Suttons Bay Law

Creditors use employer garnishment errors to collect entire debt from employers
Employee wage garnishments appear to be informal and somewhat routine proceedings from the perspective of the employer. Employers are routinely sent writs of garnishment on printed forms, and employers can simply respond to writs of garnishment without using an attorney. Employers, however, face a huge risk relative to its employees’ garnishment proceedings because in the State of Michigan, employers can be held liable for the entire debt of the employee that is subject of the garnishment, including court costs and attorney’s fees, if the employer fails to comply with certain requirements. Some creditors are paying attention to the small details that the employer may overlook, because the creditor wants to be repaid and rather than wait around to be paid from the debtor, creditors are using employer garnishment errors to collect the entire debt from the employer. Employers are commonly not represented by counsel in this process and creditors are represented by counsel, providing the creditor a significant advantage.

Failure by employers to respond within 14 days could cause courts to take action against the employer
If an employer is named as the garnishee in a writ of garnishment, the employer must provide information as to the debtor-employee’s money that the employer controls on the Garnishee Disclosure Form, including a calculation of the amount that is available for garnishment from the employee’s paycheck. The properly completed form must be mailed to the court and the parties within 14 days after the employer receives the writ of garnishment. If the employer fails to disclose within the 14 days, the court can take action against the employer and can order the employer to pay the full amount owed on the judgment as stated in the writ of garnishment. A friendly letter to the creditor stating that the employee is no longer in the employer’s records or other information is unavailable is insufficient. The creditor can go to court and obtain a default judgment for the entire amount of the debt because the employer did not properly respond to the writ.

Employers are responsible for managing the priorities and amounts
Additionally, if an employee has multiple creditor problems and those creditors have all obtained a writ of garnishment, employers are responsible for managing the priorities and amounts of the various writs. This can be challenging for an employer to correctly manage. For a one time, $6.00 fee, employers must calculate, deduct, and remit payments, in addition to accommodating other obligations the employee-debtor may have.

How to lessen your risk of direct employer liability
To lessen the risk of being responsible for an employee’s debt, employers should establish a detailed process of addressing writs of garnishment that begins when the writ arrives in the mail, carries through the calculation process and the final step of properly serving the disclosure. In Michigan, an employer is not required to retain counsel to respond to a writ of garnishment but this creates an interesting scenario where the creditor is represented by counsel and the employer that is at risk for the entire debt of the employee is not necessarily represented by counsel. Retaining an attorney to advise and evaluate your garnishment process is recommended to lessen your risk of direct employer liability.

Additional information:

Garnishee Disclosure Form and Instructions

A Guide to Garnishment and Periodic Payments

Dan A. Penning

Tags: Asset Protection, Employment Law, Know it Now by Dan Penning
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Judge Rules on Employee and Facebook Post

We have previously provided information regarding social media and how employee postings on various websites may or may not affect the employment status of employees. The Acting General Counsel for the National Labor Relations Board (“NLRB”) recently released a report on August 18, 2011, summarizing the results of 14 employment related cases that center on employees’ use of social media relative to their employment and their employer’s social media policies for employees. The report provides insight into what the NRLB regards as protected speech and also the enforceability of certain social media policies that employers implement. Remember that the NLRB and the National Labor Relations Act apply to most employers, union and non-union alike.

Protected, Concerted Activity

Employers are often surprised to learn that employees can openly discuss their terms and conditions of employment with fellow colleagues on social media sites, such as Facebook, and such activity is largely a “protected concerted activity” according the NLRB, which is behavior protected by section 7 of the National Labor Relations Act (“NLRA”). The medium of expression does not matter if it is “protected, concerted activity.” An employee can openly criticize an employer’s wage and hour policies and employees’ working conditions. Such statements can be very damaging to a company but whether the statements are damaging or not, they are largely protected. Protected speech includes any statements made by the employee that involves wages, hours or working conditions. Concerted is defined as “engaged in with or on the authority of other employees.” Employee statements cross the line, however, when personal attacks are made that meet a high enough threshold of being “so disloyal, reckless or maliciously untrue” that the statements are no longer protected.

Employer Social Media Policies

If you do not have a social media policy.

