Jacobs LLP. Elizabeth I. Hook is a partner with Braxton Hook PLLC.

4 find to improve their productivity, and increase innovation and revenue. Competition in this rapidly changing technological, social and global economy mandates that they do so in order to survive. And with so much focus on individual human rights across a spectrum of workers, most employers put a high premium on maintaining a stable workplace culture of respect and understanding. While the general policy of America First has been front and center in the news, the current administration has not clarified many of the issues surrounding various aspects of this policy as they affect the existing workforce in the U.S. Whether foreign nationals are actually taking away American jobs or whether this is just politics as usual has become a much debated and often times emotional discussion. America First has caused bitter divides in the workplace and, in some instances, actions that rise to the level of possible discrimination or even harassment claims. Most employers and employees, whether foreign workers or not, do not want to violate any laws and want to continue to comply with what has become very confusing immigration legislation and policy. No one wants to discriminate or have employees take it upon themselves to question a foreign national s immigration status. But the law is very complex, and there is a lot of misinformation about what is lawful and what is not under the immigration law.

5 There is literally a panoply of work visas in the immigration regulations. The ones most often referenced in the new immigration environment are provided below. The H-1B Work Visa: This visa is one of the more well-known visas available to foreign nationals, designed to allow U.S. employers to recruit and employ foreign professionals in specialty occupations for a finite duration of time. In total, H-1B visa holders are allowed to legally work and live in the U.S. for up to six years. To be eligible for H-1B status, foreign nationals must possess at least a bachelor's degree or its equivalent. The wage is certified by the Department of Labor depending on the duties and experience. Currently, there is tremendous scrutiny from the U.S. Customs and Immigration Service ( USCIS ) regarding wage levels for lower paid positions. Most foreign national students who hold F-1 student visas apply for H-1B work visas upon completion of their studies. The H-1B work visa is subject to a statutory cap. The L Multinational Intracompany Work Visa: The L-1 visa is a nonimmigrant visa which allows overseas companies to transfer executives and managers into the U.S., including business owners. The duration of the transfer to a new or existing U.S. office under the L-1A visa is up to seven years, and under the L-1B visa for specialized knowledge employees is up to five years. To qualify

6 for an L-1 visa, the employee must have worked for a subsidiary, parent, or affiliate or branch office of the U.S. company outside of the U.S. for at least one full year out of the last three years. The E-1 and E-2 Treaty Work Visas: These visas allow treaty traders and treaty investors, who are entitled to be in the U.S. under a bilateral treaty of commerce and navigation between the U.S. and their country of nationality or citizenship, to work in the U.S. in a managerial or significant knowledge capacity. The foreign national must be coming to the U.S. as an employee to fill an executive, managerial, or essential worker capacity. The F-1 Student Visa : Holders of an F-1 student visa enter the U.S. as full-time students at an accredited college, university, or other academic institution, or in a language training program. These students must be enrolled in a program or course of study that results in a degree, diploma, or certificate and the school must be authorized by the U.S. government to accept international students. A limited-duration work permit is granted at completion of the program, and the student may also obtain concurrent work authorization during his or her studies based on eligibility.

7 It is difficult to sort through the maze of campaign and political rhetoric to decipher the potential effects of immigration policies on employers. What does more enforcement mean to an employer? How does an employer manage its work force without violating employment or immigration laws? How does an employer interview candidates under the America First policy without violating federal, state and local anti-discrimination laws? What day-to-day impact does the America First policy have on a business, its culture and its employees? Employers should proceed with caution as they must balance employment law with immigration law to determine the proper procedures to put in place in the work place. With a heavy focus on enforcement of immigration laws naturally comes more Immigration and Customs Enforcement ( ICE ) raids and U.S Department of Labor ( DOL ) audits in the work place, and often more scrutiny in areas that are unexpected and may not make legal sense. Employers have to be careful to ensure that they fully comply with their obligations under the law when dealing with such situations. Below are some of the latest policies and other directives issued by the White House from April 2017 to present day. Although there are many, we highlight only the ones that relate to legal work authorization. Also, please keep in mind that some of directives and policies change within a short period of time.

