Business Law: Chapter 34 - Employment, Immigration, and Labor Law

Layoffs

The Worker Adjustment and Retraining Notification (WARN) Act applies to employers with at least one hundred full-time employees. The act requires these employers to provide sixty days' notice before implementing a mass layoff or closing a plant that employs more than fifty full-time workers. A mass layoff is a layoff of at least one-third of the full-time employees at a particular job site. Employers thus must provide advance notice of the layoff both to the affected workers and to state and local government authorities. (An employer may notify the workers' union representative, if the workers are members of a labor union.) An employer that violates the WARN Act can be fined up to $500 for each day of the violation.

Common Law Exceptions to the Employment-at-Will Doctrine

The courts have carved out various exceptions to the doctrine based on contract theory, tort theory, and public policy.

Vesting

The creation of an absolute or unconditional right or power.

Documentation Requirements

The employer must declare, under penalty of perjury, that an employee produced documents establishing his or her identity and legal employability. A U.S. passport establishing the person's citizenship is acceptable documentation. So is a document authorizing a foreign citizen to work in the United States, such as a permanent resident card or an Alien Registration Receipt. Nevertheless, employers must be honest when verifying an employee's documentation. If an employer "should have known" that the worker was unauthorized, the employer has violated the rules.

minimum wage

The lowest wage, either by government regulation or by union contract, that an employer may pay an hourly worker. $7.25

The H-1B Visa Program

The most common and controversial visa program today is the H-1B visa system. To obtain an H1-B visa, the potential employee must be qualified in a "specialty occupation," meaning that the individual has highly specialized knowledge and has attained a bachelor's or higher degree or its equivalent. Individuals with H-1B visas can stay in the United States for three to six years and can work only for the sponsoring employer.

Exceptions Based on Public Policy(Employment at Will)

The most common exception to the employment-at-will doctrine is made on the basis that the employer's reason for firing the employee violates a fundamental public policy of the jurisdiction. Generally, the courts require that the public policy involved be expressed clearly in the statutory law governing the jurisdiction.

Collective bargaining

The process by which labor and management negotiate the terms and conditions of employment, including working hours and workplace conditions.

I-9 Employment Verification for IRCA

The process of verifying the employment eligibility and identity of a new immigrant worker. It must be completed within three days after the worker commences employment. For new hires!

The Right to Strike

The right to strike is guaranteed by the NLRA, within limits. Strike activities, such as picketing, are protected by the free speech guarantee of the First Amendment to the U.S. Constitution. Persons who are not employees have a right to participate in picketing an employer. The NLRA also gives workers the right to refuse to cross a picket line of fellow workers engaged in a lawful strike. Employers are permitted to hire replacement workers to substitute for the striking workers.

Violations of FMLA An employer that violates the FMLA can be required to provide various remedies, including the following:

1. Damages to compensate the employee for lost wages and benefits, denied compensation, and actual monetary losses (such as the cost of providing care for a family member). Compensatory damages are available up to an amount equivalent to the employee's wages for twelve weeks. 2. Job reinstatement. 3. Promotion, if a promotion has been denied. Employers generally are required to notify employees when an absence will be counted against FMLA leave. If an employer fails to provide such notice, and that failure to notify causes harm to the employee, the employer can be sanctioned.

Unfair Labor Practices The NLRA specifically defined a number of employer practices as unfair to labor:

1. Interference with the efforts of employees to form, join, or assist labor organizations or to engage in concerted activities for their mutual aid or protection. 2. An employer's domination of a labor organization or contribution of financial or other support to it. 3. Discrimination in the hiring of or the awarding of tenure to employees for reason of union affiliation. 4. Discrimination against employees for filing charges under the act or giving testimony under the act. 5. Refusal to bargain collectively with the duly designated representative of the employees.

Wages, Hours, and Layoffs In the 1930s, Congress enacted several laws to regulate the wages and working hours of employees, including the following:

1. The Davis-Bacon Act requires contractors and subcontractors working on federal government construction projects to pay "prevailing wages" to their employees. 2. The Walsh-Healey Act applies to U.S. government contracts. It requires that a minimum wage, as well as overtime pay at 1.5 times regular pay rates, be paid to employees of manufacturers or suppliers entering into contracts with agencies of the federal government. 3. The Fair Labor Standards Act (FLSA) extended wage-hour requirements to cover all employers engaged in interstate commerce or in producing goods for interstate commerce. Certain other types of businesses were included as well. The FLSA, as amended, provides the most comprehensive federal regulation of wages and hours today.