The NLRB has determined that whether or not an employer has a social media policy in place, the employer cannot take disciplinary action against employees who engage in protected, concerted activity. Such activity can be insulting to the employer, including the use of swear words and sarcastic comments. If you are considering firing an employee, make a careful review of whether the employee was criticizing wages, hours, or working conditions and whether the communication was directed to other employees or whether the employee was communicating on behalf of other employees.

If you have a social media policy.

If your social media policy attempts to control what your employees cannot say about your company, you can run afoul of the NLRA, particularly if the policy is meant to discourage disparaging remarks about the company.

One of the policies that was found to have violated the NLRA absolutely prohibited employees from “making disparaging remarks about the company or its supervisors” and from mentioning the company “in any media without the company’s permission.” This policy is overly broad. Employers should craft its social media policy to protect legitimate business interests such as trade secrets, confidential financial information, and employees’ medical conditions. The intention of protecting business interests, however, cannot impinge upon employees’ rights, such as the right to form a union or engage in protected, concerted activity.

Luxury Car Dealer Terminates Employee for Facebook Postings

In one case the NRLB decided, an employer terminated an employee for posting disparaging remarks and pictures on Facebook about (1) a sales event that the employer held where it served food purchased from a warehouse club and (2) a vehicle that had been accidentally driven into a pond at the dealership across the road that was also owned by the employer. The employer was a luxury car-dealership holding the sales event to draw attention to the launch of a new automobile model introduction. The salespeople were concerned that the choice in food would affect their sales and resulting commissions. The NLRB report summarized the decision in this matter as follows:

“Although the employee posted the photographs on Facebook and wrote the comments himself, we concluded that this type of activity was clearly concerted. We found that he was vocalizing the sentiments of his coworkers and continuing the course of concerted activity that began when the salespeople raised their concerns at the staff meeting. Further, we concluded that this concerted activity clearly was related to the employees’ terms and conditions of employment. Since the employees worked entirely on commission, they were concerned about the impact the Employer’s choice of refreshments would have on sales, and therefore, their commissions. . . . Here, the employee’s postings were neither disparaging of the Employer’s product nor disloyal. The postings merely expressed frustration with the Employer’s choice of food at the sales event. They did not refer to the quality of the cars or the performance of the dealership and did not criticize the Employer’s management. We found it irrelevant that the postings did not clearly indicate that they were related to a labor dispute given that they were neither disparaging nor disloyal.” (Memorandum OM-11-74).

Employers are cautioned to carefully consider how they communicate decisions that may affect employees’ wages, hours, and working conditions because those decisions may be memorialized on an employee’s Facebook page, complete with pictures, that may negatively affect an employer’s reputation in the community.

What the NLRB considers legal and illegal
This remains a developing area of the law and the positions of the NLRB have not been tested in the courts. However, having examples from the NLRB of what it considers to be legal and illegal is very helpful to employers and provides a clearer picture of what may get employers in trouble with the NLRB. The full report is available at here.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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The Perils of Internet Searches Using the Names of Job Applicants

Exposure to Liability
Many employers, in the interest of finding information about applicants or current employees, periodically or routinely conduct internet searches with the name of the person about whom the company desires more information. Many employers discover positive information about the applicant that was not evident on the applicant’s resume and application; however, employers also happen upon other valuable information as well, that indicates an applicant’s faults that may affect job performance if the applicant were to begin work for the company. Facebook, Twitter, Google profiles, MySpace, and LinkedIn can be goldmines for discovering indicators that will not be apparent in the application materials submitted by the applicant to the employer. Although these searches are commonly conducted by employers, the use of internet searches to make hiring decisions regarding certain applicants for a position can expose an employer to liability under Anti-discrimination Laws, whether federal, state or local, Privacy Rights, and the Fair Credit Reporting Act, amongst other laws.

Avoiding discrimination claims
If an employer locates a picture of an applicant on the internet, the picture may make evident the applicant’s race, gender or other indicator of a protected class of individuals under, for example, the Equal Employment Opportunity Laws. Companies routinely discourage or prohibit applicants from submitting photographs of themselves with their application materials for the very reason that it could subject the employer to discrimination claims if they do not hire the applicant. If the employer locates a photo of the applicant by other means, the employer has continued to expose themselves to a potential discrimination claim. Furthermore, if an applicant has flagged certain organizations or comments on Facebook with the “Like” (thumbs-up) designation, these facts could point to protected classifications that could also lead to a discrimination claim if the applicant is not hired. Also, it is not unusual for an applicant’s religious affiliation or whether or not they served in the armed forces to be evident in their profiles on social media and networking sites.

