Categories
Non-Compete

Illinois Employers Should Use Caution with Having Low-Income Employees Sign Covenants-Not-To-Compete

Illinois Employers Should Use Caution with Having Low-Income Employees Sign Covenants-Not-To-Compete

By Joseph H. Laverty of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Non-Compete on Tuesday, November 28, 2017.

The unemployment rate in Illinois continues to decline, as is the case nationally. As of the time of writing this article, the state wide unemployment rate in Illinois is 4.6% and numerous experts predict that this rate will go lower as the economy continues to improve. Some cities in Illinois have unemployment rates as low as 3.4%. What this means for employers is that it may become even more difficult to fill open positions.

Many employers are reviewing their wage and benefit packages to try to retain employees. Employers are also using restrictive covenants more and more in trying to keep employees from going to other employers for higher wages and better benefits. Illinois employers need to be aware of the Illinois Freedom to Work Act (“Act”). The Act became law on January 1, 2017. The Act prohibits employers from entering into a covenant not to compete with any low-wage employee. Under the Act, a low wage employee means any employee who earns the greater of: 1) an hourly rate equal to the minimum wage required by the applicable federal, state or local minimum wage; or 2) $13.00 per hour. The Act states that a covenant not to compete entered into between an employer and a low-wage employee (an employee earning $13.00 per hour or less) is illegal and void.

Recently, the Illinois Attorney General’s office filed suit against a national chain of payday lending stores – Check Into Cash – which has thirty-three (33) locations in Illinois. The lawsuit alleges that Check Into Cash required its low-wage employees to sign non-compete agreements in violation of the Act. Last year, before the Act went into effect, the state of Illinois settled a similar lawsuit with Illinois based fast food purveyor, Jimmy Johns, which had employees sign covenants not to compete as well.

As the employment market becomes more and more competitive, employers need to take note and understand the Illinois Freedom to Work Act and determine if they are in compliance with the Act. Illinois employers need to determine if there is a real “business necessity” for entering into the covenant not to compete, such as protecting trade secrets, or if the covenant is overly restrictive and simply trying to prevent employees from leaving in an increasingly tight job market, especially for low paying jobs. Employers should seek assistance when implementing restrictive covenants to make sure the covenants are enforceable, not over reaching and in compliance with the law.

Wessels Sherman attorneys can help companies with drafting covenants not to compete, as well as other restrictive covenants (and can advise companies that already have restrictive covenants in place on whether they are enforceable and comply with the law).

If you have any questions and/or would like additional information regarding the Illinois Freedom to Work Act, please contact Attorney Joseph H. Laverty at (563) 333-9102 or via email at jolaverty@wesselssherman.com.

Related Posts: Seneczko Wins Default as Discovery Sanction in Duty of Loyalty Claim, Illinois Workplace Transparency Act, Illinois Employers Should Not Go Overboard With Non-Compete Agreements!, Twelve Commonly Asked Questions About Non-Compete Agreements In Illinois

2016 Top Ranked Law Firms Based On Av - Av Preeminent Martindale - Hubbell Lawyer Ratings

Categories
Independent Contractor

Congress Is Struggling To Handle The Gig Economy

Congress Is Struggling To Handle The Gig Economy

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Independent Contractor on Wednesday, November 8, 2017.

Yet one more area of controversy for our Congress to battle over is the “Gig Economy.” Should Congress regulate it through new legislation? – or is it better to leave it to the courts?

On September 6, 2017, the House Education and Workforce Committee held a fascinating Congressional Hearing to air and discuss competing viewpoints over the likely need for unique federal labor and tax legislation to deal with the Gig Economy (also called the “on demand economy”).

TESTIMONY FOR AND AGAINST THE GIG ECONOMY: Testifying at the September 6, 2017 Congressional Hearing was Michael Beckerman, President and CEO of the Internet Association. Mr. Beckerman testified (in support of the Gig Economy) that he is worried that policymakers and regulators may put up roadblocks (to the Gig Economy) to consumer choice and competition.

Sharon Block, a former Labor Department official and current Executive Director of Harvard University Labor and Worklife Program, testified at the same Congressional Hearing (but with less sympathy for the employer needs of the Gig Economy) and stated “We have a danger here of placing (and favoring) the online platform economy (her words for the Gig Economy) in one category and saying that labor and employment laws don’t fit.”