Requirements for Receiving Workers' Compensation In general, the only requirements to recover benefits under state workers' compensation laws are:

1. The existence of an employment relationship. 2. An accidental injury that occurred on the job or in the course of employment, regardless of fault. (An injury that occurs while an employee is commuting to or from work usually is not covered because it did not occur on the job or in the course of employment.)

Coverage and Application of FMLA An eligible employee may take up to twelve weeks of leave within a twelve-month period for any of the following reasons:

1. To care for a newborn baby within one year of birth. 2. To care for an adopted or foster child within one year of the time the child is placed with the employee. 3. To care for the employee's spouse, child, or parent who has a serious health condition. 4. If the employee suffers from a serious health condition and is unable to perform the essential functions of her or his job. 5. For any qualifying exigency (nonmedical emergency) arising out of the fact that the employee's spouse, son, daughter, or parent is a covered military member on active duty. For instance, an employee can take leave to arrange for child care or to deal with financial or legal matters when a spouse is being deployed overseas.

Illegal Strikes In the following situations, the conduct of the strikers may cause the strikes to be illegal:

1. Violent strikes. The use of violence (including the threat of violence) against management employees or substitute workers is illegal. 2. Massed picketing. If the strikers form a barrier and deny management or other nonunion workers access to the plant, the strike is illegal. 3. Sit-down strikes. Strikes in which employees simply stay in the plant without working are illegal. 4. No-strike clause. A strike may be illegal if it contravenes a no-strike clause that was in the previous collective bargaining agreement between the employer and the union. 5. Secondary boycotts. A secondary boycott is an illegal strike that is directed against someone other than the strikers' employer, such as companies that sell materials to the employer. 6. Wildcat strikes. A wildcat strike occurs when a small number of workers, perhaps dissatisfied with a union's representation, call their own strike. The union is the exclusive bargaining representative of a group of workers, and only the union can call a strike. Therefore, a wildcat strike, unauthorized by the certified union, is illegal.

Income Security

Federal and state governments participate in insurance programs designed to protect employees and their families from the financial impact of retirement, disability, death, hospitalization, and unemployment. The key federal law on this subject is the Social Security Act.

authorization card

A card signed by an employee that gives a union permission to act on his or her behalf in negotiations with management.

employment at will

A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise.

Requirements for Immigrant Employment: I-551 Alien Registration Receipt

A document known as a "green card" that shows that a foreign-born individual can legally work in the United States.

union shop

A firm that requires all workers, once employed, to become union members within a specified period of time as a condition of their continued employment.

closed shop

A firm that requires union membership on the part of its workers as a condition of employment.

right-to-work laws

A state law providing that employees may not be required to join a union as a condition of retaining employment.

workers' compensation laws

A state statute establishing an administrative procedure for compensating workers for injuries that arise out of, or in the course of, their employment, regardless of fault. Instead of suing the employer, an injured worker files a claim with the state agency or board that administers local workers' compen-sation claims.

Family and Medical Leave Family and Medical Leave Act (FMLA):

Allows employees to take time off work for family or medical reasons or in certain situations that arise from military service.

lockout

An action in which an employer shuts down to prevent employees from working, typically because it cannot reach a collective bargaining agreement with the employees' union.

strike

An action undertaken by unionized workers when collective bargaining fails. The workers leave their jobs, refuse to work, and (typically) picket the employer's workplace.

cease-and-desist order

An administrative or judicial order prohibiting a person or business firm from conducting activities that an agency or court has deemed illegal.

whistleblowing

An employee's disclosure to government authorities, upper-level managers, or the media that the employer is engaged in unsafe or illegal activities.

