Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Since my original post on the subject of Executive Order 12989 yesterday (and the sweeping effects it will have for all federal contractors), others have also added their comments to the subject. Among some of the notable posts:

The brand-new Florida Employment Law Blog (run by my former colleague Richard Tuschman -- congrats, Richard!) predicts negative implications for employers -- particularly those in Florida:

I find the government’s statement [that this will bring stability] suspicious because the government, although it has failed time and time again, has tried on repeated occasions to push legislation or regulations that would impose a mandatory electronic employment verification program on all US employers. Further, the Order is presented as being designed to promote "economy and efficiency" along with "stability and dependability," but the reality is that there is nothing economic, efficient, stable or dependable about skilled and unskilled jobs that cannot be filled because there are no enough American workers readily available to work.
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The government in its zeal security and enforcement is failing to consider the true economic impact these measures will have on employers and consumers. Enforcing this type of order in the absence of immigration reform which could provide employers with helpful avenues could doom - against contrary government opinion - many efficient employers. I am not sure how the government is going to enforce this Order, but for us in Florida enforcing these measures could have a long lasting negative effect.

The Workplace Prof blog predicts that this Executive Order will be short-lived by noting that the Government Accountability Office (GAO) yesterday released the following reports, testimony, and correspondence on employment verification issues surrounding the immigration debate: Employment Verification: Challenges Exist in Implementing a Mandatory Electronic Employment Verification System. GAO-08-895T, June 10.

Suffice to say that this is far from a settled issue. Government contractors should continue to monitor this subject throughout the summer for further development.

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Most people think that changes to the laws or the way companies conduct business can only happen through the legislative changes.  But an Executive Order effective this week reminds us of the power of Executive Branch.   

Effective immediately, all federal contractors must now agree to use E-Verify, an Internet-based system operated by U.S. government, to electronically verify the employment eligibility of new employees.  This appears to apply to all contracts on a going-forward basis, not a look-back provision.  The White House's press release is available here along with the text changes. 

The press release issued by the Department of Homeland Security has the particulars on Executive Order 12989:

The Department of Homeland Security today designated E-Verify, operated by U.S. Citizenship and Immigration Services in partnership with the Social Security Administration, as the electronic employment eligibility verification system that all federal contractors must use as required by Executive Order 12989, as amended. E-Verify is a free Internet-based system that allows enrolled employers to confirm the legal status of new hires within seconds.

"A large part of our success in enforcing the nation's immigration laws hinges on equipping employers with the tools to determine quickly and effectively if a worker is legal or illegal," said Homeland Security Secretary Michael Chertoff. "E-Verify is a proven tool that helps employers immediately verify the legal working status for all new hires."

President George W. Bush has amended Executive Order 12989 in order to direct all federal departments and agencies to require contractors, as a condition of each future federal contract, to agree to use an electronic employment eligibility verification system – designated by the Secretary of Homeland Security – to verify the employment eligibility of all persons hired during the contract term and all persons performing work within the United States on the federal contract

According to the Delaware Employment Law Blog, "This requirement apparently extends to all newly hired employees, not just employees hired to work on the government contract. In addition, the Executive Order requires the contractor to use an electronic verification system to verify the employment eligibility of “all persons assigned by the contractor to perform work in the United States.”"

Further details on the changes can be found at the Pennsylvania Labor & Employment Law Blog.

And major newspapers have also chimed in, including an editorial in today's Los Angeles Times which notes the creeping re-definition of what's "reasonable":

On Monday, the Department of Homeland Security announced that it will require federal contractors to ensure the immigration status of employees through its E-Verify system. It's a reasonable step -- and that may be the problem. As immigration hawks have gone from triumph to triumph, the rest of us have had to adjust our views of what reasonable behavior is. 

For employment, it's just one more detail that must be followed in an increasingly complicated mess of regulations, laws and now executive orders.

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The Employee Benefits blog has a terrific post this week explaining the "Gross Misconduct" rule for COBRA Coverage.

For those unfamiliar with the lingo, The Consolidated Omnibus Budget Reconciliation Act (COBRA) (among other aspects) describes rights that employees have to continue their health insurance after their employment as been terminated (and for some other reasons too).    But there is an exception: When the employee is terminated for "gross misconduct", the benefits cease.  What does that mean? Well, the Act doesn't define it.

But the Employee Benefit blog shares some insight from one case about what it means. 

Three things are very important about this decision.  First, the court did not find that any “criminal” conduct was required to meet the “gross misconduct” definition.  Gross misconduct can be an intentional, deliberate, extreme and outrageous that “shocks the conscience.”  It can be “reckless or in deliberate indifference to an employer’s interests.”  ...

Second, the employer has the burden of establishing the termination was for “gross misconduct.”  ... It must be the primary reason, not one of many.

Finally, the employee and potential COBRA beneficiaries have to be notified of the determination that COBRA is not being offered because of the termination for gross misconduct.  

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What's the latest trend that human resources departments are using to control costs? According to a Business Week article in this week's issue, it's "Dependent Eligibility Audits".  What are they? The article explains:

Dependent eligibility audits," in which companies demand proof that spouses and children qualify for medical benefits, are swiftly becoming both fashionable and financially rewarding for companies frantic to curb the runaway costs of health coverage. Companies such as Boeing, General Motors, and American Airlines have been asking workers to send in marriage licenses, birth certificates, student IDs, and tax returns. The goal: to cull the benefits rolls of ineligibles, which could include ex-spouses, stepchildren who live elsewhere, or 29-year-old college grads still being claimed as dependents.

While this may appear to simply be a "benefit" issue, some companies are taking this issue serious, including firing some employees, according to the article.

At many companies, missing the deadline for sending in paperwork risks having a dependent's coverage dropped. Still, there are usually appeal windows of up to 60 days during which coverage can be reinstated if employees show proof. A few companies, however, are getting tough on those who procrastinate or are caught signing up an unqualified person. Some have made employees wait until the next open enrollment period before reinstating insurance if they repeatedly missed deadlines. [One consultant] said one client even fired workers discovered to have enrolled ineligible people because they violated its stringent code of conduct.

While such audits would, at first glance, appear to implicate privacy concerns, employees seeking benefits from a company routinely have to provide information on their dependents anyways. The risks in conducting the audit therefore have to do more with perceptions and managing employees, rather than privacy concerns. 

For the HR professionals there, feel free to post your experiences, if any, with such audits and whether this is indeed, a developing trend.

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