The Top Four Scary Problems HR Professionals Don't Even Know They Should Be Worried About

Transcription

1 The Top Four Scary Problems HR Professionals Don't Even Know They Should Be Worried About Sarah Riley Howard Brian P. Lennon White Collar Criminal Defense & Compliance Group 2012 Warner Norcross & Judd LLP. All rights reserved. wnj.com

2 Agenda What should be keeping you up at night but maybe isn t (yet): what happens at a Homeland Security I-9 audit, why your I-9s are in much worse shape than you think they are, why you may be violating the anti-discrimination provisions of the I-9 law without realizing it, and how any of these problems can cost your company hundreds of thousands of dollars in fines; why you need to think about the Foreign Corrupt Practices Act, even in HR; when and why you need an internal investigation, and who should do it; and antitrust enforcement and the HR team Warner Norcross & Judd LLP. All rights reserved. Page 2

3 Homeland Security: The Dreaded I-9 Audit The West Michigan office of Immigration and Customs Enforcement (ICE), formerly known as the INS, has said it intends to audit every large employer s I-9 forms within the next three years. It s at least reasonable to expect many, many audits no matter where you are. Nationwide, ICE has ramped up audits: 503 in 2008 vs. 2,496 in Over that period: ICE assessed $10.4 million in fines, and referred 221 employers for criminal prosecution. Once you get an audit notice, you may have as little as 3 days to turn in your I-9s Warner Norcross & Judd LLP. All rights reserved. Page 3

4 It s Not Just a One-Page Form There are at least six common errors that most HR staff make in completing I-9s. Employers can be fined even for solely technical violations in filling out forms, and even when the mistake had nothing to do with hiring an unauthorized worker. Employers can be held responsible for unknowingly hiring illegal immigrants, or continuing to employ them, when ICE concludes that anyone in management (floor supervisors, etc.) knew or should have known that the employee was not authorized to work. To some extent, I-9s can be corrected according to ICE regulations, and you get credit for making the effort to have error-free I-9s. Use legal counsel during an I-9 audit. Audits carry the possibility of huge fines, criminal charges, federal contract debarment, and bad publicity Warner Norcross & Judd LLP. All rights reserved. Page 4

5 Some very common errors on I-9s Employee signed Section 1 on 6/2, but began work on 6/1. This is a violation employee must complete and sign Section 1 by end of Day 1 of employment. Employer s representative didn t fill out and sign Section 2 until 6/14. Section 2 must be completed by end of Day 3 of employment. There s no expiration date on the Passport in List A. How can fixable errors be fixed? Different color ink pen, initialed, and dated Warner Norcross & Judd LLP. All rights reserved. Page 5

6 Some very common errors on I-9s Employee checked two boxes in Section 1. Only one box can be checked. Employee signed Section 1 on the wrong line. Yes that s enough to get you a fine. There s nothing filled out in List A or List B + C. That s another big fine Warner Norcross & Judd LLP. All rights reserved. Page 6

7 More is better, right? No more is not better. More is another fine. You should only examine either a List A document, or a List B + List C document. Not all three, and not List A plus List B or List C. No employee signature in Section Warner Norcross & Judd LLP. All rights reserved. Page 7

8 The Foreign Corrupt Practices Act Since 2009 enforcement has exploded actions resulting in more than $1.7B in fines and disgorgements Median penalty $25M; 15 year sentence; 18 new individual defendants Estimated 300 companies targeted for investigation. You don t want to be that Indiana medical supply company: Paid 10-20% fees to employees of govt.-owned business that used its products. Made $1.5M in fee payments from 2000 to Used fraudulent invoices to disguise payments as commissions, royalties & other sales and marketing expenses. Internal accounting verified the amounts paid, but hid the nature of the payments. Folks in the field said these payments were customary. SEC enjoined them from further violations & disgorgement of $5.6M DOJ, through a DPA, imposed a $17.5M criminal penalty, implement rigorous internal controls, required full cooperation with law enforcement & required the company to retain a compliance monitor for 18 months 2012 Warner Norcross & Judd LLP. All rights reserved. Page 8

9 The Foreign Corrupt Practices Act Effective FCPA compliance plans have these elements: Tone from the Top Realistic Risk Assessment Structure Starting with High-level Oversight Policies & Procedures Training of Key Personnel & Certification Monitoring & Auditing Financial Accounting & Internal Reporting Investigation & Remediation Discipline & Enforcement 2012 Warner Norcross & Judd LLP. All rights reserved. Page 9

10 Internal Investigations Corporations are under increased scrutiny. Federal, state & local governments/agencies DOJ, SEC, DHS, State AGs Competitors Current & Former Employees Whistleblowers The Economist magazine called 2012 The Year of the Bounty Hunter predicting that whistleblowing will become a global industry. Whistleblower tips detected 54.1 percent of all uncovered fraud schemes in public companies. 20+ Federal whistleblower protection statutes. Since 2006, 16 states have strengthened or expanded their whistleblower laws. Retaliation protections are everywhere. OSHA, ADEA, ADA, FCA, FLSA, IRCA, Title VII, Title IX, Clery Act, NLRA, Workers Comp Acts, Rehabilitation Act, USERRA EEOC Percentage of Charges: 15.7% in 1993, now 37.4% of all claims Opportunistic & well-financed plaintiff s bar 2012 Warner Norcross & Judd LLP. All rights reserved. Page 10

11 Internal Investigations There are five primary reasons why internal investigations are important: To determine the facts; To stop wrongful conduct (if it is on-going); To limit, isolate & mitigate the company s exposure; To begin to establish the company s good faith response; and To deter future misconduct There are three elements of an effective internal investigation: The Investigator in-house, outside counsel, or joint. The Plan Scope should be well-defined but flexible. Clear instructions for preservation, identification & collection of data. The Execution of the Plan interviews, representation of employees, analysis of the data, reporting of findings and conclusions 2012 Warner Norcross & Judd LLP. All rights reserved. Page 11

12 Antitrust Violations Antitrust enforcement by governments is on the rise. Your competitors can sue you for allegations of antitrust violations, too. Section 1 violations: a conspiracy or agreement to unreasonably restrain trade Section 2 violations: a monopoly of a market, or agreement to monopolize a market Where can employees get themselves and the company into trouble? Competitors having a casual conversation together at a trade show Arrangements to bid for subcontracts in an organized fashion s which sound later like an agreement to box out a mutual competitor Conversations with the manufacturer of a product often used with yours, about the competitor of that manufacturer Can apply to non-profits (hospitals, schools, charities) as well as for-profits 2012 Warner Norcross & Judd LLP. All rights reserved. Page 12

13 HR and Antitrust Violation Prevention What can be done? A compliance plan not overly ambitious, actually executed, enacted in good faith. Watch out for sales incentive programs that encourage violations. Watch out when hiring competitors employees non-compete agreements, situations that could be perceived as anticompetitive activity. Employee training periodic, with consistently-enforced penalties for violations Keep records of who conducted the training, when, the materials, the attendees. Internal investigations in the event of a problem 2012 Warner Norcross & Judd LLP. All rights reserved. Page 13

14 Conclusion and Questions Sarah Riley Howard Brian P. Lennon Warner Norcross & Judd LLP. All rights reserved. Page 14