Employer Penalties bc of ICE

An employer who violates the law by hiring an unauthorized worker is subject to substantial penalties. The employer can be fined up to $2,200 for each unauthorized employee for a first offense, $5,000 per employee for a second offense, and up to $11,000 for subsequent offenses. Employers who have engaged in a "pattern or practice of violations" are subject to criminal penalties, which include additional fines and imprisonment for up to ten years. A company can also be barred from future government contracts. In determining the penalty, ICE considers the seriousness of the violation (such as intentional falsification of documents) and the employer's past compliance. ICE regulations also identify factors that will mitigate (lessen) or aggravate (increase) the penalty under certain circumstances. An employer that cooperates in the investigation, for instance, may receive a lesser penalty than an uncooperative employer.

Labor Certification

An employer who wishes to submit an H-1B application must first file a Labor Certification application on a form known as ETA 9035. The employer must agree to provide a wage level at least equal to the wages offered to other individuals with similar experience and qualifications. The employer must also show that the hiring will not adversely affect other workers similarly employed. The employer is required to inform U.S. workers of the intent to hire a foreign worker by posting the form. The U.S. Department of Labor reviews the applications and may reject them for omissions or inaccuracies.

wrongful discharge

An employer's termination of an employee's employment in violation of the law or an employment contract.

Immigration Law

An estimated 12 million undocumented immigrants now live in the United States, and many of them came to find jobs. Because U.S. employers face serious penalties if they hire undocumented workers, it is necessary for businesspersons to understand immigration laws. The most important laws affecting immigration in the context of employment are the Immigration Reform and Control Act (IRCA) and the Immigration Act.

hot-cargo agreements

An illegal agreement in which employers voluntarily agree with unions not to handle, use, or deal in the non-union-produced goods of other employers.

The Occupational Safety and Health Act

At the federal level, the primary legislation protecting employees' health and safety is the Occupational Safety and Health Act, which is administered by the Occupational Safety and Health Administration (OSHA). The act imposes on employers a general duty to keep the workplace safe.

Labor Unions

These laws protect employees' rights to join labor unions, to bargain with management over the terms and conditions of employment, and to conduct strikes.

Private Retirement Plans The major federal statute that regulates employee retirement plans is the Employee Retirement Income Security Act (ERISA):

This act empowers a branch of the U.S. Department of Labor to enforce its provisions governing employers that have private pension funds for their employees. ERISA created the Pension Benefit Guaranty Corporation (PBGC), an independent federal agency, to provide timely and uninterrupted payment of voluntary private pension benefits. The pension plans pay annual insurance premiums (at set rates adjusted for inflation) to the PBGC, which then pays benefits to participants in the event that a plan is unable to do so. A key provision of ERISA concerns vesting.

Workers Protected by the NLRA

To be protected under the NLRA, an individual must be an employee or a job applicant. (If job applicants were not covered, the NLRA's ban on discrimination in regard to hiring would mean little.) Additionally, individuals who are hired by a union to organize a company (union organizers) are to be considered employees of the company for NLRA purposes.

Other types of Monitoring Lie-Detector Tests

Today, the Employee Polygraph Protection Act generally prohibits employers from requiring employees or job applicants to take lie-detector tests or suggesting or requesting that they do so. The act also restricts employers' ability to use or ask about the results of any lie-detector test or to take any negative employment action based on the results. Certain employers are exempt from these prohibitions. Federal, state, and local government employers, and certain security service firms, may conduct polygraph tests. In addition, companies that manufacture and distribute controlled substances may perform lie-detector tests. Other employers may use polygraph tests when investigating losses attributable to theft, including embezzlement and the theft of trade secrets.

Notices, Records, and Reports for OSHA

Employers with eleven or more employees are required to keep occupational injury and illness records for each employee. Each record must be made available for inspection when requested by an OSHA compliance officer. Whenever a work-related injury or disease occurs, employers must make reports directly to OSHA. If an employee dies or three or more employees are hospitalized because of a work-related incident, the employer must notify the OSHA within eight hours. A company that fails to do so will be fined. Following the incident, a complete inspection of the premises is mandatory.

H-2, O, L, and E Visas

H-2 visas provide for workers performing agricultural labor of a seasonal nature. O visas provide entry for persons who have "extraordinary ability in the sciences, arts, education, business or athletics which has been demonstrated by sustained national or international acclaim." L visas allow a company's foreign managers or executives to work inside the United States. E visas permit the entry of certain foreign investors or entrepreneurs.

Voting

If an election is held, the NLRB supervises the election and ensures secret voting and voter eligibility. If the proposed union receives majority support in a fair election, the NLRB certifies the union as the bargaining representative for the employees.

