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Brunini Adds Real Estate and Economic Development Counsel

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Adam Vaughan has joined Brunini as a member of the Real Estate, Corporate Law, and Economic and Project Development practice groups within the firm’s commercial department, bringing extensive experience in complex real estate transactions, affordable housing development, and finance.

Adam partners with developers, business owners, and government entities to help move projects from concept to completion, structuring transactions, navigating regulatory requirements, and identifying practical solutions that align with clients’ strategic and financial objectives. He helps clients anticipate potential challenges, mitigate exposure, keep complex developments on track, and execute initiatives that generate long-term economic impact while meeting operational and compliance demands.

“We are delighted to welcome Adam to the firm,” said managing partner James McCullough. “Adam has played a key role in the development of transformative community projects across the Southeast. His experience further elevates our ability to meet clients’ increasing real estate and economic development needs.”

As one of Mississippi’s longest-established law firms, Brunini serves business clients in the areas of commercial, litigation, and regulatory law. The firm’s commercial department counsels clients in matters of general corporate law, mergers and acquisitions, public and industrial development financing and tax incentives, securities regulation, financial services and banking, real estate transactions, insurance regulation, syndication, estate planning, antitrust, and corporate and personal taxation.

Federal Court Blocks FTC’s Noncompete Ban Nationwide

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On Tuesday, August 20, 2024, a federal judge issued an order blocking the pending nationwide ban on noncompete agreements which was scheduled to take effect in a matter of days. In April 2024, the U.S. Federal Trade Commission (“FTC”) voted 3-2, along party lines, to approve a final rule essentially banning virtually all new noncompete agreements and clauses in employment contracts —a potential change that would impact millions of U.S. workers by allowing them to leave their jobs to work for competitors or to start a competing business.

In her ruling, Judge Ada Brown, U.S. District Judge for the Northern District of Texas, sided with a group of plaintiffs, including the U.S. Chamber of Commerce and a Texas-based tax firm that sued to block the ban, alleging that the ban exemplified agency overreach and would make it harder for companies to retain talent. In a 27 page opinion, Judge Brown ruled that the FTC lacked the authority to enact the ban, which she said was “unreasonably overbroad without a reasonable explanation” and “arbitrary and capricious.”

In addition to casting further doubt on the future of noncompetes, Judge Brown’s ruling signifies further judicial disagreement over the role of regulatory agencies in America—especially on the heels of the U.S. Supreme Court’s recent decision to overturn the federal judiciary’s forty-year-old practice of deferring to agencies’ interpretations of ambiguous federal laws.

The Northern District case is currently one of three on-going lawsuits challenging the FTC’s non-compete rule. The others are pending in Florida and Pennsylvania, with one judge initially siding with the FTC and the other against. Neither of those suits has yet reached a final determination on the FTC’s rulemaking authority.

While the FTC’s ban has now been struck down, employers nationally can continue using noncompete agreements—so long as they comply with existing state-specific restrictions. Without this ruling, the FTC’s noncompete ban was scheduled to go into effect on Wednesday, September 4, 2024. Instead, the issue is now likely headed to the Fifth Circuit Court of Appeals.

Brunini’s Labor & Employment specialists are monitoring these events and will update you accordingly.  In the meantime, feel free to contact any member of Brunini’s Labor & Employment Practice Group if you wish to discuss.

Biden’s unnecessary regulations on offshore oil rigs threaten jobs in Gulf States

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By CURT L. HEBERT JR. AND CURTIS SCHUBE

The Biden administration, in line with its goal of significantly reducing oil production, has quietly implemented regulations that are likely to result in a significant loss of jobs in the oil industry across the Gulf Coast states, including Mississippi and Louisiana.

For any offshore producer of energy, part of the company’s financial calculus has to be the ability to comply with all imposed industry regulations that require companies to be able to disassemble the facility and restore the site after the end of production (“decommissioning”).

This can be expensive, so often, this process requires companies to demonstrate their capacity to pay for the decommissioning. This can be done by demonstrating financial strength and reliability or by purchasing surety bonds if that financial strength and reliability is not demonstrated.

