by Christopher Graham and Joseph Kelly.

On his way out of office, now former Governor Quinn, with much fanfare, signed the “Illinois Secure Choice Savings Program Act”(820 ILCS 80/1 et. seq.), supposedly making Illinois the first state to require employers to either offer employees a retirement plan or enroll them in a State program. Sounds great if your an employee, right? But is it really a monumental piece of legislation as suggested when announced? Or was this just more Illinois politics?

Although the Act is the law, it isn’t effective until June 1, 2015. Even then, the Act provides that “the Program shall be implemented, and enrollment of employees shall begin, within 24 months after the effective date . . .”–so perhaps not until June 1, 2017.

There’s also an exception to that June 1, 2017 deadline, providing for “delay” of “implementation” “[i]if the [Illinois Secure Choice Savings] Board does not obtain adequate funds to implement the Program . . . .” Given the sorry state of Illinois finances, that delay is a realistic possibility, if not a likelihood.

The Board also may not implement the program “if the IRA arrangements offered under the Program fail to qualify for the favorable income tax treatment ordinarily accorded to IRAs under the Internal Revenue Code or if it is determined that the Program is an employee benefit plan and State or employer liability is established under [ERISA].” 820 ILCS 80/95. We’re not sure where things stand on resolving those issues.

If your company offers a qualified retirement plan, moreover, the new law will have no effect on your company, even if implemented. That means it’s meaningless for a huge number of employees and employers.

Assuming implementation occurs, if your company has no qualified retirement plan, but has been in business for less than two years or employed less than 25 employees at any time during the previous calendar year, your company will not be required to participate in the State program at least until the two-year and 25-employee thresholds are reached.

Once the State program–“an automatic enrollment payroll deduction IRA”–is created, a covered company will be required to auto-enroll employees, unless it then creates its own plan, such as a 401K, SEP or SIMPLE.

If your company has no qualified retirement plan and doesn’t meet the two-year and 25 employee thresholds, it will be considered a “small employer” and have the option of participating in the State program. We’re not sure why an employer would opt into the State program, rather than choose a low-cost private plan.

If your company is required to offer the State program or chooses to participate as a “small employer”, it won’t be required to contribute to any plan. Employees auto-enrolled will have a payroll deduction of 3% of their earnings earmarked for the State program; this isn’t a mandatory additional contribution by an employer. Employees also may choose to contribute more than 3%. But, if they need or prefer to have the money to use immediately, they can opt out of the State program. We wonder how many employees will prefer to opt out–especially when it’s highly likely that most, if not all employees in State-sponsored programs will be low-wage earners who may need the money just to cover everyday necessitates.

There will be Board-prepared employer and employee information packets, with background information, disclosures for employees, and information about a vendor Internet website. Employers required to participate will be required to provide information packets to employees when the program is launched and to new employees at hiring thereafter. An employee who opts out may participate later by electing to do so during an employer’s annual designated enrollment period or an earlier time if the employer allows.

If your company is required to auto-enroll an employee, but doesn’t, the company will be subject to a penalty of $250 per employee for each calendar year during which the employee neither was enrolled in the program nor opted out–and then $500 for each calendar year after the date a penalty was assessed. So, a company required to auto-enroll better do so, even if most of it’s employees opt out anyway.

It will be interesting to see how many employees really benefit from this program and how much it costs this already-financially-challenged State to administer it, assuming it even is implemented. Stay tuned.

Tags: Illinois, Secure Choice Savings Program Act, employer, private sector, mandatory retirement program, ERISA

by Christopher Graham and Joseph Kelly

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As of January 1, Illinois joined 12 other states and almost 100 cities and counties with so-called “ban-the-box” laws. The banned “box”, common in employment applications, is for checking off whether an applicant has a criminal conviction. Here’s a recent list of all of the states, counties, and municipalities with some version of this law.

Under the new Illinois law, known as the “Job Opportunities for Qualified Applicants Act”:

An employer or employment agency may not inquire about or into, consider, or require disclosure of the criminal record or criminal history of an applicant until the applicant has been determined qualified for the position and notified that the applicant has been selected for an interview by the employer or employment agency or, if there is not an interview, until after a conditional offer of employment is made to the applicant by the employer or employment agency.

The Act thus addresses not only application inquiries about criminal records and histories, but other pre-employment crime-related inquiries. The Act applies to employers with at least 15 employees. A similar Chicago ordinance applies to Chicago employers, regardless of the number of employees.

