Prepared by Ted Gentry
March 2013

Hiring Highlights

We believe it’s a good sign that South Carolina businesses are concerned about hiring issues. Nationally, the average number of claims for new unemployment benefits this month was the lowest level since February 2008. The South Carolina Department of Employment and Workforce reported that nearly 27,000 more South Carolinians are working than in 2012, and experts are hopeful that the decline in unemployment claims indicates a recovering economy.

In that vein, we continue February’s discussion of topics to avoid in job interviews. This month, we consider the risks and benefits of reviewing social media sites maintained by employees or applicants for employment.

The ease and speed with which an employer can find a wealth of information on an applicant using Facebook and other social media outlets make these sites almost too tempting to ignore. As an initial matter, requiring an employee or applicant to provide passwords or access to Facebook or other social media sites is discouraged, and even illegal in some cases. Some states passed legislation in 2012 prohibiting employers from asking for social media passwords or accessing social media accounts of applicants and employees. The South Carolina General Assembly and the U.S. Congress are considering similar legislation that would prohibit employers from taking adverse employment actions against applicants or employees for refusing an employer’s request for email or social media account information. More insight on the dangers of using information gathered via social media can be found in our previous entries, “Accessing Your Employee’s Social Media Accounts” and “Can Your Facebook Account Cost You Your Job?

Even when not prohibited by law, getting “as much information as you can” on-line can carry risks. Certainly, examining an applicant’s Facebook page might provide insight into her relationship with her employer, her work ethic, and whether she would be a good fit for your company. However, the same Facebook page could also yield information on the applicant’s religion, age, disability, national origin, family status or other information concerning a protected status. As we discussed last month, having that sort of information is not beneficial, and once it is seen, it cannot be “unseen.” If you decide not to hire that applicant, she could file a discrimination claim asserting that you improperly relied on that sort of information in rejecting her. Thus, even if an employer had no discriminatory intent, a peek at an applicant’s social media postings could actually give rise to a claim of discrimination!

Any background checks – and even informal internet searches – should be done by trained HR staff or managers sensitive to the legal risks posed by the Fair Credit Reporting Act, as well as by state and federal equal opportunity employment laws. Employers can also reduce their exposure by documenting the reasons they make (or don’t make) hiring decisions.

Please let us know if we can help you determine if your procedures comply with applicable law. And visit the Wyche website for further discussion of the risks and benefits of employer-conducted social media searches.

Record Retention Guidelines

In the spirit of spring cleaning, many employers may be planning to review and perhaps destroy old files on applicants and employees. While that may not be a bad idea, employers should keep in mind that state and federal laws and regulations govern how long certain applicant and employee records must be kept.

South Carolina Requirements

South Carolina employers must retain the following records for five years:
• the beginning and ending dates of each pay period and the largest number of workers employed during each calendar week of each pay period;
• for each employee: full name, social security number, number of hours worked each week if less than full-time, amount of money wages paid, reasonable cash value of remuneration paid in a form other than cash, dates of hire, re-hire, or return to work after temporary layoff, and date and reason for separation from employment.
• for an employee who may be eligible for partial benefits: the wages earned by week, whether any week was less than full-time, and time lost due to the employee’s unavailability for work.

Records of all injuries suffered by an employee in the course of employment should be retained for two years. The South Carolina Workers’ Compensation Commission supplies forms for this purpose.

Federal Requirements

No single statute sets forth all federal recordkeeping obligations, and there are numerous specialized requirements – including ones for companies that contract with the government and that are subject to special regulations, such as those issued by the Department of Transportation.  Keeping this principle in mind, here are some of the most commonly applicable guidelines:

Type of Record Minimum
Payroll records and time sheets (for details of information required, see the DOL’s Fact Sheet on recordkeeping requirements under the Fair Labor Standards Act) Typically 3 years, but it is recommended employers retain records for length of employment plus 5 years
Form I-9 3 years after employment begins or 1 year from termination (whichever is later)
Tax records 4 years after payment, deduction of taxes or due dates of returns
Polygraph test records 3 years (results and reasons for tests)
Credit reports 5 years
Job applications, resumes, job advertisements, screening tools and tests, interview notes, records promotions, demotions, transfers, performance appraisals, terminations, etc. 1 year from creation of the document or the decision to hire/not hire, whichever is later (for employers with at least 15 employees

The Department of Labor (the “DOL”) offers an overview of recordkeeping requirements, organized by topic and by law, and an elaws’ FirstStep Recordkeeping Advisor to assist employers.