The offshore oil industry has operated under a financial assurance model that has worked extraordinarily well for years and the oil industry has thrived under a successful financial assurance model. The typical journey of an offshore oil rig involves a major oil company erecting the oil rig and using it during its most productive phase. Eventually, the major companies may sell off the leasing rights to smaller, independent, oil companies who continue to extract oil until the oil rig reaches the end of its productive life.

Major oil companies have no trouble with financial assurance. They have a deep reserve of assets to draw upon, which usually prevents them from having to purchase surety bonds. However, the assets are not always sufficient for smaller companies.

This reality has historically not been a problem. The system has included joint and several liability between the oil producers, and it has relied on the market to act as a safety net. When the existing owner cannot pay for all of the decommissioning, predecessor owners have stepped up. This risk has usually been built into the transactions between the two companies, with the major oil companies doing their due diligence before assuming the risk. Importantly, with this system in place, as long as any company that has ever controlled the lease has the necessary financial strength, no surety bonds must be purchased.

The end result of this joint and several liability system is that the taxpayer almost never has to pay for decommissioning. Historically, only $58 million has been paid for by the taxpayer. This is a tiny amount considering the size of the industry. All of that amount came from sole liability leaseholders, where there was no predecessor owner to assume the gap in liability. Bottom line: The existing system has worked, and the taxpayer has been protected for decades.

Recently, the Bureau of Ocean Energy Management passed regulations that try to fix what wasn’t broken. They noticeably fail to affirm that this joint and several liability framework will remain moving forward — so much so that the Surety and Fidelity Association of America noted that “BOEM is silent as to how and when the required financial assurance will be called upon.”

As a result, small and independent oil companies are likely to be required to purchase surety bonds to meet their financial assurance requirements. However, the surety market has stated that it may not even be able to underwrite the amount of necessary surety bonds. Even if it could, this would add $6 billion in new costs for these small oil companies over the next 20 years.

Small oil companies make up over 75% of the oil companies currently operating in the outer continental shelf in the Gulf of Mexico. The average cost increase for those companies to purchase the newly required surety bonds is projected to be $379 million per year at best, but likely closer to $800 million per year. Assuming these small oil companies can even get the necessary surety bonds, the costs of the surety bonds are likely to damage them severely.

The new regulations are likely to put many small oil companies out of business, and the people who work for them are also likely to find themselves without jobs. Opportune LLP wrote that the new regulations will eliminate 36,000 jobs. Additionally, Opportune projects the regulations will shrink the nation’s gross domestic product by $9.9 billion and will cost the federal government $573 million in oil royalties.

The new regulations frivolously act as the tip of the spear for the environmental activists who seem to hold tremendous sway over key leadership in the Biden administration. The significant impact on Gulf States’ workers is unnecessary. The damage to the economy is unnecessary. It is time that our federal government stops appeasing the few at the cost of so many.

Hebert is the former chairman of the Federal Energy Regulatory Commission, a former chairman of the Mississippi Public Service Commission and a former chairman of the Oil and Gas Committee in the Mississippi House of Representatives. He is currently a partner with the Brunini Law Firm and is an expert on the complex power and energy industry as well as the regulation of the industry by government at all levels.

Schube is the executive director for the Council to Modernize Governance, a think tank committed to making the administration of government more efficient, representative and restrained. He is formerly a constitutional and administrative law attorney.

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Federal Trade Commission Votes to Ban Employer Use of Noncompete Agreements

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On Tuesday, April 23, 2024, the U.S. Federal Trade Commission (“FTC”) voted 3-2, along party lines, to approve a final rule essentially banning virtually all new noncompete agreements and clauses in employment contracts—a potential change that would impact millions of U.S. workers.  If implemented, the final rule would also invalidate all existing noncompete agreements, except for those agreements pertaining to “senior executives.” As part of this retroactive invalidation, U.S. employers would be required to provide notice to current and former employees informing them that they are no longer subject to an enforceable noncompetition agreement.