Reasonable expectations of privacy
Privacy-related rights can also be an issue for employers who navigate the internet for information on potential hires. An individual must prove that he or she has a reasonable expectation of privacy to prove a claim for invasion of privacy. Individuals who post personal information on the internet for the public to view will likely have a difficult time proving that he or she had a “reasonable expectation of privacy.” The applicant, however, may have protected his or her personal information with a password or other privacy controls that limit access to the information. If the employer poses as a “friend” of the applicant or uses a third party with certain privileges to gain access to the personal information about the applicant, it may subject the employer to liability. The applicant may have postings of particularly relevant information, such as sleeping at work, goofing off, disparaging the former employer, etc., but it could be considered private. The employer may also be in violation of certain software licenses, terms of use requirements, and other conditions imposed upon the users of the particular site.

Searching in compliance with Fair Credit Reporting Act
Many employers require applicants to agree to certain background checks, such as criminal background checks, credit checks, etc. However, background checks such as these are not protected under the Fair Credit Reporting Act unless the investigation is conducted by a third party reporting agency. If the employer conducts its own background checks on applicants, the employer does not enjoy the protections of the Fair Credit Reporting Act. Using a third party is not without risk, however, because the third party search must be conducted in compliance with the Fair Credit Reporting Act.

Search for one, search for all
If an employer makes the decision that it is important for their purposes, at some point in the hiring process, to conduct internet searches of applicants, the employer’s policy should include the requirement that once an internet search is conducted on one applicant, it must be conducted on all remaining applicants. A seemingly brief and innocent internet search of John Doe or Jane Doe who has applied to work at your company can expose your business to discrimination claims, privacy violations, and Fair Credit Reporting Act violations. Please contact us if you have additional concerns or for further guidance in the area of establishing policies and guidelines for internet searches of applicants who are applying for a position with your company.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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I’m pleased to announce that one of Michigan’s premier business journals, DBUSINESS, recently announced its 2010 “Top Lawyers” in metropolitan Detroit – and three of the principals with Wright Penning & Beamer made the list.

DBUSINESS compiles its list as a resource and reference guide for its readers. Selection criteria include:

• legal knowledge
• analytical capabilities
• judgment
• communication ability, and,
• legal experience.

The list was published in the journal’s November/December 2009 edition.

According to the publication, selected lawyers “possess the highest professional ability and ethical standards.”

Dirk Beamer, Lee Flaherty and I were selected this year. Beamer for his expertise in business and commercial litigation; Flaherty for her work with non-profits and charitable organizations, and I was recognized for business and estate planning.

As a founding shareholder of the firm I’ve focused my practice areas primarily in planning for business entities including family businesses, estate planning for business owners, individuals, families with special needs children, and succession planning for family cottages and farms. Through these practice areas our firm has become a leading resource for individual and business clients.

Beamer oversees our firm’s diverse litigation practice, focusing primarily on business and commercial litigation. He spearheads the firm’s efforts in insurance law, unfair competition, trademark infringement, employment matters and contract disputes. Dirk has litigated in state and federal courts across the country. He also counsels business owners and managers concerning employment practices and management.

In addition to her work with non-profits, Lee Flaherty is well versed in real estate, business law, estate planning and probate. Lee’s business expertise encompasses the support of ongoing businesses, business purchases and sales, and representation in commercial real estate transactions. Her estate planning practice focuses on the preparation of a wide variety of trusts and other documents to assist clients in avoiding probate, preserving assets and minimizing taxes.

I take pride in my colleagues’ accomplishments and wanted to share this good news with you. As a firm we continue to strive daily to deliver the highest quality legal services to our clients throughout Michigan and beyond.

