Tag Archives: john balitis

privacy

How Personal Employment Information Is Shared And Sold

In today’s competitive business world, employers constantly are seeking ways to increase efficiency and reduce cost.  One obvious option in this effort is outsourcing, and employers certainly should be free to delegate functions to third-party vendors when it makes sense to do so.  But what are the implications when outsourcing requires an employer to share with a vendor private information about the employer’s workforce?

For attorneys who counsel either businesses or individuals, it’s important to know what rules and limitations apply to the increasingly popular trend of outsourcing employee verification services.  The issues associated with this trend are far-reaching and beg the question:  How can we better regulate and improve this beneficial type of outsourcing, for employers and employees alike?

The key to answering these questions begins with an understanding of the dual role credit reporting agencies play as database sponsors in the employee verification industry.  For example, in addition to compiling consumer credit scores, credit reporting giant Equifax also is in the business of compiling other information that is equally personal; namely, confidential details about workers’ current and former employment.  In fact, Equifax might even be selling information as personal as your compensation level, the name of your healthcare provider, whether you’ve ever filed for unemployment benefits, and your paystub history.

What is “The Work Number”

The Work Number, a subsidiary of Equifax, provides various financial and employment verification services.  The Work Number uses its ever-expanding database to confirm employment and income information for commercial verifiers, social service verifiers, and potential future employers.  The Work Number’s database currently contains the employment and salary records of over one-third of U.S. adults, and it includes detailed employee information about weekly paystubs, healthcare providers, medical and dental insurance, and unemployment compensation claims.

The Work Number built its database with the cooperation of thousands of U.S. businesses.  The Work Number markets itself to these willing participants as a means for busy human resource departments to outsource the time consuming task of verifying a range of information on former and current employees.  This service is so attractive that participating businesses actually pay for the ability to send The Work Number all employee information typically needed in the verification process.  The Work Number fields verification inquiries on the employer’s behalf, freeing up employer staff time for other tasks.

While providing employers with a valuable service, The Work Number simultaneously funnels this information it receives from its clients to its parent company, Equifax.  In turn, Equifax sells the information to third parties such as debt collectors, student loan issuers, and financial institutions.

Although Equifax’s sharing of the personal information garnered by The Work Number under in its role as a verification service provider is indisputable, the extent of such sharing is in question.  In an interview with NBC News, Equifax spokesman Timothy Klein denied that salary information is sold to debt collectors.[i]  Klein’s statement is in conflict, however, with Equifax CEO Richard Smith’s 2009 NYSE Magazine interview, in which he stated “[W]e can provide information about a debtor’s location, income, and employment.  That can help prioritize which accounts to pursue first.”[ii]

Because employer use of The Work Number has become so prevalent, the District of Columbia has issued new guidelines for low-income housing compliance, which include a provision governing the treatment of applicants whose employment and earnings can be verified only via The Work Number.[iii]  Likewise, the current Code of Mississippi Rules actually includes The Work Number’s email address, phone number, and website address in a statutory provision that instructs applicants for State-funded childcare on how to provide income and employment verification.[iv]  Considering The Work Number’s fast-paced growth and the privacy concerns it poses for consumers, it makes sense to consider what safeguards, if any, are in place to protect us.

Fair Credit Reporting Act

The most obvious consumer protection tool implicated by Equifax’s practices is The Fair Credit Reporting Act (FCRA).  The FCRA regulates instances in which “consumer reports” or “investigative consumer reports” are requested from a “consumer reporting agency.”[v]  For purposes of the FCRA, a “consumer reporting agency” includes any entity that regularly assembles credit or other information about consumers and furnishes that information to third parties via any means of interstate commerce.[vi]  Thus, Equifax and The Work Number are considered consumer reporting agencies for purposes of the FCRA.  “Consumer reports” include any communication of a consumer’s personal characteristics which will serve as a factor establishing the consumer’s eligibility for credit or insurance or for employment purposes.[vii]  By contrast, “investigative consumer reports” include reports regarding the consumer’s personal characteristics gathered during personal interviews, but do not include specific factual information about the consumer’s credit record.[viii]  Due to the more personal nature of information contained in an investigative consumer report, stricter guidelines are in place regarding disclosure of investigative consumer reports compared to ordinary consumer reports.  To the extent Equifax and The Work Number provide third parties with consumers’ personal and financial information, Equifax and The Work Number furnish consumer reports.