8 II. BUY AMERICAN AND HIRE AMERICAN President Trump signed an executive order ( EO ) entitled Buy American and Hire American in April The Hire American section of the EO has no direct impact on existing immigration laws. Rather, it directs various executive agencies to propose new rules and issue new guidance to protect the interests of United States workers in the administration of our immigration system, including through the prevention of fraud or abuse. The EO further calls for agency officials to suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries. The EO no doubt will result in far-ranging administrative review that could lead to new regulations and policy. The EO directs the Departments of Labor ( DOL ), Homeland Security ( DHS ), Justice ( DOJ ) and State ( DOS ) to propose reforms to employmentbased immigration program rules and guidance, with the goal of protecting the economic interests of U.S. workers. The EO indicates that the agencies will focus on increasing H-1B wage minimums in an effort to promote the hiring of U.S. workers over foreign workers. USCIS guidelines indicate that positions with entry-level wages may be ineligible for the H-1B program, and it is currently denying or heavily scrutinizing and denying H-1B petitions that contain minimum

9 wage levels. The immigration agencies are directed to recommend ways to replace the current H-1B cap lottery with an allocation system that gives priority to foreign nationals who have earned advanced degrees or are paid higher wages. Such changes require legislation and then would be subject to federal rulemaking to put in place implementing regulations. The Administration also announced its intention to enhance the integrity of the U.S. immigration system by targeting fraud and abuse. Accordingly, the responsible agencies have announced plans to focus on such efforts. For example, the DOL recently announced plans to protect American workers from H-1B program discrimination. Many employers have been critical of the Buy American Hire American EO as unrealistic for businesses to generate revenue production. The National Foundation for American Policy ( NFAP ) released the results of a study that suggested that the greater the restriction on immigration law, the more companies feel compelled to outsource work overseas. What does all this mean to U.S. employers? Those employers who compete on a global scale, and need a highly qualified work force to compete with other global organizations, will have to ensure that their hiring practices continue to be

10 compliant with immigration and employment law. Although looking for the most talented individuals to hire, employers will have to be diligent about ensuring that their managers and Human Resources personnel are well-versed, and supported with sound legal advice, in immigration law and the potential employment law consequences in the hiring process. III. INCREASE IN WORPLACE ENFORCEMENT ACTIVITIES The EO and other announcements by the White House have made clear that enforcement of immigration laws will be a priority. The areas where employers should see an increase in enforcement activities are with Employment Eligibility Verification Form I-9, DOL audits and greater scrutiny upon entry at U.S. borders. A. Compliance with Employment Eligibility Verification Form I-9 Under the Immigration Reform and Control Act of 1986 ( IRCA ), whenever a U.S. company hires a new employee, the employer is required by law to verify the identity and employment authorization of the worker. This is accomplished by completing the Employment Eligibility Verification Form I-9 and having the new hire present one or more acceptable documents. In addition, depending upon the immigration status of the worker, the employer periodically

11 may be required to re-verify that individual s authorization to work. Failure to comply with the I-9 requirements can lead to severe penalties for employers. The current political climate makes strict compliance with the I-9 rules of paramount importance for all employers. ICE officers can make surprise visits based on industry, or investigate based on complaints by disgruntled employees or by memoranda of understanding with other federal agencies. In addition to I-9s, enrollment in the federal E-Verify system may be required depending on the state in which the company operates. E-Verify is an internet-based system that allows businesses to determine the eligibility of their employees to work in the U.S. It compares information from an employee s I-9 to data from U.S. government records. Nonetheless, merely enrolling in the E-Verify system does not shield a company from liability. The administrative task of obtaining and retaining I-9 records can be daunting, especially in businesses with scattered work locations that may not have a Human Resources officer onsite. But the consequences of failing to have complete records can be great, so employers must make sure they have a solid I-9 process in place. It is usually a good idea to perform self-audits periodically as it is easier to identify and correct gaps for small time periods than to have to do it in preparation for a DOL audit.

