Foley Hoag LLP

SUMMARY

We know that the recent financial crisis and related economic downturn unfortunately are causing many employers to consider ways to reduce operational expenses, including through workforce restructuring and layoffs. We offer a few preliminary considerations: any such reduction-in-force (RIF) must be carefully planned and executed both to minimize exposure to liability under various employment laws and to mitigate negative effects on employee morale and operations. The following are some issues for employers to consider as they grapple with whether and how to implement a layoff.

Questions Include:

• Is a Layoff Necessary?
• Voluntary or Involuntary Program?
• Develop Uniform Selection Criteria
• Conduct a Layoff Analysis
• Is Advance Notice Required
• Severance and ERISA
• Asking for a Release
• Don't Forget Immigration Implications
• Don't Lose Sight of Termination Basics

SUMMARY

Chapter 151B, the Massachusetts anti-discrimination statute, does not apply to small employers, meaning those with fewer than six employees. However, last Friday, the Massachusetts Supreme Judicial Court (“SJC”) held that an employee may nonetheless sue a small employer for discrimination under the Massachusetts Equal Rights Act. The decision has potential ramifications for all employers -- large or small -- because it suggests that a plaintiff has a claim for discrimination under the Massachusetts Equal Rights Act whenever Chapter 151B does not apply, such as discrimination claims brought by non-employees.

SUMMARY

Last year, in the wake of the TJ Maxx data security breach, Massachusetts enacted a data security law intended to protect residents from identity theft. The law provides that businesses must provide prompt notice of security breaches relating to personal information. “Personal information” means a person’s name together with either his or her Social Security Number, driver’s license number, state identification number, financial account number, credit card number or debit card number. Because all employers hold their employees’ Social Security numbers, the law applies to all employers in Massachusetts, not just those businesses that collect customer information, such as retailers. 

SUMMARY

Section 409A is an extremely broad law that covers many arrangements not generally considered deferred compensation, such as stock options, bonus plans, and severance and change in control agreements. In general, 409A governs any arrangement where an employee or consultant has a vested right to compensation in one year that will be paid in a later year, unless the arrangement fits into one of the exemptions to 409A. Arrangements subject to 409A must comply with strict rules as to the time and form of payment, and it is very difficult to make changes to an arrangement once it is in place. Any deferred compensation arrangement that does not comply with 409A will subject the employee or consultant to income tax liability at the time that the right to payment vests (even if there is no right to receive payment at that time), together with a 20% penalty tax on the deferred amount. (continues)

SUMMARY

Implementation of the Electronic System of Travel Authorization

The Department of Homeland Security (DHS) has announced the implementation of the Electronic System for Travel Authorization (ESTA), which will be used to apply for travel to the United States under the Visa Waiver Program (VWP). To apply for travel authorization to the United States, VWP travelers will access the ESTA web-based system and complete an application online. The application will consist of the biographical and eligibility information currently required on the I-94 paper form, and will be used to determine traveler eligibility and to assess any law enforcement and/or security risks posed by a VWP traveler. DHS is recommending that VWP travelers obtain an ESTA approval as soon as possible, and no later than 72 hours prior to departing to the United States. However, ESTA has been designed to accommodate last minute and emergency travel as well.

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SUMMARY

U.S. Citizenship and Immigration Services (USCIS) has reinstituted Premium Processing on a limited basis for certain employment-based immigrant I-140 Preference Petitions. USCIS will accept Form 1-907, Request for Premium Processing Service, for I-140 Petitions filed for alien Beneficiaries who meet all of the following specific criteria: (continues ...)

SUMMARY

In Kentucky Retirement Systems v. EEOC, the Supreme Court held that Kentucky’s pension and disability system did not discriminate against older workers in violation of the Age Discrimination in Employment Act (ADEA). Under Kentucky’s system, pension benefits are calculated based upon years of service. Employees are eligible for normal retirement benefits after 20 years of service or after the employee works 5 years and has reached the age of 55. The system also provides benefits to employees who become disabled before becoming eligible for normal retirement benefits. A disabled employee is treated as if he or she had 20 years of service or 5 years of service, if the employee is already 55 years old. The purpose of this rule is to treat disabled workers as if they are retirement eligible upon becoming disabled.

SUMMARY

Last week, the U.S. Supreme Court held in Metropolitan Life Insurance Co. v. Glenn, that a conflict of interest exists if an entity such as an employer or an insurance company evaluates claims for benefits under an employee benefit plan and also pays out those benefits from its own pocket. This conflict does not disqualify entities from occupying this dual role, however the dual role will be considered as a factor in determining whether the plan administrator abused its discretion in denying benefits. The decision is significant because it affects the plan administrator’s discretionary authority to determine eligibility for benefits and to construe the terms of the plan. Employers now need to worry about such a conflict whenever they make determinations about whether employees are eligible for benefits.