There are three types of recipients of the information provided by Equifax and The Work Number: prospective employers, financial institutions and creditors, and third party purchasers.  The FCRA applies differently to each recipient type.

Prospective Employers

The Work Number markets itself as a means for prospective employers to verify employment information of job applicants.  Thus, as its core business, The Work Number provides sensitive information to prospective employers.  Because the FCRA applies whenever employers request consumer reports from a consumer reporting agency like The Work Number, the FCRA is implicated by The Work Number’s information transfers to prospective employers.

The FCRA addresses issues such as what types of employers can obtain consumer reports, how they must obtain the report, what they must do before taking adverse action in response to the report, and what they must do after taking adverse action.[ix]  The Work Number contends that FCRA guidelines are met when it provides prospective employers with employment information.  Such guidelines include providing job applicants with written notice that information obtained from a consumer report may be used when making decisions concerning their employment.[x]  This notice must appear in a document containing only this disclosure.[xi]  Additionally, the consumer must provide written authorization of the procurement of the report.[xii]  To the extent The Work Number provides employment verification to prospective employers and meets these guidelines, it is within its rights to do so.  What the FCRA fails to address, however, is how other information in The Work Number’s database, such as salary and insurance information, is used for non-employment purposes.

Financial Institutions and Creditors

In addition to providing potential employers with consumers’ employment information, The Work Number also concedes to providing creditors and financial institutions with employment information from its database.  In an interview with NBC News, Equifax spokesman Timothy Klein admitted that pay rate information is shared with third parties.[xiii]  These third parties typically include mortgage, auto, and financial services credit grantors.  Klein said The Work Number provides such information to financial institutions and credit grantors in compliance with the FCRA, but denied that salary information is sold to debt collectors.[xiv]  The Work Number asserts that consumers give such third parties the right to access this information at the time the consumer applies for credit.

Section 1681 of the Fair Credit Reporting Act states that generally, a consumer reporting agency, like Equifax or The Work Number, may only furnish a consumer report to such third parties when the consumer reporting agency has reason to believe the third party “intends to use the information in connection with a credit transaction involving the consumer … and involving the extension of credit to, or review or collection of an account of, the consumer.”[xv]  Even assuming Klein’s assertion is true that consumers grant these third parties access to such information, other provisions in the FCRA raise the question of whether this authorization is sufficient.  Subsection (c)(1)(A) of the FCRA requires that “the consumer authorize[e] the agency to provide such report to such person.”[xvi]  This language suggests that a much more personalized authorization transaction may be required than Klein alluded to in his statement.  Namely, it appears that the consumer must furnish the specific consumer reporting agency in question with authorization to provide the report to the specific financial institution or creditor requesting the report.  Interestingly, although in certain circumstances a consumer may authorize all reporting agencies to give all creditors this information by executing a general waiver at the time he or she applies for credit, another subsection of the FCRA indicates the consumer may have an additional line of defense.  Pursuant to subsection (c)(1)(B)(iii), a consumer may elect to have his name and address excluded from lists provided by consumer reporting agencies in connection with credit transactions not initiated by the consumer.[xvii]

Unfortunately, the rules delineating when reporting agencies like Equifax and The Work Number can give creditors and financial institutions other information from The Work Number’s database are unclear.  It is not clear when, how, and with regard to whom the consumer must provide authorization for a reporting agency to share this information.  However, given that consumers must be clearly notified in writing and provide authorization prior to issuance of a consumer report when such report will be used for employment purposes, a strong argument can be made that this same proactive and consumer oriented approach should apply to all sections of the FCRA.