12 B. Compliance with the Terms of H-1B and L Visas The DOL and USCIS actively seek out companies that have filed H-1B petitions and L petitions to conduct surprise visits to make sure that the company is in compliance with the terms of the visas. During these site visits, agents typically request to speak with the foreign national and the Human Resources personnel who signed the immigration petitions. This can be very disruptive to a work force, and if proper records are not kept and updated, can lead to severe consequences. In addition, when foreign nationals are travelling for business or pleasure and requesting admission (or readmission) to the U.S. under an H-1B visa, or any other visa, they may face increased scrutiny from U.S. Customs and Border Protection ( CBP ) officers stationed at U.S. ports of entry. CBP officers can search the foreign national s electronic devices and examine his or her resume, looking for discrepancies or other possible areas of concern related to the individual s employer or client. CBP officers have tremendous discretion to grant or refuse admission to the U.S., and CBP has broad authority to search the electronic devices of foreign nationals requesting admission, looking at s, text messages, social media posts, and saved documents. CBP officers examine such data to determine whether the individual s stated reasons for visiting the U.S.

13 are consistent with the approved petition, visa application, or other representations to the government. When looking for the most talented individuals to hire into critical roles, employers will have to be diligent about ensuring that any petition for an H-1B visa is scrupulously accurate in listing the credentials required for a position, as well as the description of the position s responsibilities. The credentials required for the position must be defensible, and the employer must ensure that the candidate selected actually possesses those credentials. Any changes to a position s responsibilities that occur after issuance of an H-1B visa must be carefully reviewed against the description contained in the petition. If the changes are substantive, an amended petition must be filed. Finally, as stated earlier, petitions for H-1B visas for positions with entry-level wages are likely to be denied. Employers must carefully consider whether an H-1B visa candidate is required for a position, or whether it is simply a manager s hiring preference for a particular candidate. If a business makes the decision not to sponsor candidates for H-1B visas, then it is critical that the policy is uniformly applied to all positions. Employers must also be in compliance with all federal, state and local anti-discrimination laws when it comes to their hiring practices. Choosing to sponsor one candidate

14 for an H-1B visa but not another can open the door to claims of discrimination based on sex, age, national origin, religion, sexual orientation, gender identity or expression, disability, etc. To avoid such exposure, an employer must assess its need for highly skilled and specialized talent and then formulate a policy whereby there are uniform standards applied to determine which position can be sponsored for an H-1B visa. All too often, an employer will have a strong policy in place, but falls short in the implementation of it. All business managers should be made aware of the policy and any changes made to it. The burden of administering the H-1B visa petitions often falls on Human Resources. Employers must give their Human Resources personnel the information and legal support to ensure that all steps in this critical process are followed, and support them when they must have difficult discussions with business managers. With the focus squarely on the work visas in the employment arena, no employer can afford to do less. C. Responding to Onsite Visits from ICE and DOL What should an employer do when confronted with an ICE raid or DOL audit? What compliance obligations does it have? The very first step is to make sure that no one deals with these agents without first contacting Human Resources,

15 and that Human Resources immediately contacts immigration and/or employment law counsel. In general, the best approach for any employer in dealing with ICE and DOL is cooperation. However, an employer should ensure that its legal interests are protected by having an immigration or employment lawyer present for all interviews and audits, if possible. If agents arrive without notice seeking to interview an employee, the employer must make that employee available. If there is an unannounced DOL audit, the employer should have legal counsel work with the agents to arrange a time and place for them to review the records onsite with the employer s lawyer present, and then supply the records requested. Employers cannot provide legal advice to their employees in dealing with ICE or DOL, therefore managers and Human Resources must be carefully trained to give no advice or instruction other than to inform employees that they can either agree or refuse to speak with ICE and DOL agents. IV. DEFERRED ACTION FOR CHILDHOOD ARRIVALS The Trump Administration stated it would keep the Deferred Action for Childhood Arrivals ( DACA ) program in place for the time being, but has rescinded a memo from then-president Obama that was to expand DACA and create the Deferred Action for Parents of Americans and Lawful Permanent Residents ( DAPA ) program. The U.S. Department of Homeland Security (DHS)