 

How We Got Here:  President Biden’s July 2021 Executive Order

The Biden Administration began taking aim at corporate employers’ use of noncompetition agreements back in July 2021, when President Biden signed his Executive Order on Promoting Competition in the American Economy. In the Executive Order, President Biden issued a specific directive to the FTC to utilize its statutory rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

 

The FTC’s Proposed Rule

In early January 2023, the FTC, appearing to meet the President’s challenge, announced a proposed rule that would all but outright ban the use of non-compete agreements by employers in the United States. The FTC’s proposed rule was sweeping. With very limited exception, it would: (1) retroactively invalidate all existing non-compete agreements between employers and employees, and (2) prohibit employers from using such agreements in the future. As written, the FTC’s proposed rule governs non-compete agreements with employees, independent contractors, volunteers, and even interns. It would cover any employer, regardless of entity type or size.

 

The FTC’s definition of “non-compete” is very broad. It covers not only conventional non-compete agreements—where an employee cannot work for a contractually defined “competitor” for a set period of time after their current employment ends—but also any agreement that “has the effect of prohibiting the worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment with the employer.” That means other widely used post-employment restrictions, such as non-solicitation agreements and non-disclosure agreements, could be prohibited by the rule if they are written too broadly.

 

Perhaps the most controversial feature of the proposed rule is its retroactive application—in other words, it would not only bar future non-compete agreements, but also retroactively invalidate any covered agreements that have already been entered into by employers and employees. In addition, the FTC’s proposed rule invalidates any state laws that offer workers less protection than the FTC’s rule.

 

The FTC’s 3-2 Vote

This brings us to the FTC’s 3-2 vote, adopting virtually all of the proposed rule as its final rule.  The “final rule” still has several hurdles it has to overcome before the FTC’s ban carries the rule of law.  The FTC must publish the Final Rule in the Federal Register for a period of 120 days.  But even before that happens, opponents of the FTC’s proposed rule have promised to challenge it in court. The U.S. Chamber of Commerce, the largest pro-business lobbying group in the country, has said it plans to file suit promptly to block the final rule from becoming law.

 

In the meantime, employers are encouraged to be proactive and engage their legal counsel to begin planning for potential impacts now.  Preparations should include auditing current restrictive covenants employers may have with current and former employees. These should not be limited to those agreements or clauses entitled “noncompetition” agreements—but any that could have the effect of being a noncompetition agreement or clause.

 

Brunini’s Labor & Employment specialists are monitoring these events and will update you accordingly.  In the meantime, feel free to contact any member of Brunini’s Labor & Employment Practice Group if you wish to discuss.

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UPDATE: U.S. Department of Labor Finalizes “Proposed Rule” Increasing White-Collar Overtime Exemption Threshold

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By: Hunter C. Ransom

Summary: Minimum salary threshold for overtime exemption to rise to $43,888 on July 1, 2024; then to $58,656 on January 1, 2025; then automatically every three years.

Last year, the United States Department of Labor released a Proposed Rule titled Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees. That’s a long-winded way of saying the DOL is substantially increasing the number of employees eligible for overtime.

Starting from the Bottom

The Fair Labor Standards Act generally requires employers to pay an overtime premium of 1.5 times an employee’s regular rate of pay for all hours worked beyond 40 in work week unless the employee falls under an exemption. See 29 U.S.C. § 207. One exemption is the so-called “White-Collar Exemption” for Executive, Administrative, and Professional employees.

To fall under the white-collar exemption, an employee must satisfy three requirements:

  • Salary Basis Test: The employee must receive a salary (i.e., the same amount each week regardless of quantity or quality of work performed);
  • Salary Level Test: The salary must meet the minimum threshold; and
  • Duties Test: The employee must meet a duties test for the applicable exemption (executive, administrative, or professional).

The DOL’s Final Rule affects the minimum threshold for the Salary Level Test. Until 2016, the minimum salary threshold for that exemption stayed at $455 per week ($23,660 annually). After a failed update by the Obama-era DOL in 2016, the Trump-era DOL raised the threshold to $679 per week ($35,308 annually), where it currently sits until July 1.

Proposed Rule becomes Final 

In September of last year, the DOL proposed a rule that would both significantly raise the threshold to $1,059 per week and automatically update the salary threshold every three years based on the latest earnings data. On April 23, 2024, the DOL released the final rule.