Equifax Information Sold to Third Parties

In addition to providing information to prospective employers, financial institutions, and creditors, Equifax also sells some of this information to interested third parties.  For example, Equifax heavily markets The Work Number’s services to student loan issurers.  Thanks to The Work Number’s information, student loan issuers have seen a 5.5% increase in Right Party Contact and a 7.3% increase in Collections Resolution.[xviii]  Additionally, Equifax provides information from The Work Number to financial firms.  In these transactions, the information is packaged as a “portfolio monitoring” service which allows financial firms to market their products to a specially selected group of consumers.  The Work Number’s information is also marketed to these firms as “proactive managing of risk.”  In this context, the firms analyze information from The Work Number for early warning signs about when someone might soon run into financial trouble.  The marketing campaign for these services touts “Using The Work Number to stay abreast of employment changes can expand your ability to mitigate risk while maximizing product and service potential.”[xix]

Strangely, the FCRA seemingly fails to address this type of information transfer at all.  While the FCRA provides guidelines for when a consumer reporting agency may furnish a consumer report, how and when a consumer report may be furnished for employment purposes, how and when a consumer report may be furnished in connection with credit or insurance transactions, and what added protections are afforded medical information, there is a lack of guidance regarding the sale of such information.  Nowhere does the FCRA expressly prohibit the sale of consumer information to third parties with a business interest in the information.  This is further complicated by the fact that Equifax owns The Work Number.  As a credit bureau, Equifax proceeds under the comparatively lax rules governing credit reporting agencies, which are distinct from those governing data brokers.  Thus, by virtue of Equifax’s affiliation with The Work Number, it can behave as a credit bureau, selling credit information to lenders.  The problem, however, is Equifax has access to a much greater wealth of consumer information than a credit bureau otherwise would, thanks to its affiliation with The Work Number.

The good news, however, is that the FCRA actually may address the problematic affiliation between Equifax and The Work Number.  Section 1681s-3 of the FCRA relates to affiliate sharing.[xx]  This section prohibits an entity that receives information which would be a consumer report from another entity under common ownership from using that information to make a solicitation for marketing purposes, unless the consumer is provided an opportunity to prohibit such solicitations after a clear disclosure has been made to the consumer explaining that information may be communicated amongst such entities for purposes of solicitation.[xxi]  However, even this provision of the FCRA might not be as helpful as it seems.  Although it may prohibit Equifax from using information it obtains from The Work Number to solicit business, that is only half the battle.  Equifax still could continue to sell the information it gathers by its own efforts to third parties.  The information might simply be less comprehensive.

Possible Solutions

In light of these revelations, the first question on many consumers’ minds is how to address this sharing or sale of private information, which appears to be lawful under the guidelines currently in place.

From an individual’s perspective, preventing sensitive information from ending up in The Work Number database seems like a futile proposition.  A job applicant, for example, could attempt to condition a prospective employment relationship on the employer’s agreement not to share any of the applicant’s personal or employment information.  However, given the current job market, most employees would have very little negotiating power, and most employers are unlikely to oblige, especially given the economy gained by utilizing The Work Number.  If an individual is unsuccessful in this negotiation, he or she can always turn down a job offer.  While doing so will keep the employee’s personal information safe for now, the applicant has cut off his nose to spite his face and remains unemployed.  It seems then that the only plausible way to regulate these information transfers is to address them before the consumer even gets involved.

Congress Should Revisit the Fair Credit Reporting Act

The most effective means by which to provide much-needed regulatory reform is to take legislative action.  Specifically, Congress should revisit the FCRA, taking into consideration the flaws and gaps that Equifax is exploiting.  One approach could include amending the FCRA to require a consumer’s written authorization before such information is sold.  Specifically, implementing the same comprehensive authorization guidelines currently in place regarding consumer reports used for employment purposes could serve as a model.  Under this approach, the consumer reporting agency would need to provide consumers with clear, conspicuous written notice of the possible sale of their information prior to the information being sold.  Such notice would need to be in a stand-alone document, and the consumer’s response, either authorizing the sale or not authorizing the sale, would also need to be in writing.