Rep. Virginia Foxx (R-N.C.) said at the September 6th Congressional Hearing: “The self-employed individuals who rely on the sharing economy (yet another term for Gig Economy) for work don’t fit neatly into obsolete job categories defined in another era. So, there are important questions over how we can modernize policies to meet the needs of the future.”

MANY NEW STATE INDEPENDENT CONTRACTOR LAWS, BUT NO LAWS PASSED BY CONGRESS: While members of Congress have introduced 15 proposed laws (all different formulations!) dealing with independent contractor classification and misclassification of worker status since mid-2007, no actual laws have been passed by a very divided Congress. This legislative area regarding the Gig Economy is a “political football”! In the meantime, new state independent contractor laws of all types have been passed in over half the states in that time. Any new federal laws about independent contractor status in the Gig Economy would not change the amazing variety of state laws that currently exists in the independent contractor area.

Legislators sharply disagree about whether Congress should focus its legislative efforts on regulating the Gig Economy at the present time.

Legislators also very much disagree about whether Congress should step in and develop a new revolutionary system to provide “employee type benefits” for the independent contractors in the Gig Economy which are largely missing now in the Gig Economy.

Many legislators struggle to decide if Congress should make an attempt to revise the independent contractor legal test to account for the changes in modern society brought about by the Gig Economy.

Due to the incredible explosive growth of the Gig Economy with its millions of independent contractors, Congress is being forced to evaluate what legislation is appropriate. We will be seeing more and more articles about this complex issue.

Questions? Contact Attorney Nancy Joerg in our St. Charles office at (630) 377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Yes, You Can Win Before an IDES Hearing Officer on the Issue of Independent Contractor Status!!, IRS Form SS-8 Continues To Upset And Confuse Employers Across The U.S.!, Psychological Counselors In Pennsylvania Found To Be Independent Contractors, Yes, There are Certain Categories of Workers Who Are Independent Contractors By Law Under the Illinois Unemployment Insurance Act

2016 Top Ranked Law Firms Based On Av - Av Preeminent Martindale - Hubbell Lawyer Ratings

Categories
Independent Contractor

The Illinois Department of Employment Security (IDES) Interprets Independent Contractor ABC Test More Harshly than Other States

The Illinois Department of Employment Security (IDES) Interprets Independent Contractor ABC Test More Harshly than Other States

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Independent Contractor on Wednesday, November 22, 2017.

Good news for New Jersey employers who use independent contractors! Happily, the Superior Court of New Jersey Appellate Division [in Garden State Fireworks Inc. v. NJ Dept. of Labor, A-1581-15T2 (N.J. App. Div. September 29, 2017] recently decided that a pyrotechnics company’s legal relationship with its independent contractor pyrotechnicians satisfied all three parts of the “ABC test” as laid out in New Jersey’s definition of independent contractor status for unemployment insurance purposes.

What makes this New Jersey decision fascinating to me [as an attorney who frequently represents Illinois companies in their independent contractor legal battles with the Illinois Department of Employment Security (IDES)] is the exceedingly sensible way by which the Superior Court of New Jersey Appellate Division interpreted the ABC test. They used common sense!

Illinois and New Jersey have the exact same word-for-word “ABC test” (set by state law) for defining independent contractor status for unemployment insurance purposes. (Note: About one-third of all the states in the United States use this same precisely worded three-part legal independent contractor test.)

ABC TEST: The failure by the hiring company to satisfy any one of the three legal criteria of the state unemployment “ABC test” results in a classification of “employment”! That determination of worker classification status is fact-sensitive, requiring an evaluation in each case of the real world facts, not the form, of the relationship. The ABC test determines whether hiring companies are obligated to pay unemployment compensation taxes as well as whether “workers” (i.e., independent contractors) are eligible to receive unemployment insurance benefits. The precise wording of the ABC test is as follows:

A. Such individual (i.e., independent contractor in question) has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; AND

B. Such service (i.e., by the independent contractor in question) is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise (i.e., hiring company) for which such service is performed; AND

C. Such individual (i.e., independent contractor in question) is engaged in an independently established trade, occu­pation, profession, or busi­ness. [Emphasis added]

PRONG A (CONTROL TEST): In this New Jersey case, the pyrotechnics hiring company provided the independent contractor pyrotechnicians with required supplies (bad fact for independent contractor status), but the Superior Court of New Jersey Appellate Division “forgave that” and looked rather surprisingly at whether the pyrotechnics hiring company actually told the independent contractor pyrotechnicians which fireworks to launch or how to set up the fireworks display. Because the pyrotechnics hiring company didn’t actually tell the independent contractors exactly what to do on each job, the Superior Court of New Jersey Appellate Division sensibly decided that the pyrotechnicians were not under the direction and control of the pyrotechnics hiring company (Prong A).