The DOL received over 30,000 comments since proposing its new rule, leading to small changes: it raises the final threshold (effective in 2025) higher than the proposed rule, and it drops a proposal to apply the new threshold to U.S. territories. To summarize, here’s what to expect:

  • Effective July 1, 2024, the overtime salary exemption threshold for white-collar employees will rise to $43,888;
  • Effective January 1, 2025, the threshold will rise to $58,656;
  • The threshold will rise every three years automatically based on latest earnings data.

How to prepare

The new rule will likely face legal challenges, but employers should prepare for higher operating costs. Specifically, employers should contact their legal counsel, audit their current practices, and project the increased costs resulting from the Final Rule. A specific action item may include, among other things, (a) re-classify employees as non-exempt or (b) adjust salaries to meet or exceed the new thresholds.

Feel free to contact any attorney in Brunini’s Labor & Employment Practice Group with any questions or concerns.

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PATRICK MCDOWELL FEATURED BY THE APPELLATE LAWYERS AS A TOP APPELLATE ATTORNEY FOR MISSISSIPPI

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Patrick McDowell is featured by The Appellate Lawyers as a top appellate attorney for Mississippi. Patrick is licensed to practice in Alabama, Arkansas, Georgia, Mississippi, and Tennessee. His practice focuses on complex litigation in federal and state trial and appellate courts, including antitrust, contract, business tort, unfair competition, RICO, trademark, securities, product liability, drug and medical device, toxic exposure, and environmental litigation. He has successfully prosecuted and defended commercial disputes on behalf of entertainment, environmental, financial, food, insurance, manufacturing, technology, telecommunications, and television services providers. He has also successfully defended manufacturers, producers, and licensors against product liability, negligence, and toxic tort claims.

Patrick concentrates much of his practice on the defense of multi-state and federal multidistrict litigation, class actions, mass torts, and attorney general civil litigation. He has represented healthcare insurers and food producers in multidistrict antitrust class actions; telecommunications and technology services providers in multidistrict securities and ERISA class actions; employers, insurers, banks, and television service providers in federal class actions; drug, device, and other product manufacturers in multidistrict and multi-state mass tort actions; and drug and device manufacturers, healthcare insurers, and financial service providers in attorney general civil litigation.

The Appellate Lawyers is the premier guide to recommend appeals attorneys, practice area news and legal insights. TAL provides a concise and up-to-date guide to leading appellate attorneys across the country. TAL’s research covers all 50 states and a wide selection of specialist practice areas, with featured attorneys being selected based on the results of peer nominations, in-depth research, awards and client feedback.

Superlative research, analysis, and writing skills are vital when representing clients on appeal, as the strength of the case rests on the brief. Top appellate attorneys must also be skilled oral advocates. TAL’s recommended lawyers have vast experience reviewing the entire record, including trial transcripts, evidentiary materials, and motions to determine which grounds, if any, exist as a basis for your appeal. Each year, only one attorney per state is selected and recommended in our guide. The selection process is independent and it is not possible to request entry. Inclusion is by invitation only.

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Stephen J. Carmody Named Senior Fellow of Litigation Counsel of America

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SENIOR FELLOW PRESS RELEASE

FOR IMMEDIATE RELEASE

STEPHEN J. CARMODY NAMED SENIOR FELLOW OF LITIGATION COUNSEL OF AMERICA

Jackson attorney Stephen J. Carmody, of the law firm Brunini, Grantham, Grower & Hewes, PLCC, has been named a Senior Fellow of the Litigation Counsel of America (LCA). Carmody is a litigator in the firm’s Labor & Employment practice group. Steve’s practice emphasizes labor, employment, employee benefits, intellectual property, and construction litigation. He has handled a number of collective action lawsuits alleging wage and hour violations. He has taught food products litigation, seminars for the National Business Institute and the University of Mississippi Continuing Legal Education Department. He has served as a guest lecturer at Mississippi College School of Law.