Dan A. Penning

Tags: Agribusiness, Business Management/Law, Business Succession, Cottage Law, Employment Law, Estate Planning, Know it Now, Personal Management, Special Needs Children, Suttons Bay Depot by Dan Penning
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“In response to this increased risk, we have developed a comprehensive MIOSHA manual that addresses the areas most cited by MIOSHA inspectors.”

With the current economic climate, many businesses are having to re-evaluate their workforce and reduce the number of employees based on economic constraints. This can result in terminated employees filing complaints with various agencies regarding alleged labor violations, including MIOSHA violations. Inspections by governmental agents under MIOSHA can be very costly both in time and money to a business. In response to this increased risk, we have developed a comprehensive MIOSHA manual that addresses the areas most cited by MIOSHA inspectors. It should be noted that MIOSHA inspections do not only occur in manufacturing businesses but can occur in all types of businesses.

Many businesses do not have a full understanding of their rights when a MIOSHA inspector walks in the door unexpectedly to conduct an inspection. For example, employers are entitled to a pre-inspection conference, they may appoint a representative to walk with the inspector during the inspection, and many more rights are available to protect an employer. At the very least, each business should have a plan in place before an inspection occurs. A designated employer representative should prepare a MIOSHA inspection plan, with names and telephone numbers of top management and counsel to contact immediately. Also, a prepared and updated list of trade secrets to be protected should be readily available due to the fact that citation information is available via the Freedom of Information Act, and to protect trade secrets, an employer must, at the beginning of the inspection, identify the trade secrets that should be protected. Other management personnel should be trained not to consent to an inspection without proper procedures being followed. The more people involved in an inspection usually results in more inconsistent statements to the inspector and thus more scrutiny.

If you are interested in discussing this matter further, please contact me and I would be happy to provide you with more information regarding how you may want to proceed to protect your company with respect to possible MIOSHA inspections and other labor related types of claims.

Dan A. Penning

Tags: Employment Law, Know Your Business by Dan Penning
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The North-American Free Trade Agreement (NAFTA) eases the temporary entry of citizens of the United States, Mexico and Canada, whose activities are related to the trade of goods or services, or to investment. Business visitors can be admitted for business purposes under R186(a) and can carry out their activities without the need for a work permit if certain conditions are met. We are providing you this information in the event that you send employees across the border that fit under this exception. If your situation does not qualify under an exception, we can provide you with the documentation necessary to apply for a work permit. (If you are contracting with a Canadian company, you will also need to obtain an LMO. An LMO is a Labour Market Opinion issued by the HRSDC, otherwise known as Service Canada, allowing Canadian employers to hire foreign nationals in a variety of occupations.)

Business Visitors (R187):

Requirements:
1. citizenship of the United States or Mexico;
2. business activities as described in Appendix 1603.A.1 (selected summary below);
3. activities are international in scope;
4. no intent to enter the Canadian labor market;
5. the primary source of remuneration remains outside Canada;
6. the principal place of business remains outside Canada; and
7. compliance with existing immigration/admissibility requirements for temporary entry.

Business Activities:
Activities of a commercial nature that reflect the components of a business cycle. (Please see relevant provisions of Appendix 1603.A.1; selected summary below)
1. research and design;
2. growth, manufacture and production;
3. marketing;
4. sales;
5. distribution;
6. after-sales service; and
7. general service.

Application:
1. Business visitors must apply at a Point of Entry (POE); an application cannot be made prior to arriving in Canada.
2. Business visitors can be admitted at the Primary Inspection Line (except persons applying for entry under the “after-sales service provision,” who must be referred to Immigration Secondary).

Required Documentation for Each Individual:
1. proof of American or Mexican citizenship;
2. documentation to support the purpose for entry, for instance a business activity listed in Appendix 1603.A.1; and
3. evidence that the business activity is international in scope
4. evidence that the person is not attempting to enter the Canadian labor market.

The business person can usually satisfy these requirements by demonstrating the following with a signed document (company officer’s signature) from the Company stating that:
1. the primary source of remuneration is outside Canada;
2. the person’s place of business remains outside Canada (business cards, business papers, advertising pamphlets, etc. may be provided as proof); and
3. the profits of the business are accumulated primarily outside Canada.