Another possible approach includes implementing stricter rules governing the flow of consumer reports out of credit bureaus, perhaps mirroring the already stricter guidelines governing disclosure of investigative consumer reports.  Additionally, Congress could amend the FCRA to clearly delineate exactly what information can be included in consumer reports.  Part of the current problem appears to involve the crossover between the personal and employment related information contained in The Work Number’s database with the credit information expected to be in the hands of a credit bureau, like Equifax.

John Balitis is a director and attorney with the law firm of Fennemore Craig in Phoenix where he co-chairs the firm’s Labor Relations and Employment Practice Group.  He represents businesses in all aspects of employment law. Kristin Penunuri is a student at the Sandra Day O’Connor College of Law at Arizona State University.  She is a legal writing intern at Fennemore Craig in Phoenix.


[i] Bob Sullivan, Your Employer May Share Your Salary, and Equifax Might Sell That Data, The Red Tape Chronicles on NBC News.com (Jan. 30, 2013, 4:44 AM), available at http://redtape.nbcnews.com/_news/2013/01/30/16762661-exclusive-your-employer-may-share-your-salary-and-equifax-might-sell-that-data?lite.

[ii] Id.

[iii] D.C. Mun. Regs., Title 14 § 5402 (2012).

[iv] Miss. Admin. Code, Title 18, Subtitle 7, Rule 2 § 102 (2012).

[v] Fair Credit Reporting Act, 15 U.S.C. § 1681 (2006).

[vi] Id. at § 1681a (2006).

[vii] Id.

[viii] Id.

[ix] Bob Sullivan, Your Employer May Share Your Salary, and Equifax Might Sell That Data, The Red Tape Chronicles on NBC News.com (Jan. 30, 2013, 4:44 AM), available at http://redtape.nbcnews.com/_news/2013/01/30/16762661-exclusive-your-employer-may-share-your-salary-and-equifax-might-sell-that-data?lite.

[x] 15 U.S.C. § 1681b (2006).

[xi] Id.

[xii] Id.

[xiii] Sullivan, supra note 9.

[xiv] Id.

[xv] 15 U.S.C. § 1681b (2006).

[xvi] Id.

[xvii] Id.

[xviii] Bob Sullivan, Your Employer May Share Your Salary, and Equifax Might Sell That Data, The Red Tape Chronicles on NBC News.com (Jan. 30, 2013, 4:44 AM), available at http://redtape.nbcnews.com/_news/2013/01/30/16762661-exclusive-your-employer-may-share-your-salary-and-equifax-might-sell-that-data?lite.

[xix] Id.

[xx] 15 U.S.C. § 1681s-3 (2006).

[xxi] Id.

 

 

How To Learn More About Your Work Number

Consumers who want to know what, if any, information about them resides with The Work Number may do so by visiting The Work Number website (www.theworknumber.com) and requesting an Employment Data Report (“EDR”).  Processing this request involves logging in and completing an EDR request form that is available in .pdf format.  Alternatively, interested consumers may contact The Work Number by telephone at (866) 604-6570.

If an EDR contains information that is inaccurate or objectionable to the consumer, he or she may submit online comments via The Work Number website.  The website suggests that The Work Number will embed the comments so that they are visible to subscribers that obtain the consumer’s other information from The Work Number.

 

iPhone Business Apps

‘Bring Your Own Device’ trend a growing concern

The rise in popularity of smart phones, tablets and laptops has blurred the increasingly thin line between professional and personal life, between work time and personal time. But it’s is also creating security concerns for business owners who let their employees use those tech toys for work.

“Employers need to address the question of how to react to the inevitable or current use of personal or shared devices by their employees,” said Cheri Vandergrift, a staff attorney for Mountain States Employers Council, a leader in human resource and employment law services for the business community. “From IT issues to privacy and litigation concerns, companies that ignore the rising ‘Bring Your Own Device’ tide may find that BYOD brought nothing but disaster.”