Workers' Compensation versus Litigation

If an employee accepts workers' compensation benefits, he or she may not sue for injuries caused by the employer's negligence. By barring lawsuits for negligence, workers' compensation laws also prevent employers from avoiding liability by using defenses, such as contributory negligence or assumption of risk. A worker may sue an employer who intentionally injures the worker, however.

Union Elections

If the employer refuses to voluntarily recognize the union—or if less than a majority of the workers sign authorization cards—the union organizers can petition for an election. The organizers present the authorization cards to the NLRB with a petition to hold an election on unionization. For an election to be held, they must demonstrate that at least 30 percent of the workers to be represented support a union or an election.

Child Labor

Children under fourteen years of age are allowed to do only certain types of work. They can deliver newspapers, work for their parents, and be employed in entertainment and (with some exceptions) agriculture. Children aged fourteen and fifteen are allowed to work, but not in hazardous occupations. There are also restrictions on how many hours per day and per week children in these age groups can work. Working times and hours are not restricted for persons between the ages of sixteen and eighteen, but they cannot be employed in hazardous jobs. None of these restrictions apply to those over the age of eighteen.

Federal Labor Laws Norris-LaGuardia Act

Congress protected peaceful strikes, picketing, and boycotts in 1932 in the Norris-LaGuardia Act. The statute restricted the power of federal courts to issue injunctions against unions engaged in peaceful strikes. In effect, this act declared a national policy permitting employees to organize.

Employee Privacy Protection

Employees of private (nongovernment) employers have some privacy protection under tort law and state constitutions. In addition, state and federal statutes may limit an employer's conduct in certain respects. For instance, the Electronic Communications Privacy Act prohibits employers from intercepting an employee's personal electronic communications unless they are made on devices and systems furnished by the employer. Nonetheless, employers do have considerable leeway to monitor employees in the workplace. In addition, private employers generally are free to use filtering software to block access to certain Web sites, such as sites containing sexually explicit images. The First Amendment's protection of free speech prevents only government employers from restraining speech by blocking Web sites.

After a Strike Ends

In a typical strike, the employer has a right to hire permanent replacements during the strike. The employer need not terminate the replacement workers when the economic strikers seek to return to work. In other words, striking workers are not guaranteed the right to return to their jobs after the strike if satisfactory replacement workers have been found. If the employer has not hired replacement workers to fill the strikers' positions, however, then the employer must rehire the economic strikers to fill any vacancies. Employers may not discriminate against former economic strikers, and those who are rehired retain their seniority rights.

Exceptions Based on Tort Theory (Employment at Will)

In some situations, the discharge of an employee may give rise to an action for wrongful discharge (discussed shortly) under tort theories. Examples: Abusive discharge procedures may result in a lawsuit for intentional infliction of emotional distress or defamation. In addition, some courts have permitted workers to sue their employers under the tort theory of fraud.

Other Types of Monitoring Drug Testing

In the interests of public safety and to reduce unnecessary costs, many employers, including the government, require their employees to submit to drug testing. Public Employers Government (public) employers are constrained in drug testing by the Fourth Amendment to the U.S. Constitution, which prohibits unreasonable searches and seizures. Drug testing of public employees is allowed by statute for transportation workers, however. Courts normally uphold drug testing of certain employees when drug use in a particular job may threaten public safety. Also, when there is a reasonable basis for suspecting public employees of drug use, courts often find that drug testing does not violate the Fourth Amendment. Private Employers The Fourth Amendment does not apply to drug testing conducted by private employers. Hence, the privacy rights and drug testing of private-sector employees are governed by state law. Many states have statutes that allow drug testing by private employers but restrict when and how the testing may be performed.

Union Election Campaigns

Many disputes between labor and management arise during union election campaigns. Generally, the employer has control over unionizing activities that take place on company property and during working hours. Thus, the employer may limit the campaign activities of union supporters as long as it has a legitimate business reason for doing so. The employer may also reasonably limit when and where union solicitation may occur in the workplace, provided that the employer is not discriminating against the union.