Based on my many years of experience representing Illinois companies in independent contractor battles, IDES auditors, IDES Administrative Law Judges, and Illinois reviewing courts would not be so nearly generous on the issue of “direction and control” under Section 212(A) of the Illinois Unemployment Insurance Act.

PRONG B (COURSE-OF-BUSINESS OR LOCATION-OF-WORK TEST): Furthermore, the Superior Court of New Jersey Appellate Division decided that the services performed by the pyrotechnicians at issue were “outside the employer’s usual course of business.” The New Jersey Department of Labor and Workforce Development had decided (as the IDES certainly would) that the pyrotechnics hiring company’s place of business included everywhere fireworks displays were conducted.

But the Superior Court of New Jersey Appellate Division firmly decided with breath-taking common sense against the New Jersey Department of Labor and Workforce Development and said its legal position on “course of business” is unrealistic and impossible. The Superior Court of New Jersey Appellate Division decided that the independent contractor pyrotechnicians in fact worked at locations outside the pyrotechnics hiring company’s plant and therefore satisfied Prong B. The Superior Court of New Jersey Appellate Division thus recognized “economic reality” and applied common sense.

I wish that the Illinois courts, IDES auditors and IDES Administrative Law Judges would take this very sensible and rational position on “place of business” [Section 212(B) of the Illinois Unemployment Insurance Act], but they don’t. In Illinois, the long standing and frankly silly legal position is that the customer’s place of business is the shared place of business of both the hiring company and the independent contractors, making it almost impossible to pass Section 212(B) in terms of course of business or place of business.

PRONG C (INDEPENDENT BUSINESS TEST): In a marvelous extension of common sense, the Superior Court of New Jersey Appellate Division firmly decided that the independent contractor pyrotechnicians passed Prong C because the independent contractor pyrotechnicians at issue were either all retirees or full time employees elsewhere. According to the down to earth analysis by the Superior Court of New Jersey Appellate Division, this made them independent of the pyrotechnics hiring company because these independent contractors (as either retirees or full time employees elsewhere) did not “rely” upon the pyrotechnics hiring company as their primary source of income. Again, rare common sense.

The Superior Court of New Jersey Appellate Division concluded its analysis with the wise opinion that it is difficult to conceive that an individual who performs services for a hiring company no more than a few days per year, while working full time as an employee in another profession, could reasonably be considered an employee of that hiring company for purposes of unemployment. This opinion harmonizes with the purpose of an unemployment insurance system, which is to protect an individual from the “perils of unemployment.”

This interpretation by the Superior Court of New Jersey Appellate Division is so sensible that it’s mind blowing especially to someone like me who does frequent battle with the IDES on its unyielding interpretation of Section 212(A), (B), and (C) of the Illinois Unemployment Insurance Act. In Illinois, independent contractors who are employees elsewhere (or who are retirees) are usually considered by IDES auditors, IDES Administrative Law Judges, and Illinois courts to be dependent on the hiring company and therefore not independently established under the third prong.

CONCLUDING THOUGHTS: This Superior Court of New Jersey Appellate Division decision gives me hope that maybe the legal climate regarding independent contractor status will change for the better across the United States. Perhaps state agencies and state reviewing courts will more likely consider the possibility that certain kinds of workers are indeed independent contractors and not misclassified.

It will be interesting to see how legal interpretations and attitudes about independent contractors change in the coming years. The ground under our feet is starting to shift.

For assistance with an IDES audit and/or Hearing or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: (630) 377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Yes, You Can Win Before an IDES Hearing Officer on the Issue of Independent Contractor Status!!, IRS Form SS-8 Continues To Upset And Confuse Employers Across The U.S.!, Psychological Counselors In Pennsylvania Found To Be Independent Contractors, Yes, There are Certain Categories of Workers Who Are Independent Contractors By Law Under the Illinois Unemployment Insurance Act

2016 Top Ranked Law Firms Based On Av - Av Preeminent Martindale - Hubbell Lawyer Ratings

Categories
Hiring/Firing

Tomorrow’s Workforce

Tomorrow’s Workforce

By Walter J. Liszka of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Hiring/Firing on Friday, November 10, 2017.