While an AccelOps Cloud Security Survey of IT security personnel ranked BYOD as the top source for fear of incurring data loss, there are also concerns regarding employee privacy should litigation ensue and the question of using personal devices goes into the courtroom. The use of personal devices in the workplace stirs questions within the IT, legal and human resources departments of companies.

“Data access and ownership are significant legal issues that surround the BYOD trend,” said John Balitis, director at Fennemore Craig. “Employees accessing employer systems with personal devices can create major network security risks and employer IT staff accessing the devices to support them can infringe on employee privacy. Further, how to define who owns what information on the devices is challenging.”

Laurent Badoux, a shareholder in Greenberg Traurig’s Phoenix office, said there are a number of legal issues that could arise from the BYOD trend. Among them:

* Breach of confidentiality — especially with medical or financial data.
* Commercial espionage or unfair competition.
* Fair Labor Standards Act (FLSA) claims of unreported or unpaid time.
* Dispute as to ownership of data stored on personal devices.
* Claims of harassment, defamation, invasion of privacy, etc. from improper social media posting of workplace conduct.
* Negligence torts if an exployee tries to answer a work text or email while driving and causes an accident.

“The most glaring risk (an employer takes) is that sensitive confidential corporate data becomes compromised, either because an outsider is able to access that data through an employee’s device or to copy data stored on that device,” Badoux said. “When their sensitive data becomes compromised, companies face damage to the bottom lines and public image.”

According to Travis Williams, senior counsel at the Frutkin Law Firm, if a company believes information is jeopardized, or upon termination of an employee’s employment, the employer may have the right to seize the device for a short time to ensure proper protection or removal of company’s sensitive information.

“Employees need to understand that business information on their device is the property of the employer,” Williams said. “The employer has the right to protect the information. The protection may allow the employer to seize or force ‘wipe’ the device to ensure proper removal of the information.”

While there is no doubt that the BYOD trend has given tech-savvy employees the opportunity to create a more flexible schedule and therefore increase their productivity, experts said it’s imperative that companies find a balance between protecting sensitive work data, while still providing employees flexibility and independence.

“Have a policy that specifically addresses what employees can and cannot do with PEDs (personal electronic devices) used for work-related purposes and enforce that policy,” said Tibor Nagy, Jr., a shareholder at the Tucson office of Ogletree, Deakins, Nash, Smoak & Stewart. “Be sure the policy addresses what happens to employer data when the employee leaves employment.”

Experts said companies who worry about issues related to the BYOD trend should look to impose tighter security constraints, develop technology guidelines and policies or employ mobile-device management tools, services and systems.

“An employer absolutely should implement a BYOD policy if the employer allows or encourages employees to use personal devices for work,” Balitis said.

Badoux said an effective BYOD program should include:

1. Mandatory Mobile Device Management software
2. Clarification of expectations on ownership of data, privacy and access to dual-use devices.
3. “Acceptable Use” procedures harmonized with the employee handbook or agreement).
4. A well-crafted social media policy.

“Do not allow highly sensitive employer, personnel, health information, or customer data to be stored on an employee’s PED, unless you are certain that device will be used and protected to the same degree as an employer-owned device,” Nagy said. “Only allow PEDs that are ‘enterprise; enabled. Enterprise requirements include encryption of storage media; the ability to remotely wipe or clean a device; the ability to enforce password changes and password complexity; the ability to apply upgrades and patches; and the ability to revoke rights to data or corporate network access.”

minorities

Language issues become workplace legal issues

Two Whole Foods grocery store employees in Albuquerque were recently suspended after getting in a dispute with their manager over speaking Spanish in the workplace.

That incident raises an employment law question that leaves many Arizona employers scratching their heads: Can employers require their employees to only speak English in the workplace?

The answer to that question, like the gray area that surrounds many legal questions, is “it depends.”