SUMMARY

Contents

1. Exposure to Liability in the Hiring Process

2. Failure to Adequately Document Terms and Conditions of Employment

3. Misclassification Issues
    - Employee or Independent Contractor
    - Exempt or Non-exempt

4. Failure to Comply with Wage Payment Laws

5. Inadequate Protection of Intellectual Property

SUMMARY

At the 11^th Annual Foley Hoag Labor & Employment Seminar, keynote speaker Martin Ebel, a Commissioner of the Massachusetts Commission Against Discrimination (“MCAD”), stated that the Massachusetts Maternity Leave Act (“MMLA”) should be viewed as gender neutral. The law specifically provides that female employees are entitled to eight weeks of leave relating to the birth or adoption of a child. However, Commissioner Ebel announced that this language should be applied equally to male employees. He explained that reading the statute as written, meaning that it only applies to women, would raise constitutional concerns, particularly in light of the Supreme Judicial Court’s decision legalizing same-sex marriage. For example, if a female same-sex couple adopted a child, both would be entitled to leave under the MMLA. However, if the couple were male, neither would be entitled to leave. To avoid this anomalous result, Commissioner Ebel stated that the law should apply to men, as well as women. He noted that the two other Commissioners of the MCAD agreed with this view.

SUMMARY

Established in December 1980 by the partners of law firm Foley Hoag, The Foley Hoag Foundation is a private foundation that seeks to combat racism, especially among youth, in the City of Boston. The Foundation awards grants to organizations working to improve the racial climate in Boston by addressing issues of diversity and racism. Grantee organizations achieve their goals through a variety of means, including arts and cultural activities, youth leadership and recreational programs. Other grantees provide advocacy assistance, enabling individuals to confront racism through legal or political action. Some grantee organizations work to prepare young children to live in the reality of a multicultural society, others engage teens, and a few target a primarily adult constituency.

The Foley Hoag Foundation was the first—and remains the only— foundation to focus exclusively on the improvement of race relations in Boston. The trustees are fortunate to have the unqualified endorsement of Foley Hoag, which has provided an enormous amount of financial, administrative and moral support.

SUMMARY

The U.S. Supreme Court recently held that an individual who alleged that he was fired by his employer for complaining about race discrimination could pursue a retaliation claim under the Civil Rights Act of 1866. This statute, commonly referred to as Section 1981, grants people of all races the same rights to “make and enforce contracts.”

SUMMARY

Until now, most small tax-exempt organizations, defined as those with gross receipts of $25,000 or less per year, have not been required to file an annual information return with the Internal Revenue Service (the “IRS”). 

However, small tax-exempt organizations must now file an annual electronic information return – the Form 990-N, also known as the e-Postcard. This requirement covers all tax periods beginning after December 31, 2006. The e-Postcard must be filed no later than the 15th day of the 5th month following the end of the organization’s tax year. For example, an organization whose tax year ends December 31 must submit the e-Postcard by the following May 15.

SUMMARY

The U.S. Citizenship and Immigration Services (USCIS) announced today that it has received H-1B petitions in excess of both the regular 65,000 annual cap and the 20,000 limit for beneficiaries with a U.S. advanced degree. It will conduct a random selection process among all filings received by April 7, 2008 to determine which petitions will be processed. The “lottery” for US advanced degree petitions will be conducted first, and any petitions not selected will be included in the lottery for the 65,000 limit.

SUMMARY

One week before the expected onslaught of H-1B petition filings from employers, the U.S. Citizenship and Immigration Services (“USCIS”) issued an Interim Rule which is intended to the promote the “fair and orderly administration” of the FY 2009 annual limit on H-1B petition filings. The following are the highlights from the Interim Rule:

SUMMARY

Employers should file H-1B petitions for foreign national employees with the U.S. Citizenship and Immigration Services (“USCIS”) on April 1, 2008. For most employers, new H1-B petitions are subject to an annual limit of 65,000. Last year, this cap for the entire year was reached on the first day of the filing period, and we anticipate that the volume of filings will be the same or more this year. Thus, employers must be prepared to submit their petitions within this one day window, on April 1, 2008, or be prevented from filing until next year. There also is a cap of 20,000 for foreign nationals with U.S. advanced degrees. This separate cap was reached within four weeks of the start of the filing period, and we expect the volume of these petitions to increase this year. Employers should be prepared to file these petitions on April 1, as well.

SUMMARY

Engagements Include:

• Litigation and Arbitration between Sovereign States
• Arbitration between Sovereign States and Investors
• International Commercial Arbitration
• Litigation before the United States Courts

SUMMARY

• Litigios y Arbitrajes entre Estados Soberanos
• Arbitrajes entre Estados
• Soberanos e Inversionistas
• Arbitrajes Internacionales Comerciales
• Litigios ante las Cortes de los Estados Unidos

SUMMARY

The I.R.S. recently issued its annual cost-of-living adjustments applicable in 2008 to qualified retirement (pension, profit-sharing, § 401(k), money purchase and stock bonus) plans.

SUMMARY

On November 7, 2007, USICS issued a revised I-9 Employment Eligibility Verification Form. The primary change to the revised Form I-9 is the elimination of five documents which were previously listed on List A as acceptable for proof of both identity and employment eligibility:

• Certificate of U.S. Citizenship (Form N-560 or N-570)
• Certificate of Naturalization (Form N-550 or N-570)
• Alien Registration Receipt card (Form I-151 - please note that the current I-551 Permanent Resident Card remains on List A)
• Reentry Permit (Form I-327)
• Refugee Travel Document (Form I-571)