While the author is seventy-two (72) and probably will be out of the workforce in a few years (?), according to the United States Census Bureau (National Population Projection Statistics), Employers will be facing some interesting changes and challenges in their future workforces. Those “changes and challenges” will not only deal with technological issues, but with actual employees!

It is quite clear that by the mid-2000’s, the United States population will be a “majority of minority employees”. It is projected that the population of the United States will be over 30% Hispanic and over 20% African American, probably by the year 2050. This is a projection, based on the current birthrate statistics in our country. In reality, the current United States population of children under five (5) years old is a “majority of minority” today and, will probably be true of the under eighteen (18) population by the year 2020. Today, many companies are pursuing racial and ethnic diversity as an important means of improving decision making, attracting customers and promoting the social good. In the future, recruiting and retaining people of color may be the only way to stay in business.

While much has been made of the departure from the workforce of the massive “baby boomer” generation, while the workforce is getting younger, it is projected that the median age of the U.S. population will actually increase in time, fueled by both lower birthrates and the longer lifespan of the average American worker. There will be millions of highly skilled and experienced workers who will want to continue to work into their seventies (the author included) and, it is projected that by the year 2020, workers over the age of fifty-five (55) will make up 25% of the workforce. This figure was less than 12% in 1990. While individuals between the ages of twenty (20) and sixty-four (64) will still be the largest pool of potential workers (Millennials, Gen-Y and Gen-Z), the percentage of individuals over fifty-five (55) will be greater than ever and Employers who embrace this reality may have an edge over those who do not.

It is also becoming quite clear that the “new reality of the workplace” will be that it will include more individuals with disabilities. While the current unemployment rate of individuals with disabilities is approximately 10% (more than twice that of non-disabled persons), individuals with disabilities will begin making up a greater portion of the labor pool in future years. This is somewhat premised on the fact of the increased incidents of autism-related conditions, attention-deficit/hyperactivity disorders and various other learning disabilities among children and young adults. The current statistics suggest that one (1) out of every sixty-eight (68) children has some place on the autism spectrum and that nearly 12% of children ages twelve (12) to seventeen (17) have been diagnosed with some variant of attention-deficit/hyperactivity disorders. Employers can expect in the next few decades or years to see a new generation of high potential, well-educated candidates who may expect accommodations in the workplace as they have experienced in the classroom, with college testing and elsewhere because of their conditions. Employers who can adapt and use the abilities of individuals with disabilities will have a huge advantage.

The most successful Employers of the future who are competing for talent are the ones that will be adjusting their companies to make not only a better place for people of all backgrounds, ages and abilities to work, but who are flexible in accommodating talented people and identifying and promoting employees to management positions who can lead a diverse workforce.

Questions? Contact attorney Walter Liszka in our Chicago office at (312) 629-9300 or by e-mail at waliszka@wesselssherman.com

Related Posts: The New Illinois Law Regarding Severance And Release Agreements: Five Commonly Asked Questions, Illinois Employers Have New Restrictions on the Use of Arrest Records in Employment Decisions, Artificial Intelligence Video Interview Act – What This Means For You, Illinois Employers Alert!: There is A New Illinois Law regarding Severance and Release Agreements!

2016 Top Ranked Law Firms Based On Av - Av Preeminent Martindale - Hubbell Lawyer Ratings

Categories
Employment Policies and Procedures

Recent Mass Shootings Have Again Raised Questions for Companies Regarding their Workplace Policies

Recent Mass Shootings Have Again Raised Questions for Companies Regarding their Workplace Policies

By Joseph H. Laverty of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Employment Policies and Procedures on Monday, November 13, 2017.

Two of the five deadliest mass shootings in the United States have taken place over the last few months. On October 1, 2017, fifty-eight (58) people were killed at the Harvest Music Festival in Las Vegas, Nevada. In that shooting, a gunman fired from the 32nd floor of the Mandalay Bay Resort and Casino on a crowd of more than 20,000 gathered in Las Vegas for the Route 91 Harvest Music Festival. The gunman killed fifty-eight (58) people and injured more than five hundred (500). This was the deadliest mass shooting in modern US history.

On November 5, 2017, a gunman opened fire on parishioners at the First Baptist Church in Sutherland Springs, Texas, killing twenty-six (26) people and injuring many others.