The Act’s restrictions don’t apply if the employer is: (1) required by law to exclude applicants with criminal convictions, as is the case with certain types of jobs; (2) required to be bonded and an employee with a conviction would prevent the employer from getting that bond; or (3) hiring applicants licensed under the Emergency Medical Services Systems Act.

The Act also “does not prohibit an employer from notifying applicants in writing of the specific offenses that will disqualify an applicant from employment in a particular position due to federal or State law or the employer’s policy.”

The Illinois Department of Labor may investigate potential violations and assess penalties. The Illinois Attorney General may bring civil suits on the Department’s behalf. A single violation will result in a written warning and requirement to remedy. Penalties escalate to $500 for a second offense, and $1500 for each violation thereafter.

If you’re a covered employer and you haven’t done so already, you should review your company’s job descriptions or otherwise consider the requirements of an employee’s job to determine whether it is exempt from the Act’s restrictions.

You also should promptly revise your employment applications for all covered positions to eliminate any question or anything else requiring an applicant to disclose anything about a conviction or other criminal history.

For information about other restrictions on inquiring about criminal histories, see our recent post “What you need to know about background checks for hiring, firing, and other employment decisions”.

Tags: Illinois, background checks, criminal record, criminal history, hiring, applicant, Job Opportunities for Qualified Applicants Act, ban-the-box, ban the box, employment applications, Chicago

by Christopher Graham and Joseph Kelly

As a new year approaches, your business will have new employment laws and regulations to consider. Effective on January 1, 2015, the Occupational Safety and Health Administration, commonly known as OSHA, has some more things for you to worry about.

As OSHA’s website states, “With the Occupational Safety and Health Act of 1970, Congress created the Occupational Safety and Health Administration (OSHA) to assure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance.”

There always have been requirements for reporting certain work-related accidents to OSHA. Current regulations require all employers to report “the death of an employee from a work-related incident or the in-patient hospitalization of three or more employees as a result of a work-related incident.” Reporting must be “[w]ithin eight (8) hours” of the incident.

As of January 1, employers must begin reporting every in-patient hospitalization, even involving a single employee, though the reporting deadline is lengthened to 24 hours, from eight.

Employers also must begin reporting every employee amputation or eye loss “as a result of a work-related incident.” The reporting deadline also is 24 hours.

Currently, unless your business is “exempt, if you have at least 10 employees, you also must follow OSHA regulations for keeping records about:

• work-related fatalities;
• work-related injuries and illnesses resulting in days away from work, restricted work or transfer to another job, loss of consciousness or medical treatment beyond “first aid”; and
• significant work-related injuries or illnesses diagnosed by a physician or other licensed health care professional–such as a cut, fracture, sprain, or amputation, and acute and chronic illnesses such as a skin disease (contact dermatitis), respiratory disorder (occupational asthma, pneumoconiosis), or poisoning (lead poisoning, solvent intoxication).

To determine whether you reach the 10-employee threshold, you must consider full-time, part-time, temporary, and seasonal employees.

Businesses considered exempt have included specific low hazard retail, service, finance, insurance or real estate industries.

But exemptions will change on January 1. And so if you have at least 10 employees you should consider whether your business will lose its exemption.

Businesses losing the exemption will include:

• certain real estate-related businesses including building owner-lessors
• material and supply dealers
• equipment rental and leasing companies
• certain retailers

Other businesses may be exempt under the following OSHA list for exemption status. You also can see how your business fits within the North American Industry Classification System or “NAICS,” which will control whether an exemption applies. You can learn more about the NAICS through the United States Census Bureau. And for more information about the new OSHA rules, see OSHA’s website.

It’s also always prudent to consult qualified legal counsel to make sure your business complies with the law.

Tags: OSHA, Occupational Safety and Health Administration, record-keeping, employer, employee, death, hospitalization, amputation, loss of an eye, NAICS

by Christopher Graham and Joseph Kelly

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You own a business. Business is booming! So you need to hire more employees. But you want to know whether anyone you may hire has skeletons in the closet. Is it okay to run background checks? Yes, but be there are limitations.

If you don’t have or follow a policy for background checks that follows state and federal law, you could end up in hot water.

The Equal Employment Opportunity Commission and Federal Trade Commission issued a joint publication earlier this year entitled “Background Checks: What Employers Need to Know”.

Why the EEOC? Because it’s charged with enforcing federal laws that protect applicants and employees from discrimination based on race, color, national origin, sex, or religion, disability, genetic information (including family medical history) and age (40 and older).

Why the FTC? If you use a company in the business of compiling information for background checks, such as a credit or criminal background report), you must follow the Fair Credit Reporting Act or “FCRA”, which is enforced by the FTC.