16 made this announcement on June 15, 2017, immediately following President Trump s signing of a memo to rescind DAPA and the expanded version of DAPA. Of course, we know this all changed in September. The DACA program, which was created by President Obama through executive action on June 15, 2012, allows qualifying undocumented immigrants, who came to the United States as children, to obtain two-year deferrals of removal (i.e. deportation) proceedings, and to obtain work authorization. DACA has shielded hundreds of thousands of undocumented immigrants who came to the United States as children from removal since its inception. In 2014, President Obama issued a memo that was to expand eligibility for DACA and to create DAPA, which would provide immigration relief to qualifying undocumented foreign nationals who have a U.S. citizen or lawful permanent resident child. Before DHS began accepting applications under this memo, however, a U.S. federal district court blocked its implementation. Although the case technically is still pending, the rescission of the 2014 executive order effectively serves to make the case moot. Although Trump promised to immediately terminate the DACA program once assuming office, DHS issued guidance on June 15, 2017 stating that recipients of DACA will continue to be eligible for two-year extensions of their

17 status. Then in September 2017, Attorney General Jeff Sessions announced that President Trump is terminating the DACA program. President Trump will be winding down the program over the coming months. Beneficiaries of DACA, popularly referred to as Dreamers, are undocumented aliens who were brought to the U.S. as children. The DACA program was implemented as a means of providing temporary travel and work authorization to nearly 800,000 qualifying individuals and to shield them from being deported from the U.S. DHS has not accepted new DACA applications filed after September 5, 2017, but will continue to process applications filed prior to that day. Current beneficiaries of DACA will be able to continue to use their respective work and travel documents until the documents expire. Further, those whose DACA documents are scheduled to expire by March 5, 2018 may apply by October 5, 2017 for two-year renewals. What does all this mean for employers? It is critical that employers do not take steps that would inadvertently place them in violation of immigration and employment anti-discrimination laws. First, an employer may not refuse to hire an applicant solely because the applicant presents an employment authorization document that will expire in the future. The Immigrant and Employee Rights ( IER ) Section of the Civil Rights Division at the Department of Justice advises

18 employers that they cannot refuse to hire an individual solely because that individual s employment authorization document will expire in the future. The existence of a future expiration date does not preclude continuous employment authorization for a worker and does not mean that subsequent employment authorization will not be granted. In addition, consideration of a future employment authorization expiration date in determining whether an individual is qualified for a particular job may constitute an unfair immigration-related employment practice in violation of the anti-discrimination provision of the [Immigration and Nationality Act ( INA )]. U.S. Dep t of Justice, Civil Rights Div. website, Frequently Asked Questions, Unfair Documentary Practices. Since DACA beneficiaries are not holders of employer-sponsored work visas, there is no way to determine if an employer has DACA workers whose benefits expire other than by reviewing the documents contained in the I-9 files. But reviewing I-9 documents to validate who is a DACA beneficiary is a violation of the INA, which limits how an employer can use the I-9 information. [A]ny information contained in or appended to the Form I-9, including copies of documents... used to verify an individual s identity or employment eligibility, may be used only for enforcement of the Act and Sections 1001, 1028, 1546, or 1621 of Title 18, United States Code. 8 C.F.R. 274a.2(b)(4). The Title 18

19 Sections referenced are statutory crimes involving fraud and false statements to any branch of the federal government, identification fraud, fraud and misuse of visa and like documents, and perjury. Checking whether someone is a DACA beneficiary does not constitute enforcing the employment verification law, and does not involve investigating potential criminal activity, and is therefore prohibited. Using the employment verification documents in this way would also be a violation of the E-Verify Memorandum of Understanding, which provides that [t]he Employer... will use the information it received from E-Verify only to confirm the employment eligibility of employees as authorized by this MOU.... [and] agrees that it will safeguard this information, and means of access to it..., to ensure that it is not disseminated to any person other than employees of the Employer who are authorized to perform the Employer s responsibilities under this MOU.... The E-Verify Memorandum of Understanding for Employers, Art. II, 15. The I-9 Form, itself, contains information provided by the employee as to whether and when the employee s work authorization is due to expire. Employers may rely on this database information as to the work authorization expiration date to determine if an employee s authorization will be expiring any time in the future