The Litigation Counsel of America is a trial lawyer honorary society composed of less than one-half of one percent of American lawyers. Fellowship in the LCA is highly selective and by invitation only. Fellows are selected based upon excellence and accomplishment in litigation, both at the trial and appellate levels, and superior ethical reputation. Senior Fellow status in the society is reserved for advanced commitment to and support of the LCA, the Diversity Law Institute and the Trial Law Institute. The LCA is aggressively diverse in its composition. Established as a trial and appellate lawyer honorary society reflecting the American bar in the twenty-first century, the LCA represents the best in law among its membership. The number of Fellowships has been kept at an exclusive limit by design, allowing qualifications, diversity and inclusion to align effectively, with recognition of excellence in litigation across all segments of the bar. Fellows are generally at the partner or shareholder level, or are independent practitioners with recognized experience and accomplishment. In addition, the LCA is dedicated to promoting superior advocacy, professionalism and ethical standards among its Fellows.

Carmody is a member of the Catholic Foundation and Director of its Bishop’s Cup Charity Golf Tournament. He also serves as a Board Member, Legal Counsel, Vice President and Treasurer of the Board of Governors of the Country Club of Jackson.

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NLRB Issues (New) Final Rule Expanding the Definition of a “Joint Employer”

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By: Hunter C. Ransom

On October 26, 2023, the National Labor Relations Board (“NLRB”) released its new/final “joint employer” rule potentially allowing workers to constitute employees of more than one entity for labor relations purposes—a move that will result in increased union organizing and collective bargaining efforts across the country. Because that decision broadly expands the definition of a “joint employer” under the National Labor Relations Act (“NLRA”), employees of franchisees and staffing agencies will have an easier time bringing franchisors and user firms to the bargaining table.

The NLRB’s controversial new/final rule establishes “joint employment” not only when one company has the right to exert control over terms and conditions of another company’s employees, but also when evidence exists of reserved, unexercised, or indirect control over any working conditions. That includes obvious situations like hiring and firing, along with other conditions such as wages, benefits, scheduling, supervising, disciplining and directing.

Let’s see how we got here.

A brief history of the “joint employer” definition

Before 2015, the NLRB held that an entity had to share and actually exercise direct and immediate control over essential terms and conditions of employment to constitute a joint employer with another entity. Then, in 2015, the NLRB decided Browning-Ferris Industries of California, Inc., in which it expanded the definition of “joint employer” to include entities who had indirect or reserved control over employees.

Three years later, in 2018, a federal court of appeals required the NLRB to reconsider its indirect control standard under Browning-Ferris. The NLRB accordingly issued a “final rule” in 2020 that excused alleged joint employers from bargaining unless employees could show they had “direct and immediate control” over essential terms and conditions of employment to constitute a joint employer. That rule stood until October 26th.

The new rule

NLRB Board members referred to the 2020 policy as “contrary to common-law agency principles that must govern the joint-employer standard.” Consistent with common-law agency principles, the Board concluded it should require an entity to negotiate with unionized workers when the entity has the “authority to control essential terms and conditions of employment,” regardless of whether they exercise that control or whether they do it directly or indirectly.

Because of the new/final rule, two or more employers will now be considered “joint employers” merely by sharing or co-determining matters governing essential terms and conditions of employment, such as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.  Moreover, the NLRB will once again consider evidence of reserved and/or indirect control over these essential terms and conditions of employment when analyzing “joint-employer” status. In other words, instead of requiring actual direct control, the NLRB could consider even potential retained (but unexercised) indirect control over working conditions sufficient for a business to be a joint employer for labor relations purposes.

While the new rule is unquestionably broader, the NLRB did set some limitations. First, the NLRB classified the standard as fact-specific and noted it would consider whether an entity meets the joint-employer definition on a case-by-case basis. It also only requires a joint employer to bargain over the essential terms it has the authority to control. The party asserting that an entity is a joint employer has the burden of proof in making this determination.

What does the new rule mean for employers?

The new rule takes effect on December 26, 2023. The new/final rule will have implications obligating both businesses to potentially bargain with a duly certified union as exclusive bargaining representative—at least with respect to those working conditions over which they share control—while exposing both companies to joint unfair labor practice liability. The same is true for franchises and other business models where one company’s employees perform services benefitting another employer.

The rule could face legal challenges, but affected employers should review their relevant policies along with current and pending contracts with third parties to determine whether the policies or agreements reserve right to control any essential term or condition of another entity’s employees. Employers should also train their supervisors and managers to avoid actions that might leave the employer vulnerable to an argument it has direct or indirect control over another entity’s employees.