“While there is no specific law that requires a specific language in the workplace, Title VII of the Civil Rights Act and the Arizona Civil Rights Act prohibit discrimination based upon national origin and language is closely tied to national origin,” said Stephanie Quincy, a partner with Steptoe & Johnson LLP in Phoenix. “The Equal Employment Opportunity Commission (EEOC) is a federal agency that enforces Title VII and the Arizona Civil Rights Division of the Arizona Attorney General’s Office enforces the Arizona Civil Rights Act.  Both agencies are very concerned that employers will enact language requirements not because of business necessity, but as a way of excluding certain nationalities from the workplace. The Phoenix office of the EEOC sued a restaurant located on the Navajo Nation for enacting an English-only policy, resulting in years of protracted litigation for the employer.”

That restaurant is not alone. The EEOC recently released figures on what kinds of employment discrimination cases are being brought to the agency and complaints of discrimination based on national origin, including those involving perceived problems with language ability or accent, have increased  77 percent since 1997. The EEOC has suggested that it might be the increasing diversity of the American workforce, but civil rights advocates think it’s more likely due to a climate of fear, particularly in states like Arizona that have been enacting laws hostile to immigrants, both legal and undocumented.

“Generally speaking, English-only rules are not in and of themselves unlawful,” said John Balitis, a director at Fennemore Craig who practices in the labor and employment area. “They are permissible when needed to promote the safe and efficient operation of the employer’s business.”

According to Joseph T. Clees, shareholder, and Alexandra J. Gill, associate, of Ogletree, Deakins, Nash, Smoak & Stewart, there are some circumstances where an English-only rule may be necessary to further a safety, efficiency or other legitimate business concern. The EEOC has provided examples of such circumstances including, communication with customers, employees or supervisors who only speak English; emergency situations; cooperative work assignments where the English-only rule is necessary for efficiency purposes; and to assist supervisors with monitoring of performance.

“This is an extremely high standard and very difficult to meet,” Quincy said. “Furthermore, some of these categories would only permit an English-only rule where the business necessity is present and would not support a rule completely prohibiting non-English languages completely.”
This is where that gray area comes into play when it comes to language in the workplace, experts said.

“If the employer cannot demonstrate that (speaking English) is a ‘business necessity,’ it cannot justify such a rule and could be subject to legal action by any employee who is affected by the policy,” Quincy said. “A policy does not have to be a formal written policy. A rogue supervisor can create a policy by simply telling employees speaking Spanish to quit doing so. Such a policy can almost never be supported when enforced on employee breaks or when employees are having non-work related discussions.”

Because the EEOC has taken the position that English-only policies can violate Title VII, Clees and Gill said employers adopting these policies can face a range of penalties under Title VII if the policy is found to be discriminatory.

“An individual alleging a violation of Title VII may seek to recover damages including back pay, front pay, compensatory damages, punitive damages, and attorneys’ fees,” they said. “Individuals may also request injunctive relief.”

Because of the potential backplash, Clees said employers should carefully analyze their reasoning for instituting an English-only policy prior to doing so.

“Employers should consider whether the policy has important safety justifications and/or business justifications, and whether instituting the policy would be effective in advancing the desired business purpose,” he said. “Employers should also consider whether there are any alternatives to an English-only policy that would accomplish the same goals. If an employer decides to an English-only policy is necessary, it should ensure that employees are clearly informed of the policy, including when and where it applies.”

While there is no precise test for weighing or evaluating the business reasons for a language policy in the workplace, Quincy said the EEOC suggests considering:
· Evidence of safety justifications for the rule.
· Evidence of other business justifications for the rule, such as supervision or effective communication with customers.
· Likely effectiveness of the rule in carrying out obectives.
· English proficiency of workers affected by the rule.

“Employers should only (implemented policies that either completely or partially prohibit the use of any language other than English) if they can articulate a business necessity for such policies,” said Charitie L. Hartsig, an associate at Ryley Carlock & Applewhite. “They should also clearly inform employees of the circumstances under which they will be required to speak only English and the consequences of violating the policy. Limited English-only policies have been allowed under Title VII where the policies are in place to ensure clear communications regarding the performance of dangerous and safety-sensitive tasks. The EEOC presumes that an employer that completely prohibits employees from speaking their native language disadvantages the employee’s employment opportunities on the basis of national origin under Title VII. However, the Ninth Circuit rejected the EEOC’s per se rule. Nevertheless, Arizona employers should be cautious about implementing English-only policies and do so only when there is a business necessity for doing so.”