The officer at the border will likely request that the applicant/business visitor establish that the applicant retains employment outside Canada (as an employee of an enterprise or as a self-employed individual) and that the primary source of remuneration remains outside Canada. In general, an individual who is to be paid in Canada would be considered to be joining the labor market and could not be admitted as a business visitor. (The payment of expenses incidental to the trip is allowed, as is an honorarium.) Thus, the need for a signed document from the company will help demonstrate the requirements above. We recommend the individual name of the person requesting entry be in the document.

NAFTA is a facilitative agreement, so the applicant should be given every opportunity to establish that the admission criteria for business visitors are being met and to provide any missing documentation by alternative means, such as by fax. A verbal statement that the business of the applicant is being carried on outside Canada can be acceptable, but may not be, depending on the circumstances.

Business Activities defined

Selected provisions of Appendix 1603.A.1 that fall under the “Business Visitor” exception to a work permit–
Marketing:
• Market researchers and analysts conducting independent research or analysis or research or analysis for an enterprise located in the United States or Mexico.
• Trade fair and promotional personnel attending a trade convention.
• Where the business of the convention involves sales rather than simple promotion, the provisions under Sales apply.

Sales:
• Sales representatives and agents taking orders or negotiating contracts for goods or services for an enterprise located in the United States or Mexico but not delivering goods or providing services.
• Buyers purchasing for an enterprise located in the United States or Mexico.
• Sales representatives and agents cannot sell Canadian-made goods or services provided by a Canadian.
• This provision allows persons to sell to the general public, provided that the goods or services are not delivered or available to the buyer at the time of sale (on the same business trip). The seller may only take orders for the goods or enter into contracts for the services.

Conventions:
For events held by the following organizations:
• Associations;
• Corporations, and
• Governments.

Events can be one of the following:
• association meetings, conventions and congresses;
• corporate meetings;
• incentive meetings, or
• trade shows, exhibitions and consumer shows.

Setting up display:
Company employees will require work permits to install and dismantle a booth or display if it is larger than a portable pop-up. Work permits for this purpose do not require an LMO.
Contract Service Providers:
Foreign service providers who are working under contract for exhibitors require work permits.

This includes persons who are involved in activities such as:
• the installation and dismantling of a show or exhibit;
• audio video, staging, or show decorating services, and
• lighting, carpet laying, carpentry, or electrical work.

All foreign service providers working under contract to Canadian events require work permits. Work permits for this purpose require an LMO.

Foreign service providers who are supervisory personnel working under contract for foreign
events require work permits. Work permits for this purpose do not require an LMO, as long as the supervisors will be directing local hires.

Exhibitors are expected to hire Canadians to do all the labour on the convention floor.

After-sales Service:
After-sales services include those provided by persons repairing and servicing, supervising installers, and setting up and testing commercial or industrial equipment (including computer software). “Setting up” does not include hands-on installation generally performed by construction or building trades (electricians, pipe fitters, etc.). R187 also applies to persons seeking entry to repair or service specialized equipment, purchased or leased outside Canada, provided the service is being performed as part of the original or extended sales agreement, lease agreement, warranty, or service contract.

Service personnel coming to perform service work on equipment or machinery that is either out of warranty, or where no service contract exists, continue to require a positive LMO and a work permit.

Warranty or Service Agreement:
Service contracts must have been negotiated as part of the original sales or lease agreements or be an extension of the original agreement. Service contracts negotiated with third parties after the signing of the sales or lease agreement are not covered by this exemption. If, however, the original sales agreement indicates that a third company has been or will be contracted to service the equipment, R187 applies. Where the work is not covered under a warranty, a confirmed work permit is required.

General Service:
Public relations and advertising personnel consulting with business associates, i.e. colleagues or clients, or attending or participating in conventions.

We welcome your comments.

Heather Brenneman Miles
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Tags: Employment Law by Dan Penning
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Employment Law

Let our experienced lawyers guide you through your employment law dispute

Services Offered: We counsel businesses to help them understand the complexities of employment law and how to avoid problems. We negotiate effective termination and severance agreements where possible, and defend employers against frivolous claims where necessary.

Our attorneys belong to the Labor and Employment Section of the State Bar of Michigan and train annually at its Institute. Let the experienced lawyers of Wright, Penning & Beamer guide you through your employment law dispute.

Tags: Employment Law by Dan Penning
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