20 in order to address that situation. Of course, this applies to work authorization under any type of visa, and should be monitored generally by Human Resources in any event. V. ROLLING BACK OBAMA ERA REGULATIONS AND EOs There is no doubt that President Obama s Administration was very active in issuing regulations, guidelines and EOs designed to provide greater protections and benefits to workers and to gather data deemed to be more useful in understanding demographics and wages for more diverse categories of employees. With the election of Donald Trump came the opportunity for the business community to reverse this trend and eliminate what it perceived to be the burdensome regulations previously imposed. While overall a positive development for the business community, the rollback of regulations and guidelines has not entirely eliminated the burden for employers. In response to the federal government s actions, many states have taken the opportunity to enact their own laws, regulations and guidelines to replicate the efforts made by the previous administration. The end result is that, rather than having a uniform set of laws and regulations at the federal level, employers must now contend with a patchwork of state and local ones that are not uniform and may have their own compliance mechanisms. The administrative burden of maintaining compliance with

21 numerous laws and regulations that differ state by state and city by city in some instances now outweighs whatever burden had been imposed at the federal level. Following is a review of some of the changes. A. FLSA Overtime Salary Threshold In 2016, the DOL Wage and Hour Division updated the minimum salary threshold for a position to qualify as exempt from the federal Fair Labor Standards Act ( FLSA ) overtime regulations. Set to take effect on December 1, 2016, the updated threshold would have been a weekly salary of $913 ($47,476 annually), doubling the existing weekly salary threshold of $455 ($23,660 annually). The updated threshold had a significant impact on businesses throughout the U.S. given the size of the increase. Because such a change to wages cannot be implemented overnight, many businesses set the change in motion months before the effective date in order to be able to comply from day one. However, a coalition of business groups and 21 states challenged the rule in federal court in Texas, arguing that the Obama administration overstepped its authority in issuing the rule. The judge issued a nationwide preliminary injunction on November 22, 2016, halting implementation of the new threshold rule. On August 31, 2017, the court issued its decision invalidating the rule, finding that the salary threshold rule

22 effectively rendered the exempt duties test moot. State of Nevada, et al. v. United States Dep t of Labor, et al., No. 4:16-cv (E.D. Texas) (Aug. 31, 2017). While it is good news that the salary threshold increase was rolled back, the truth is that most businesses had already changed their salary structure in anticipation of a December 1, 2016 deadline because the nationwide injunction was issued only a week before the effective date. And, as most business managers are aware, it is exceedingly difficult to take back a benefit that has already been given to an employee. Those businesses which had not yet communicated the changes to affected employees may still have had the benefit of scrapping the planned increases, but from a practical standpoint, most had already communicated the changes to their employees. Moreover, for many employers the victory was pyrrhic in that they are also subject to state laws that provide for increases in the salary threshold for exempt positions. For example, New York employers were subject to an increase in the salary threshold effective December 31, As of that date, employers in New York City were required to pay a minimum weekly salary to exempt employees of $825 ($42,900 annually); employers in Nassau, Suffolk and Westchester Counties were required to pay a minimum weekly salary of $750 ($39,000 annually); and employers in the remaining counties in New York State were required to pay a

23 minimum weekly salary of $727 ($37,804 annually). Those thresholds will also increase annually in New York City until December 31, 2018; in Nassau, Suffolk and Westchester until December 31, 2021; and in the remaining counties in New York State until December 31, As of December 1, 2018, New York City employers will have to pay exempt employees a minimum weekly salary of$1,125 ($58,500 annually). That level will have to be reached in Nassau, Suffolk and Westchester Counties as of December 31, And as of December 31, 2020, employers in the remaining counties in New York State will have to pay their exempt employees a minimum weekly salary of $937 ($48,724 annually). New York State is not alone in implementing such increases and, as a result, businesses must keep abreast of any such changes not only at the state level, but also at the local level. For example, Missouri recently enacted legislation barring political subdivisions from enacting or enforcing a minimum wage ordinance in response to laws recently enacted by the cities of St. Louis and Kansas City to increase the non-exempt minimum wage in their jurisdictions. Although the local laws ultimately were barred in that state, it is likely that more and more municipalities will try similar actions across the country. B. Independent Contractors and Joint Employment