Medicare

Medicare is a federal government health-insurance program administered by the Social Security Administration for people sixty-five years of age and older and for some under age sixty-five who are disabled. It originally had two parts, one pertaining to hospital costs and the other to nonhospital medical costs, such as visits to physicians' offices. It now offers additional coverage options and a prescription-drug plan. People who have Medicare hospital insurance can obtain additional federal medical insurance if they pay monthly premiums

Employee Privacy Rights Electronic Monitoring

More than half of employers engage in some form of electronic monitoring of their employees. Many employers review employees' e-mail, as well as their social media posts and other Internet messages. Employers may also make video recordings of their employees at work, record their telephone conversations, and listen to their voice mail.

Reasonable Expectation of Privacy

Normally, if employees have been informed that their communications are being monitored, they cannot reasonably expect those interactions to be private. In addition, a court will typically hold that employees do not have a reasonable expectation of privacy when using a system (such as an e-mail system) provided by the employer. If employees are not informed that certain communications are being monitored, the employer may be held liable for invading their privacy. Most employers that engage in electronic monitoring notify their employees about the monitoring. Nevertheless, a general policy may not sufficiently protect an employer monitoring forms of communications that the policy fails to mention. For instance, notifying employees that their e-mails and phone calls may be monitored does not necessarily protect an employer who monitors social media posts or text messages.

Appropriate Bargaining Unit

Not every group of workers can form a single union. The proposed union must represent an appropriate bargaining unit. One key requirement is a mutuality of interest among all the workers to be represented by the union. Factors considered in determining whether there is a mutuality of interest include the similarity of the jobs of the workers to be unionized and their physical location.

Inspections by OSHA

OSHA compliance officers may enter and inspect the facilities of any establishment covered by the Occupational Safety and Health Act. Employees may also file complaints of violations. Under the act, an employer cannot discharge an employee who files a complaint or who, in good faith, refuses to work in a high-risk area if bodily harm or death might result.

Federal Labor Laws National Labor Relations Act

One of the foremost statutes regulating labor is the 1935 National Labor Relations Act (NLRA). This act established the rights of employees to engage in collective bargaining and to strike.

Exceptions Based on Contract Theory (Employment at Will)

Some courts have held that an implied employment contract exists between the employer and the employee. If the employee is fired outside the terms of the implied contract, he or she may succeed in an action for breach of contract even though no written employment contract exists. Generally, the key consideration in determining whether an employment manual creates an implied contractual obligation is the employee's reasonable expectations. An employer's oral promises to employees regarding discharge policy may also be considered part of an implied contract. If the employer fires a worker in a manner contrary to what was promised, a court may hold that the employer has violated the implied contract and is liable for damages.

The Immigration Reform and Control Act (IRCA)

The IRCA makes it illegal to hire, recruit, or refer for a fee someone not authorized to work in this country. Through Immigration and Customs Enforcement officers, the federal government conducts random compliance audits and engages in enforcement actions against employers who hire undocumented workers.

The Immigration Act

The Immigration Act of 1990 placed caps on the number of visas (entry permits) that can be issued to immigrants each year, including employment-based visas. Employment-based visas may be classified as permanent (immigrant) or temporary (nonimmigrant). Employers who wish to hire workers with either type of visa must comply with detailed government regulations

Labor-Management Relations Act

The Labor-Management Relations Act (LMRA or Taft-Hartley Act) of 1947 was passed to prohibit certain unfair union practices. For instance, the act outlawed the closed shop—a firm that requires union membership as a condition of employment. The act preserved the legality of the union shop, however. A union shop does not require union membership as a prerequisite for employment but can, and usually does, require that workers join the union after a specified time on the job. The LMRA also prohibited unions from refusing to bargain with employers, engaging in certain types of picketing, and featherbedding (causing employers to hire more employees than necessary). In addition, the act allowed individual states to pass right-to-work laws—laws making it illegal for union membership to be required for continued employment in any establishment. Thus, union shops are technically illegal in the twenty-seven states that have right-to-work laws.

Labor-Management Reporting and Disclosure Act

The Labor-Management Reporting and Disclosure Act (LMRDA) established an employee bill of rights and reporting requirements for union activities. The act also outlawed hot-cargo agreements, in which employers voluntarily agree with unions not to handle, use, or deal in goods of other employers produced by nonunion employees. The LMRDA strictly regulates unions' internal business procedures, including elections. For instance, it requires unions to hold regularly scheduled elections of officers using secret ballots. Former convicts are prohibited from holding union office. Moreover, union officials are accountable for union property and funds. Members have the right to attend and to participate in union meetings, to nominate officers, and to vote in most union proceedings.