The joint statement covers what you need to do before you get background information, using that information, and disposing of it. If you run background checks, read it carefully.

Some of the statement’s key EEOC takeaways:

• “In all cases, make sure that you treat everyone equally.” So, if you run checks, run them on everyone.
• Don’t try to get an applicant’s or employees’ genetic information, including family medical history.
• Don’t ask medical questions before making a conditional job offer.
• Although it seems obvious, “Any background information you receive from any source must not be used to discriminate in violation of federal law.” So . . .
• “[A]pply the same standards for everyone . . . .”
• “Take special care when basing employment decisions on background problems that may be more common among people” in a protected class.
• “Be prepared to make exceptions for problems revealed during a background check that were caused by a disability.”
• For criminal background checks, “employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee.”
• Keep employment records until either 1-year after creation or 1-year after a personnel action, whichever is later—unless you’re a state or local government, educational institution, or federal contractor and, thus, subject to longer record keeping requirements. If you’ve been charged with discrimination or been sued, you’ll have additional preservation obligations.

Some key FTC takeaways about reports from third parties:

• Tell the applicant or employee you might use the information for decisions about his or her employment” – in a stand-alone written notice, not in an employment application.
• Get the applicant’s or employee’s written permission for the background check (okay to include in the written notice).
• For reports based on personal interviews about a person’s character, reputation, characteristics and lifestyle, you must tell the applicant or employee of his or her right to a description of the investigation’s nature and scope.
• Certify to the third-party investigator that you provided the required notice, have permission, complied with the FCRA, and won’t discriminate against the applicant or employee, or otherwise misuse the information contrary to federal or state equal opportunity laws or regulations.
• You must provide the applicant or employee notices if you intend to make an adverse employment action (such as firing or not hiring someone) based on the third-party background information, including (1) the consumer report you relied on and (2) a copy of “A Summary of Your Rights under the Fair Credit Reporting Act” which should have been provided by the company selling you the report.
• After you take an adverse employment action based on the third-party background information, you must notify the applicant or employee that he or she was rejected because of information in the report, certain contact information about the company that sold the report, and other related information.
• You may dispose of third-party reports if you’ve met all other recordkeeping requirements, but disposal must be secure.

What else do you need to know? You also better check the law in each state where your business intends to hire employees. State law likely has additional requirements.

For example, where we’re located, the Illinois Human Rights Act, subject to certain exceptions, restricts employers, potential employers, and others from inquiring into or using the fact of an arrest or criminal record information for hiring and other employment-related decisions. See 775 ILCS 5/2-103. The Human Rights Act, however, doesn’t prohibit the employer and others “from obtaining or using other information which indicates that a person actually engaged in the conduct for which he or she was arrested” Id.

Since 2011, the Illinois Credit Privacy Act, subject to certain exceptions, has restricted “employers” from inquiring about an applicant’s or employee’s credit history, ordering or obtaining an applicant’s or employee’s credit report from a consumer reporting agency, or discriminating against any person concerning employment, compensation, or a term, condition or privilege of employment because of the person’s credit history or credit report. See 820 ILCS 70/10(a).

The Credit Privacy Act excludes certain types of employers from being “employers” under the Act, such as banks, insurance companies, debt collectors, and certain state and local government entities. And it “does not prevent an inquiry or employment action if a satisfactory credit history is an established bona fide occupational requirement of a particular position or a particular group of an employer’s employees.” Id. at 70/10(b).

But if you think that you get to decide whether credit history is a “bona fide occupational requirement,” think again. The Act tells you whether it is or isn’t. Examples of when it’s bona fide include when state or federal law requires bonding for the position or the job duties include custody of or unsupervised access to cash or marketable assets of at least $2500 or signatory power of business assets of at least $100 per transaction, setting the direction or control of the business, or access to personal or confidential information, financial information trade secrets.

For an overview of background check legal variations nationwide, see an excellent post by Jackson Lewis law firm here.

Bottom line: if you’re going to do background checks, make sure you know what you’re doing. Consult qualified counsel about state, federal and any local requirements.

Tags: employee background checks, applicant background checks, Fair Credit Reporting Act, FCRA, Federal Trade Commission, EEOC, criminal background checks, credit reports, Illinois Credit Privacy Act, Illinois Human Rights Act

by Christopher Graham and Joseph Kelly

If you’re an Illinois employer, regardless of size, you will soon have to deal with a new law about pregnant workers looking for work or already employed.