 

 

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U.S. Department of Labor Unveils Newest Effort to Expand Employee Overtime Eligibility

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To borrow a phrase from the incomparable Yogi Berra, “[i]t’s like déjà vu all over again.” On Wednesday, August 30, 2023, the United States Department of Labor (“the DOL”) released its newest Proposed Rule that, if implemented, would broaden federal overtime pay regulations to cover millions of additional workers who are currently exempt from overtime eligibility.  Entitled Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, the Proposed Rule seeks to dramatically increase the standard salary level and the highly compensated employee total annual compensation threshold, as well as providing a built-in updating mechanism that would allow for automatic updating of all the thresholds.

 

New 2023 Proposed Rule

Under its new Proposed Rule, the DOL seeks to significantly raise the exempt salary threshold from $684 per week to $1,059 per week.  Stated another way, U.S. employees would need to earn $55,068 or more per year to be exempt from overtime pay – a change the agency says would impact 3.6 million workers who are currently exempt from overtime eligibility.  Additionally, the new Proposed Rule would make the following changes:

  • Automatically update the salary threshold every three (3) years.
  • Raise the threshold for the “highly compensated employee” exemption to $143,988 (from the current threshold of $107,432).
  • Apply salary thresholds in U.S. territories that are subject to federal minimum wage with some exceptions for American Samoa.

The Proposed Rule seeks to update the regulations that govern which executive, administrative, and professional employees (the so-called “white collar” workers) are entitled to minimum wage and overtime pay protections under the Fair Labor Standards Act (“the FLSA”).  The FLSA requires employers to pay its “non-exempt employees” overtime (1.5x the workers’ “regular rate of pay”) for all hours worked in excess of forty (40) per week.  See 29 U.S.C. § 207.  The DOL’s regulations implementing the FLSA sets forth a variety of employment classifications that are “exempt” from the FLSA’s overtime requirement—including employees performing executive, administrative, and/or professional job duties.

Since the 1940’s, in order for an employee to qualify as an exempt, “white collar” employee, he/she had to meet three “tests”:

  • The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
  • The amount of salary paid must meet a minimum specified amount; and
  • The employee’s job duties must primarily involve executive, administrative, or professional duties (as defined by the regulations).

 

Stroll Down Memory Lane

Until rather recently, the DOL’s last update to these regulations came in 2004, when the agency set the minimum salary threshold at $455 per week (or $23,660 per year).  Then, in May 2016, the Obama-era DOL kicked off a highly-contentious legal fight when it attempted change to the overtime rule by nearly doubling the minimum salary level from $23,660 to nearly $48,000 per year.  At the same time, the 2016 proposal would have also increased the total annual compensation requirement needed to exempt “highly compensated employees” to $134,004 annually (previously set at $100,000), established a mechanism for automatically updating the minimum salary level every three years and allowed employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the new standard salary level.

Ultimately, the May 2016 proposal was challenged in court.  On November 22, 2016, the U.S. District Court for the Eastern District of Texas enjoined the DOL from implementing and enforcing the proposal. On August 31, 2017, the court granted summary judgment against the DOL, invalidating the May 2016 proposal.  Currently, the Department is enforcing the regulations that have been in place since 2004, including the $455 per week standard salary level.

Ultimately, the Trump-era DOL formally rescind the Obama-era DOL’s 2016 proposal with its own new Proposed Rule, issued on March 7, 2019.  The Trump-era Proposal was formally adopted in 2020.  With its passage, the DOL officially raised the minimum salary level for exempt employees to $679 per week, or $35,308 annually—the level it currently sits at today.  Additionally, the 2020 rule change allowed employers to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level test (provided such bonuses are paid annually or more frequently); and increased the total annual compensation requirement needed to exempt “highly compensated employees” to $107,432 annually.  Additionally, the 2020 rule change did not adopt any changes to the standard duties test for the white collar exemptions.

 

Moving Forward

Make no mistake—the DOL’s goal with the new Proposed Rule is to increase the number of employees eligible for overtime. As with the prior proposals, observers feel the number could rise well above the projected increase.  If implemented, the Proposed Rule will undoubtedly result in greater expense or operational change for many employers as they struggle to deal with a shrinking pool of workers who are eligible for an exemption from the overtime pay.