The National Labor Relations Board

The NLRA created the National Labor Relations Board (NLRB) to oversee union elections and to prevent employers from engaging in unfair and illegal union activities and unfair labor practices. The NLRB has the authority to investigate employees' charges of unfair labor practices and to file complaints against employers in response to these charges. When violations are found, the NLRB may issue a cease-and-desist order compelling the employer to stop engaging in the unfair practices

New NLRB Rules Expedite Elections

The NLRB now requires that a company hold a pre-election hearing within eight days after it receives a petition for an organizing election. On the day before the hearing, the company must also submit a "statement of position" laying out every argument it intends to make against the union. Any argument that the company does not include in its position paper can be excluded from evidence at the hearing. Once the hearing is held, an election can be scheduled right away.

Overtime Provisions and Exemptions

Under the FLSA, any employee who works more than forty hours per week must be paid no less than 1.5 times her or his regular pay for all hours worked over forty. The FLSA overtime provisions apply only after an employee has worked more than forty hours per week. Certain employees are exempt from the FLSA's overtime provisions. These employees generally include executive, administrative, and professional employees, as well as outside salespersons and those who create computer code. Executive and administrative employees are those whose primary duty is management and who exercise discretion and independent judgment.

Good Faith Bargaining

Under the NLRA, employers and unions have a duty to bargain in good faith. Bargaining over certain subjects is mandatory, and a party's refusal to bargain over these subjects is an unfair labor practice that can be reported to the NLRB. For instance, bargaining is mandatory for subjects relating to wages or working hours.

Health, Safety, and Income Security

Under the common law, employees who were injured on the job had to file lawsuits against their employers to obtain recovery. Today, numerous state and federal statutes protect employees from the risk of accidental injury, death, or disease resulting from their employment. In addition, the government protects employees' income through Social Security, Medicare, unemployment insurance, and the regulation of pensions and health insurance plans.

State Immigration Legislation

Until 2010, federal law exclusively governed immigration and the treatment of illegal immigrants. Then Arizona enacted a law that required Arizona law enforcement officials to identify and charge immigrants in Arizona who were there illegally, potentially leading to the immigrants' deportation. Arizona's law was challenged in Arizona v. United States, which reached the United States Supreme Court. The Court upheld the controversial "show-me-your-papers" provision, which requires police to check the immigration status of persons stopped for other violations. All other provisions of Arizona's law were struck down as unconstitutional violations of the supremacy clause. Although states may require immigrants to show their papers if stopped by law enforcement for another reason, they may not make it a crime to fail to carry documentation. States also cannot authorize law enforcement to arrest anyone based solely on a reasonable suspicion that the person is in the country illegally.

Terms and Conditions of Employment

Wages, hours of work, and certain other conditions of employment may be discussed during collective bargaining sessions. For instance, subjects for negotiation may include workplace safety, employee discounts, health-care plans, pension funds, and apprentice and scholarship programs.

Tipped Workers

When an employee receives tips while on the job, the FLSA gives employers a tip credit toward the minimum wage amount. The employer is required to pay only $2.13 an hour in direct wages—if that amount, plus the tips received, equals at least the federal minimum wage. If an employee's tips and direct wages do not equal the federal minimum wage, the employer must make up the difference. Note that some states have enacted laws to prevent employers from including tips in the minimum wage. In these states, tipped workers receive the regular minimum wage.

Benefits and Protections of FMLA

When an employee takes FMLA leave, the employer must continue the worker's health-care coverage on the same terms as if the employee had continued to work. On returning from FMLA leave, most employees must be restored to their original position or to a comparable position (with nearly equivalent pay and benefits, for instance). An important exception allows the employer to avoid reinstating a key employee—defined as an employee whose pay falls within the top 10 percent of the firm's workforce.