Despite an employer’s best business intentions, experts said instituting a language policy in the workplace is most likely a powderkeg ready to explode.
“The EEOC presumes that English-only rules applied at all times are discriminatory,” Balitis said. “Because the EEOC looks with disfavor on English-only rules, an employer may be forced to litigate even the most carefully crafted rule.”

153181882

Paid time off to vote? Yes, in Arizona!

As the November election approaches, Americans gear up to exercise their greatest civic duty — voting. But finding the time to vote is a luxury many working voters struggle with. However, Arizona law simplifies this process by dictating that employers must give eligible voters up to three hours of paid leave in order to vote on Nov. 6.

According to Arizona Revised Statute 16-402, Arizona public and private employers must give their employees paid time off to vote if the following three conditions are met:

  • The employee must be eligible to vote in the election.
  • The employee requests voting leave one day prior to the election.
  • Less than three consecutive hours exist between either: Opening of the polls and the beginning of the employee’s regular work shift, or the end of the employee’s regular work shift and closing of the polls.

Employees are not liable for any penalty or wage deduction for the mandatory time off, the law states.

“Whether it’s a presidential election year or not, this statute always applies in relation to voting in Arizona,” says John Balitis, an employment attorney with Fennemore Craig.

The statute is important for employers and employees to know because it gives employees beneficial rights in connection to voting, and it also informs employers about their obligations, Balitis says.

However, although the Arizona statute doesn’t require proof of voting, Balitis says they may ask for it.

“If an employer has reason to doubt that the employee actually took the paid time to vote, it would be reasonable for the employer to require the employee provide proof that they actually did vote,” Balitis says.

Employers who violate AZRS: 16-402 are subject to a class two misdemeanor, which is punishable by fines and possible imprisonment.

There are no cases on record of Arizona employers violating AZRS: 16-402, Balitis says.

The following states have a law similar to Arizona’s requirement for voting time off, although not all require employers to pay employees: Alabama, Alaska, California, Colorado, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, Oklahoma, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia and Wyoming.

The following states do not have any statute regarding employers giving employees time to vote: Arkansas, Connecticut, Delaware, Florida, Idaho, Indiana, Louisiana, Maine, Michigan, Mississippi, Montana, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rohde Island, South Carolina, Vermont, Virginia and Wisconsin,

For more information regarding Arizona Revised Statutes: 16-402, visit azleg.state.az.us.

Nonexempt Vs. Exempt Employees

Exempt Employees Versus Nonexempt Employees

Classifying employees as exempt or nonexempt might seem easy at first glance.  Either they are salaried or they are hourly.  Accordingly, they either are eligible to earn overtime for hours worked or they are not.

But it’s not that simple. Nor are the penalties a business can face. Complaints can be made against a business up to two years after an alleged misclassification and resulting lost wages.

Compliance is Key

Such allegations can prove costly, especially if tension in the workplace escalates between the accuser and the business to the level of what could be considered discrimination or harassment. In fact, the U.S. Department of Labor Website’s compliance section states:

“It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under the FLSA.

“Willful violations may be prosecuted criminally and the violator fined up to $10,000. A second conviction may result in imprisonment.”

In addition, any employer found to have willfully violated employee rights, whether exempt or nonexempt from the guidelines outlined in the FLSA, “may be prosecuted criminally and fined up to $10,000,” DOL documents state. “A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties of up to $1,100 per violation.”

When Wage and Hour investigators uncover violations, the DOL will often work with that employers to help them become compliant. In addition, they will be required to pay any back wages that may be due to employees.

Two-Part Test

So what is the standard by which an exempt and nonexempt employee can be measured, and what rules apply to each classification? To be considered exempt, a salaried employee must meet specific salary and duty requirements.