This newest Proposed Rule from the DOL is sure to face its own set of legal hurdles, especially in the face of an election cycle.  Experts predict another battle over whether or not the DOL actually possesses the statutory authority to issue a salary-basis or salary-level test.  The Proposed Rule is also still subject to a lengthy comment period before any final implementation.

In the meantime, employers are encouraged to be proactive and engage their legal counsel to begin planning for the change now.  Preparations should include auditing current practices and projecting the cost of change and FLSA compliance under the anticipated new framework. This includes evaluating the possibility and effects of significantly higher operating costs.

Brunini’s Labor & Employment specialists are monitoring these events and will update you accordingly.  In the meantime, feel free to contact any member of Brunini’s Labor & Employment Practice Group if you wish to discuss.

 

 

 

 

 

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Federal Government Releases New Form I-9 for U.S. Employers

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Federal Government Releases New Form I-9 for U.S. Employers

By:  Chris Fontan

 

On August 1, 2023, the U.S. Citizenship and Immigration Services (“USCIS”) released its newest version of the federal Form I-9.  U.S. employers are allowed to continue using the previous version of the Form I-9 through October 31, 2023.  However, starting on November 1, 2023, all employers are required to use this new, updated form.

 

Updates to the Form I-9

The USCIS made a number of material changes to the Form I-9 with this latest update, including:

  • Reducing Sections 1 and 2 to a single page; previously, these sections took up two pages.
  • Relocating Section 1 (Preparer and/or Translator Certification area) to a separate, standalone supplement for employers to provide to its applicants or employees as needed.
  • Revising the Lists of Acceptable Documents page—for use with Section 2—to include:
    • Adding some acceptable receipts, and
    • Providing guidance and links to information on automatic extensions of employment authorization documentation
  • Moving Section 3 (Reverification and Rehire area) to a standalone supplement for employers to utilize as needed.
  • Including a checkbox that allows employers to indicate that they have examined an applicant’s/employee’s Form I-9 documentation remotely pursuant to newly authorized virtual procedures (as opposed to traditional physical examination).

 

The updated Form I-9 virtually cuts its instruction section in half, reducing it from fifteen pages down to eight pages.  Additionally, the form has also been re-designed to be fillable on mobile devices, such as tablets and other smart phones.

 

Remote Verification

 

The biggest change with the new Form I-9 is the ability for employers to indicate they “virtually” examined an applicant’s/employee’s identity and employment authorization documents—as opposed to the traditional method of reviewing these documents in person. To participate in the remote examination option, employers must:

 

  • Be enrolled in E-Verify and be in good standing,
  • Examine and retain “clear and legible” copies of all documents,
  • Conduct a live video interaction with the employee during the verification process, and
  • Create an E-Verify case if the employee is a new hire.

 

Employers who were participating in E-Verify and created cases for employees whose documents were examined virtually between March 20, 2020, and July 31, 2023, may choose to use the new alternative procedure to satisfy the physical document examination requirement by August 30, 2023. Note however, that employers who were not enrolled in E-Verify during the COVID-19 flexibilities time frame must complete an in-person physical examination by August 30, 2023.

While the new Form I-9 is shorter and more streamlined, employers and job applicants are advised to use caution.  While the Form I-9 began as a one page document, it has existed as a multi-page form for over a decade.  As a result, experts fear that employees or employers will accidentally supply information for each other’s sections, which is prohibited under federal law. In addition, there is an increased likelihood that employees and employers will make more mistakes in completing the document, which could lead to serious consequences since individuals execute the Form I-9 “under penalty of perjury.”

 

In addition, questions also remain concerning the remote verification option.  For example, how and where should employers note whether employees that went through remote verification over the prior three years have brought in new documents?  Do employers need to document and retain proof of the video call required for virtual review on file?  Employers are advised to remain alert for further guidance on these and additional issues from USCIS in the coming months.

 

Brunini’s Labor & Employment specialists are monitoring these events and will update you accordingly.  In the meantime, feel free to contact any member of Brunini’s Labor & Employment Practice Group if you wish to discuss.

 

 

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