Tax Contributions Under the Federal Insurance Contributions Act (FICA):

both employers and employees contribute to Social Security and Medicare, although the contributions are determined differently. The employer withholds the employee's FICA contributions from the employee's wages and ordinarily matches the contributions. For Social Security, the basis for the contributions is the employee's annual wage base—the maximum amount of the employee's wages that is subject to the tax. As of 2016, the maximum amount subject to the tax was $118,500, and the tax rate was 12.4 percent. The Medicare tax rate is 2.9 percent. Unlike Social Security, Medicare has no cap on the amount of wages subject to the tax. So even if an employee's salary is well above the cap for Social Security, he or she will still owe Medicare tax on the total earned income. Self-employed persons pay both the employer's and the employee's portions of the Social Security and Medicare taxes. Under the Affordable Care Act, high-income earners are subject to an additional Medicare tax of 3.8 percent on most investment income. This additional tax applies to single wage earners making more than $200,000 and married couples making more than $250,000.

Unemployment Insurance The Federal Unemployment Tax Act (FUTA) -

created a state-administered system that provides unemployment compensation to eligible individuals who have lost their jobs. The FUTA and state laws require employers that fall under the provisions of the act to pay unemployment taxes at regular intervals. The proceeds from these taxes are then paid out to qualified unemployed workers.

COBRA The Consolidated Omnibus Budget Reconciliation Act (COBRA) enables:

employees to continue, for a limited time, their health-care coverage after they are no longer eligible for group health-insurance plans.. COBRA prohibits an employer from eliminating a worker's medical, vision, or dental insurance when the worker's employment is terminated or when a reduction in the worker's hours would affect coverage. Termination of employment may be voluntary or involuntary. Only workers fired for gross misconduct are excluded from protection. A worker has sixty days (from the date that the group coverage would stop) to decide whether to continue with the employer's group insurance plan. If the worker chooses to continue coverage, the employer is obligated to keep the policy active for up to eighteen months (twenty-nine months if the worker is disabled). The coverage must be the same as that provided to the worker (and his or her family members) prior to the termination or reduction of work. An employer that does not comply with COBRA risks substantial penalties, including a tax of up to 10 percent of the annual cost of the group plan or $500,000, whichever is less.

Social Security The Social Security Act provides (OASDI):

for old-age (retirement), survivors', and disability insurance. Retired workers who are covered by Social Security receive monthly payments from the Social Security Administration, which administers the Social Security Act. Social Security benefits are fixed by statute but increase automatically with increases in the cost of living.

Enforcement U.S. Immigration and Customs Enforcement (ICE)-

is the largest investigative arm of the U.S. Department of Homeland Security. ICE has a general inspection program that conducts random compliance audits. Other audits may occur if the agency receives a written complaint alleging that an employer has committed violations. Government inspections include a review of an employer's file of I-9 forms. The government does not need a subpoena or a warrant to conduct such an inspection. If an investigation reveals a possible violation, ICE will bring an administrative action and issue a Notice of Intent to Fine, which sets out the charges against the employer. The employer has a right to a hearing on the enforcement action if it files a request within thirty days. This hearing is conducted before an administrative law judge, and the employer has a right to counsel and to discovery. The typical defense in such actions is good faith or substantial compliance with the documentation provisions.

Affordable Care Act The Affordable Care Act (commonly referred to as Obamacare):

requires most employers with fifty or more full-time employees to offer health-insurance benefits. Under the act, any business offering health benefits to its employees (even if not legally required to do so) may be eligible for tax credits of up to 35 percent to offset the costs. An employer who fails to provide health benefits as required under the statute can be fined up to $2,000 for each employee after the first thirty people. (This is known as the 50/30 rule: employers with fifty employees must provide insurance, and those failing to do so will be fined for each employee after the first thirty.) An employer who offers a plan that costs an employee more than 9.5 percent of the employee's income may be assessed a penalty.

Employer-Sponsored Group Health Plans The Health Insurance Portability and Accountability Act (HIPAA) -

restricts the manner in which employers collect, use, and disclose the health information of employees and their families. Employers must designate privacy officials, distribute privacy notices, and train employees to ensure that employees' health information is not disclosed to unauthorized parties. Failure to comply with HIPAA regulations can result in civil penalties of up to $100 per person per violation (with a cap of $25,000 per year). Employers are also subject to criminal prosecution for certain types of HIPAA violations. An employer can face up to $250,000 in criminal fines and imprisonment for up to ten years if convicted.