An employee, who is salaried who earns less than $455 per week would be nonexempt and therefore eligible for overtime and other protections under the FLSA.  An exempt employee would not be eligible for overtime, but with limited exceptions, must receive their full salary for any week during which they work, Compensation Management News reports. For more information, visit Compensation.BLR.com.

The second portion of the test relates to the duties an employee performs, their job category such as administrative, computer specialists, outside sales and more. For specific exemptions, see the accompanying chart or visit the DOL Website. In some cases, as with computer specialists, otherwise exempt employees may be paid hourly instead as long as they earn $27.63 or more per hour.

Managing Expectations

In Arizona, there is no legal definition for exempt and nonexempt employees. Everybody is entitled to a minimum wage. However, Arizona does have its own unique minimum wage law. Arizona’s minimum wage is $7.35 per hour and federal minimum wage is $7.25.

While exempt employees are generally not eligible for overtime, they reap other benefits.

“If a person works part of a day and then leaves, you cannot dock them if they are exempt,” explained John Balitis, an employment and labor attorney with Fennemore Craig. “The caveat is that you can dock a salaried, exempt employee’s leave days, so long as it does not result in a loss of compensation during the pay period in which the docking occurs. So, the docking rule for partial day absences is different, depending on whether you are talking about pay or leave.”

Paul W. Barada, a salary and negotiation expert for Monster, agrees. “Exempt employees are generally expected to devote the number of hours necessary to complete their respective tasks, regardless of whether that requires 35 hours per week or 55 hours per week. Their compensation doesn’t change based on actual hours expended. Exempt employees aren’t paid extra for putting in more than 40 hours per week; they’re paid for getting the job done,” Barada wrote in a career advice article published on Monster.com.

If not hours, what then, constitutes an exempt employee’s fulfillment of having completed a day’s work?

“This is an interesting issue that judges and lawyers are talking about, but there is no clear answer,” Balitis said. “Given the proliferation of smart phones and employees checking their email, voice mail and texts while they are at home or in the car on the way to work, there is case law that says that becomes compensable time—so the day has started and exempt/salaried employees have to be paid.”

Balitis said employers, regardless of size, would be well-advised to to purchase a multi-law comprehensive poster for the workplace. If purchased as a subscription from a service, he said, companies generally send updated posters when any of the requirements change.

Commonly Used Exemptions

Commissioned sales employees of retail or service establishments are exempt from overtime if more than half of the employee’s earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked. You may also wish to review the applicable regulation.

Computer professionals: Section 13(a)(17) of the FLSA provides that certain computer professionals paid at least $27.63 per hour are exempt from the overtime provisions of the FLSA.

Drivers, driver’s helpers, loaders and mechanics are exempt from the overtime pay provisions of the FLSA if employed by a motor carrier, and if the employee’s duties affect the safety of operation of the vehicles in transportation of passengers or property in interstate or foreign commerce. You may also wish to review the applicable regulation.

Farmworkers employed on small farms are exempt from both the minimum wage and overtime pay provisions of the FLSA. You may also wish to review the specific regulation.

Young workers employed on small farms, with parental consent, are also exempt from the child labor provisions of the FLSA. For more information on exemptions from the child labor provisions of the FLSA in agriculture, click the underlined text. Other farmworkers are exempt from the FLSA’s overtime provisions. You may also wish to review the specific regulation.

Salesmen, partsmen and mechanics employed by automobile dealerships are exempt from the overtime pay provisions of the FLSA. You may also wish to review the applicable regulation.

Seasonal and recreational establishments: Employees employed by certain seasonal and recreational establishments are exempt from both the minimum wage and overtime pay provisions of the FLSA. You may also wish to review the applicable regulation.

Executive, administrative, professional and outside sales employees: (as defined in Department of Labor regulations) and who are paid on a salary basis are exempt from both the minimum wage and overtime provisions of the FLSA.

For more information about commonly used exemptions, visit www.dol.gov.

Source: US Department of Labor elaws – Fair Labor Standards Act Advisor

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