For a comprehensive document retention plan tailored to your company’s needs, please give us a call.

USCIS Releases Revised Form I-9

Almost one year after publishing a proposed revision to its Form I-9 for verifying the identity and employment authorization of individuals hired for employment in the United States, U.S. Citizenship and Immigration Services finally released its new Form I-9 and a revised Handbook for Employers this month. The new form has a revision date of “03/08/13 N” and has been expanded to nine total pages, all of which must be made available to the employee completing the form.

The USCIS advises that although employers should begin using the newly released form right away, older forms dated 02/02/09 and 08/07/09 will be accepted until May 7, 2013. After May 7, 2013, only the “03/08/13 N” form will be accepted.

Also, USCIS states that employers do not need to – and should not – complete the new Form I–9 for current employees who already have a properly completed Form I–9 on file. It should be noted that current employees whose status must be re-verified or past employees seeking to be rehired do not – by definition – have properly completed Form I-9s on file. On the other hand, asking employees with properly completed Form I-9s to complete new Form I-9s may violate anti-discrimination provisions of the Immigration and Nationality Act.

If you use an electronic I-9 system, make sure that your vendor’s software complies with the new requirements. Also, remember that many states, including North Carolina and South Carolina, require employers to use E-Verify in conjunction with Form I-9 to confirm a newly hired employee’s authorization to work in the United States.

Civil fines and criminal penalties for Form I-9 violations can add up quickly, so let us know if you have any questions regarding your employment verification procedures.

Court Rules Shareholders Personally Liable for Unpaid Overtime

A ruling in a recent Eleventh Circuit Court of Appeals case reminds us that individuals can be personally liable for an employer’s failure to pay employees overtime under the Fair Labor Standards Act. The FLSA broadly defines “employer” to include both the employer and “any person acting directly or indirectly in the interests of an employer in relation to an employee.” In this case, the Court held individual shareholders liable for a corporation’s FLSA violations. The shareholders were personally liable even though they were present on the worksite only about two weeks per month. The Court focused on the fact that the shareholders controlled the employer’s financial affairs such that they could “cause the corporation to compensate (or not to compensate) employees in accordance with the FLSA.” In addition, the Court held that the plaintiffs’ ability to recover unpaid wages under the FLSA for work already performed did not depend on their immigration status; that is, the fact an employee may not have been authorized to work is not a good defense to a wage claim. The Eleventh Circuit covers Alabama, Georgia, and Florida, but the takeaway is clear: supervisors, officers, directors, and owners need to ensure that overtime is being paid properly and on time to employees, or they could risk personal liability.

Paying Interns May Not Avoid Wage and Hour Lawsuits

As we have discussed earlier, class action lawsuits filed by unpaid interns have made employers wary of establishing such arrangements. However, merely paying an intern may not be enough, if the method of pay is illegal. Paid interns have recently filed lawsuits claiming they were not paid minimum wage or did not receive overtime. In a class action case filed in New York, a paid intern has alleged that the employer failed to pay minimum wage and overtime, misclassified paid interns as exempt from wage and hour laws, and classified interns as part time even though they worked more than 100 hours a week. This case is still in its early stages but even at this point there are some important lessons for employers: keep detailed time records for interns and review each position to make sure it meets the requirements of a true internship.

The Department of Labor’s Fact Sheet #71 on internships offers some additional guidance to for-profit employers who are considering internships. Non-profit organizations may have more leeway with unpaid interns. In a footnote on Fact Sheet #71, the DOL stated that “[u]npaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible.” Unfortunately, the DOL has not provided further guidance on this issue, so even non-profit organizations should enter into internship agreements with some intentionality and protect the organization (and its leaders) from undue exposure. Visit the Wyche website for more guidance on the legal issues surrounding unpaid internships, or give us a call to discuss your concerns in detail.

If you have any questions about these or other workplace law topics, please contact Ted Gentry.

This update is provided by Wyche for educational and informational purposes only and is not intended and should not be construed as legal advice.