24 In June 2017, the DOL canceled two Obama-era guidance memos regarding independent contractors and joint employment, issued in 2015 and The Administrator s Interpretation No , The Application of the Fair Labor Standards Act s Suffer or Permit Standard in the Identification of Employees Who Are Misclassified as Independent Contractors, underscored the DOL s longstanding position that a worker who is economically dependent on work provided by a business entity, regardless of the worker s skill level, is the business employee. To emphasize that fact, the guidance reiterated the economic realities test as the six factors considered by the DOL in determining if an employment relationship exists. These factors are: 1. The extent to which the work performed is an integral part of the employer s business. 2. Whether the worker s managerial skills affect his or her opportunity for profit and loss. 3. The relative investments in facilitie4s and equipment by the worker and the employer. 4. The worker s skill and initiative. 5. The permanency of the worker s relationship with the employer. 6. The nature and degree of control by the employer.

25 The guidance explained that none of these factors is determinative, but rather must be looked at in totality to make the critical determination: whether the worker is actually economically dependent on the business or is instead truly in business for him or herself. This guidance is not a departure from DOL s position, but simply signified DOL s increased focus on economic dependence rather than control. Thus, the withdrawal of this interpretive guidance does little to change the legal landscape of the independent contractor issue. Indeed, there are various other factors applied under common law, by the Internal Revenue Service ( IRS ), and by state and local authorities, so it is not possible to come up with one uniform set of guidelines. One thing is clear, however. The consequences of misclassification are so significant that an employer would be wise to use that classification sparingly and to ensure that an overall review of factors used by courts, the DOL, the IRS and state and local jurisdictions supports the classification decision. On January 20, 2016, the DOL issued Administrator s Interpretation No , which described its expansive view of joint employment under the FLSA. Emphasizing the remedial purposes of the FLSA, the guidance stated that joint employment can be either horizontal or vertical. The horizontal relationship exists when two or more employers separately employ a worker and are sufficiently

26 related with respect to that worker, for example a waitress working in two related restaurants. The vertical relationship, on the other hand, may exist when an employee of an intermediary employer is economically dependent on another employer. This usually applies where one employer has contracted with an intermediary to provide it with labor to perform services, such as security or IT services. As with the guidance on independent contractors, this Administrative Interpretation did not represent a change in the law, but rather indicated the DOL s increased focus on the expansive view of joint employment. Therefore, withdrawal of this guidance has done little more than signal DOL s current decision to rein in on the previous expansive interpretations of employment. As mentioned earlier, employers should not take excessive comfort in these actions by the Trump Administration DOL because state and local municipalities may fill the void left by the federal government. Multistate employers now have to face the prospect of dealing with multiple and sometimes inconsistent enforcement mechanisms, with significant consequences for those that are unaware. C. EEO-1 Pay Transparency Reporting Requirements

27 In September 2016, the EEOC issued a revised Employer Information Report ( EEO-1 ) to be completed by all U.S. employers with 100 or more employees. The revised EEO-1 added a new Component 2 to the report, requiring the submission of detailed W-2 compensation and hours worked data for the entire workforce, divided into 12 separate pay bands designated by EEOC. The pay transparency report was intended to collect summary compensation data to enable the EEOC, and the Office of Federal Contract Compliance Programs ( OFCCP ) for federal contractors and subcontractors, to target compensation issues and address pay disparities. Employers were given 18 months to develop data gathering mechanisms to allow submission of the data, with the effective date of March 2018 for the first submission. The business community was highly critical of the revised EEO-1, pointing out that the burden of collecting this incredibly vast amount of wage and hour data significantly outweighed any benefit the data would have in pinpointing potential wage disparities. On August 29, 2017, the EEOC requested that the Office of Management and Budget s Office of Information and Regulatory Affairs issue an immediate stay of the implementation of the pay transparency report, and review the effectiveness of the pay data collection aspects of the EEO-1 form in accordance with its authority under the Paperwork Reduction Act. This was excellent news