Along with these mass shootings is the continued gun violence both inside and away from the workplace. With the most recent gun violence cases being in the headlines over the last few months, many companies are reviewing their policies and procedures to make sure they are up to date and in compliance with federal, state and local laws.

Illinois, Iowa, Minnesota and Wisconsin all have state concealed carry statutes that employers should be familiar with. Even though these states have concealed carry laws, it does not necessarily mean employees are allowed to carry weapons into the workplace. Concealed carry laws across the country allow employers to restrict people from carrying weapons onto company property, even though the person may be a law abiding citizen with a valid concealed carry license. It is important for companies to know what their state law is regarding concealed weapons. Companies are allowed to restrict their employees, customers, vendors and anyone else coming onto their property from carrying weapons. Employers are encouraged to review their state laws and to review their policies in regards to concealed weapons and make sure that the appropriate notices are posted, prohibiting employees and any other people from carrying weapons onto company property.

Companies are also reviewing their workplace violence policies and many companies are developing workplace safety strategies/policies in the event workplace violence occurs. These policies, generally speaking, are to inform employees what to do in case there is violence in the workplace and address issues of notifying the police, what to do if there is violence in the workplace and accounting for all employees after the situation has ended. These policies can be very helpful and many companies are taking this next step and implementing policies regarding workplace violence.

Wessels Sherman can assist in drafting or reviewing your company’s policies. For more information please contact Attorney Joseph H. Laverty at (563) 333-9102 or via email at jolaverty@wesselssherman.com.

Related Posts: Can an Illinois Employer have a ZERO TOLERANCE Policy for Marijuana (Cannabis)?, Illinois Recreational Cannabis Law Is Raising Many Questions for Employers, Chicago Fair Workweek Ordinance, Recreational Cannabis Law-Beware Of Pitfalls

2016 Top Ranked Law Firms Based On Av - Av Preeminent Martindale - Hubbell Lawyer Ratings

Categories
Wage and Hour

Electronic Timekeeping – A Hidden Source of Liability

Electronic Timekeeping – A Hidden Source of Liability

By Alan E. Seneczko of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Wage and Hour on Thursday, November 9, 2017.

Your company utilizes electronic timekeeping software, whether purchased for internal use or provided by a third party payroll service. The system is operating, so it must be doing so legally, right? Not necessarily. On several recent occasions I discovered, much to the dismay of my clients, that the timekeeping system they have been utilizing for years was setup in a manner that violates state and federal wage and hours laws – often discovered, unfortunately and expensively, in connection with a Department of Labor audit or other legal action.

Below are a few examples of internal settings, not readily noticeable, that can be a source of potential liability – and they all stem from the manner in which the timekeeping system was set up:

  • Illegal “rounding” practices – the timekeeping system “rounds” employees’ time clock entries to the nearest quarter hour (or a similar increment), but only “rounds down,” in favor of the employer. The system must work both ways, and not just in favor of the employer. See, 29 CFR §785.48(b).
  • Uncompensated break times – the system automatically “clocks out” an employee for a break period that exceeds 15 minutes, making the break unpaid in violation of state and federal law. Employees must be compensated for all time spent in break or meal periods that are less than 30 minutes. See, 29 CFR. §785.18, .19.
  • Computation of overtime rate – when employees work at two or more different wage rates during the work week, the system calculates their rate of pay for overtime based upon the rate they were receiving when the overtime hours were worked, rather than a “blended” rate based upon their wages for the entire work week. See, 29 CFR §778.115.

In each of the above instances, the employer is incurring liability that grows with each passing day, week, month, etc. (the math adds up quickly, especially when you multiply the potential underpayment by the number of employees, each day, during every work week over a two-year period) – and is never even aware of it. Do not assume your system is operating in a lawful manner. Audit your electronic timekeeping system to ensure that it is recording your employees’ hours of work in a manner that complies with all of the requirements of the FLSA. When it comes to these systems, what you don’t know can definitely hurt you.

If you would like more information, or have questions about your timekeeping system, hours of work or the requirements of the FLSA, contact Attorney Alan E. Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.

Related Posts: Get Ready! Some Chicago Employers Must Soon Predict Work Schedules Under City of Chicago Ordinance!, Chicago Fair Workweek Ordinance, Summer Interns Still an Option?, DOL Rolls Out Proposed Overtime Revisions

2016 Top Ranked Law Firms Based On Av - Av Preeminent Martindale - Hubbell Lawyer Ratings