Effective January 1, 2015, the Illinois Human Rights Act will be amended to prohibit discrimination in the hiring process or during employment because of “pregnancy” which is defined as “pregnancy, childbirth, or medical or common conditions related to pregnancy or childbirth.” Illinois employers also will be required to provide “pregnant” employees with reasonable accommodations so long as the accommodation doesn’t create an undue hardship for the employer. That’s not all. Illinois employers also will violate the law if they “fail to post, keep posted, or fail to include in any employee handbook information concerning an employee’s rights under the Act, a notice, … summarizing the requirements of the Act and information pertaining to the filing of a charge, including the right to be free from unlawful discrimination and the right to certain reasonable accommodations.”

Check your posters. Check your employee handbook. Don’t discriminate! And don’t forget about federal pregnancy laws…

Illinois employers with 15 or more employees are also subject to: (1) the federal Pregnancy Discrimination Act which also prohibits discrimination against a prospective or current employee because of pregnancy, childbirth, or a related medical condition; and (2) the American with Disabilities Act which requires employers to provide reasonable accommodations to a pregnant employee if she has a pregnancy-related disability. And Illinois employers with 50 or more employees are subject to the Family Medical Leave Act. EEOC fact sheets, like this one are a good resource if you’re looking for more information.

Tags: Illinois, pregnancy, discrimination, Illinois Human Rights Act

by Christopher Graham and Joseph Kelly

We wrote here about the United States Supreme Court decision to consider whether severance payments are taxable. Seven days ago the Court answered “yes” in United States v. Quality Stores, Case No. 12-1408 (S. Ct. Mar. 25, 2014). Severance payments are taxable wages. Taxpayers lose another one to the IRS.

Tags: Severance pay, tax, employment law

by Christopher Graham and Joseph Kelly

Many people don’t like confrontation. Perhaps that’s why employers don’t conduct exit interviews with departing employees. But if an employee is subject to non-competition, non-solicitation, or confidentiality agreement restrictions, an exit interview is a way to assure compliance and identify potential problems. And an exit interview done right shouldn’t be confrontational. During an exit interview, the employer should ask the employee to sign an acknowledgment of obligations under any agreement or agreements, which should be attached to the acknowledgment. The employer also should ask the employee about the identity of the next employer. A sign of trouble may be an employee’s refusal to sign the acknowledgment or disclose the new employer. If there’s no exit interview, the employer has less chance of discovering or heading off a violation. The employer may be unable to learn that the employee is working for an industry competitor until long after the employee leaves and damage already has been done. So if your an employer, think about making exit interviews and acknowledgements part of your routine business practice.

by Christopher Graham and Joseph Kelly

As we’ve discussed previously on this blog, employee non-competition agreements in Illinois can be difficult to enforce; the Illinois Supreme Court in fact recently held that an initial offer of employment for an at-will employee isn’t enough to make a non-compete enforceable.

Employers may want to consider “gardening leave” as an alternative. Common in the United Kingdom, the employee provides a resignation notice and the employer then pays the employee not to work — for the employer or any other employer — for an agreed period.

Illinois courts have not addressed “gardening leave”, but some lawyers believe courts will look more favorably to a “gardening leave” provision than an employee non-compete.

For more information on “gardening leave”, see this excellent article by Kenneth J. Vanko.

Tags: Illinois, employment law, non-competition, non-compete, garden leave, gardening leave

The Uniformed Services Employment and Reemployment Act (“USERRA”) establishes rights for active duty military personnel and obligations for their civilian employers. USERRA was intended to assure that active-duty military personnel: (1) aren’t at a disadvantage in their civilian jobs because of their service; (2) are reinstated promptly to their jobs upon their return from service; and (3) aren’t discriminated against because of past, present, or future military service. Employers can fill a position while an employee is on active duty, but must offer to restore the employee to the job and benefits he or she would have attained if you had not been absent due to military service or, in some cases, a comparable job.

Unlike some employment laws which apply only when a company’s employees exceed a threshold amount, USERRA applies to all employers, regardless of size. Penalties for non-compliance can be severe.

Employers are required to provide notice to employees of their rights under USERRA. For more information, see the notice poster provided by the Department of Labor.

by Christopher Graham and Joseph Kelly

Some employers use the internet to learn about job applicants. What employers may not know is that using Google, Facebook or the like for applicant-screening could open them up to discrimination claims. Asking a job applicant or employee for a Facebook password in fact is prohibited under the law of Illinois and many other states as detailed in this recent blog post from Seyfarth Shaw’s Employment Law Lookout. That post also includes suggested best practices for assuring legal compliance including adopting policies, educating employees about them and why they’re important and, for employers doing business in multiple states, adjusting policies for state specific requirements.