28 for the business community because the amount and type of data required to be collected was indeed exceptionally burdensome and would have, in many cases, provided very little useful information. While most expect the revised form requirements to be rolled back, there is significant opposition to this by advocacy groups and it is likely that some form, albeit less burdensome, of compensation reporting will be implemented. D. Criminal Background Screening Ever since the crash of 2008, when unemployment climbed and layoffs became the norm, the issue of criminal background screening by employers during the hiring process has been a hot topic. Recognizing that many people in the U.S. had become virtually unemployable because of a criminal misdemeanor conviction in their past, many states and municipalities began enacting so-called ban the box legislation, aimed at prohibiting employers from using a past criminal conviction to automatically disqualify a candidate from employment. For example, New York State Correction Law Article 23-A requires employers to conduct an analysis of the relationship between a criminal conviction and the job for which the candidate has applied. Employers may not deny employment on the basis of a criminal conviction unless the conviction shows that the candidate

29 would pose an unreasonable risk to property or safety or the conviction bears a direct relationship to the position for which the candidate has applied. Where there are federal laws prohibiting the hiring of individuals with certain types of criminal convictions, the employers subject to those laws have generally been exempted from the state and local laws with respect to certain criminal convictions. For example, banks insured by the Federal Deposit Insurance Corporation ( FDIC ) and subject to the Federal Deposit Insurance Act ( FDIA ) are prohibited from hiring anyone with a record of a crime of dishonesty subject to specified penalties. Similarly, brokers seeking to be registered with the Financial Industry Regulatory Authority ( FINRA ) are statutorily disqualified from registration if they have a record of certain misdemeanors and any felony within 10 years of their application. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ( SAFE Act ) also disqualifies an individual from employment as a mortgage loan originator if he or she has a criminal record of any felonies in the previous seven years or any felony related to financial services. For all of the entities regulated by these federal laws, however, determinations based on criminal convictions outside of the categories listed are still subject to state and local law.

30 In April 2012, the EEOC issued Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of The Guidance set forth an analysis of hiring practices involving criminal background checks within the framework of a Title VII discrimination claim, that is how an employer s practices may have an intentional discriminatory affect or may result in a disparate impact on a particular group of candidates in the same protected class. In discussing the use of criminal records to exclude a candidate from employment, the Guidance references the Eighth Circuit decision in Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8 th Cir. 1977), which set out the following factors to be considered when assessing a criminal conviction: (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense or conduct and/or completion of the sentence; and (3) the nature of the job held or sought. The Guidance urges businesses to use a case-by-case approach for determining first whether the conviction has a relationship to the position sought, and if so, then applying the factors to determine whether the conviction should be exclusionary. In 2013, the State of Texas filed suit against the EEOC seeking a judgment blocking enforcement of the Guidance, declaratory judgment that state policies barring the hiring of convicted felons are legal, and for an injunction blocking the

31 EEOC from issuing right to sue letters consistent with the interpretation of Title VII in the Guidance. State of Texas v. EEOC, 5:13-cv (N.D. Texas). In 2014, the district court dismissed the case on the ground that Texas lacked standing to sue because the guidance had not been enforced against it. In June 2016, the Fifth Circuit reversed the dismissal, saying that Texas was affected by the Guidance as an employer bound by Title VII. With the change in Administrations, the NAACP Legal Defense Fund, the National Employment Project and two law firms sought to intervene in the case for fear that the Trump Administration would effective cede the case to the State of Texas. On August 23, 2017, the district court denied the bid to intervene, noting that the EEOC has stated that it intends to vigorously litigate the dispute. If the EEOC prevails in this litigation, it will effectively create a nationwide standard for non-statutory review of criminal convictions. This is not necessarily a problem for businesses, as the EEOC factors are essentially the same as those contained in numerous state and local laws throughout the country. In that sense, it provides some consistency to what is otherwise a never-ending list of laws governing criminal background checks, many with their own sometimes complicated compliance mechanisms. Compared to the current state by state and

32 city by city analysis, federal guidance that encompasses the primary goal of conducting a case-by-case review would seem to be a welcome alternative.

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