LEVEL II AGENDA June 18-20, 2024 ZOOM Virtual Class Training on 9:00 am MST Time
Tuesday, June 18
Tribal Sovereign Immunity and The Gaming Regulator Liz Homer, Homer Law
9:00 AM 10:30 AM
Break
10:30 AM 10:45 AM
Journey of Submission Peter Nikiper, Director of Technical Compliance, BMM Test Labs
10:45 AM 12:15 PM
Lunch Break
12:15 PM 1:15 PM
Creating a new Approach to Surveillance Abe Martin, CFE, CSP Casino Cryptology
1:15 PM 2:45 PM
Break
2:45 PM 3:00 PM
Surveillance Cheats & Scams Abe Martin, CFE, CSP Casino Cryptology Wednesday, June 19
3:00 PM 4:30 PM
Gaming Crimes Liz Homer, Homer Law
9:00 AM 10:30 AM
Break
10:30 AM 10:45 AM
Effective Regulatory Writing Liz Homer, Homer Law
10:45 AM 12:15 PM
Lunch Break
12:15 PM 1:15 PM
Licensing: Key Employees & Primary Officials Billy David, Bo-Co-Pa
1:15 PM 2:45 PM
Break
2:45 PM 3:00 PM
Licensing: Vendors & Facilities Billy David, Bo-Co-Pa Thursday, June 20
3:00 PM 4:30 PM
Internal Auditing-What's Required & How it Should Be Approached Sara Lee , CPA, Partner Blue Bird CPA's Break Financial Controls & Accounting Standards Sara Lee , CPA, Partner Blue Bird CPA's
9:00 AM 10:30 AM 10:30 AM 10:45 AM 10:45 AM 12:15 PM
Please plan to stay for the entire class on each day to get your certificate of completion. Please be on time for sessions
11/29/22
TRIBAL SOVEREIGN IMMUNITY AND THE GAMING REGULATOR ELIZABETH L. HOMER
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¡ Sovereign immunity is a fundamental aspect of an Indian tribe’s inherent sovereignty. ¡ As noted by the Supreme Court, tribal sovereign immunity “is a necessary corollary to Indian sovereignty and self- governance.” ¡ Tribal governments are immune from lawsuits in both federal and state courts UNLESS: ¡ 1) Congress has authorized the suit; or ¡ 2) The tribe has waived its immunity ¡ Sovereign immunity also extends to commercial activities conducted by tribal entities that are “arms” of the tribe.
TRIBAL SOVEREIGN IMMUNITY: GENERAL PRINCIPLES
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TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
¡ Sovereign immunity also protects tribal officials and tribal employees acting: ¡ 1) In their official capacity; and ¡ 2) Within the scope of their authority ¡ Why protect tribal officials? ¡ In suits against tribal officials, the sovereign entity (tribe) is the “real, substantial party in interest.” ¡ A plaintiff cannot circumvent tribal immunity simply by naming an officer of the Tribe as a defendant rather than the sovereign entity. ¡ Ultimately, relief would run against the tribe - need to protect the tribe’s treasury.
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TRIBAL SOVEREIGN IMMUNITY:TRIBAL OFFICIALS
“Individual” Acts vs “Sovereign” Acts
Individual - acts outside the scope of delegated authority are considered individual acts and not protected acts of the sovereign (tribe).
Sovereign - acts taken in official capacity and within the scope of delegated authority are protected acts of the sovereign (tribe).
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TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
¡ How to determine whether act is within “scope of delegated authority”: ¡ Examine : Look at the enabling statute or law and determine whether the official was authorized to carry out the action at issue. ¡ Ask : Was the official empowered to do what s/he did? If so,
the action was taken pursuant to the official’s delegated authority and protected by the tribe’s sovereign immunity.
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¡ What if the official’s actions were wrong? ¡ Merely being wrong or mistaken does not take an action outside the scope of delegated authority.
TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
¡ The scope of authority analysis turns “on the breadth of official power the official enjoys and not whether the official is charged with using that power tortuously or wrongfully.” Tenneco Oil Co. v Sac & Fox Tribe , 725 F.2d 572, 576 (10th Cir. 1984) ¡ Official action is still an action of the sovereign entity, even if the official’s actions were wrong or mistaken, so long as it does not conflict with the official’s valid authority.
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¡ HYPOTHETICAL: ¡ Gaming Commissioners revoke an employee’s gaming license. ¡ Revoked licensee sues Gaming Commissioners in their individual, personal capacities. ¡ Gaming Commissioners move to dismiss the suit on sovereign immunity grounds, arguing that the revocation action was taken in their official capacity as Gaming Commissioners and within the scope of their delegated authority. ¡ Tribe’s gaming ordinance specifically authorizes Gaming Commissioners to make licensing determinations, including suspensions and revocations. ¡ How should the court rule?
TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
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¡ Under these circumstances, the court should dismiss the suit because: ¡ 1) The revocation was an official act of the Gaming Commission and performed by the Gaming Commissioners in their official capacities; and ¡ 2) The revocation action was taken pursuant to the Gaming Commissioners’ authority under the gaming ordinance to suspend and revoke gaming licenses.
TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
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¡ The hypothetical is based on a state court opinion, now depublished. ¡ The state court did not find the Commissioners’ sovereign immunity claims persuasive. ¡ Contrary to the long-settled doctrine of sovereign immunity, the CA state court ruled that sovereign immunity did not apply,
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
and that the Gaming Commissioners exceeded the scope of their powers by revoking the employee’s license without cause.
¡ What went wrong?
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¡ Classic Case of “Bad Facts Making Bad Law”: ¡ The licensee/plaintiff was a blackjack dealer who, after observing criminal activity on the gaming floor, became a confidential informant for the California Department of Justice. ¡ The Gaming Commissioners scheduled a private meeting with the licensee, but he was never personally notified of the scheduled meeting. After missing the meeting, he was suspended from work. ¡ The Gaming Commissioners notified him of his suspension and their intent to revoke license by letter mailed to his former address. ¡ About a month later, the licensee met with the Gaming Commissioners and was asked to disclose information about his informant activities.The licensee declined to do so. ¡ Shortly after the meeting, the licensee was notified by letter that his license had been revoked. ¡ The licensee sued Gaming Commissioners personally, claiming that the revocation was in retaliation for his informant work.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ Court’s Ruling: ¡ The Gaming Commissioners overstepped their authority by revoking the employee’s gaming license in retaliation and without cause. ¡ Sovereign immunity will not protect the Gaming Commissioners unless they can show that the license was revoked based on criteria identified in IGRA, Compact, or gaming ordinance. ¡ Nothing in the record shows that the Commissioners had the authority to revoke his license without cause or in retaliation.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ Breakdown of the Court’s (Mis)Reasoning: ¡ The court looked beyond the Commissioners’ “scope of authority” to consider the circumstances under which the Commissioners exercised that authority. ¡ The court focused on the lack of evidence/record to support the revocation decision – i.e., the Commissioners’ failure to provide evidence regarding plaintiff’s unsuitability for licensure. ¡ Without such evidence, the court simply accepted the plaintiff’s allegation that the revocation was without cause and in retaliation. ¡ Since the Commissioners did not have the authority to revoke licenses without cause or in retaliation, their conduct was outside the scope of their authority and not protected by the tribe’s sovereign immunity. ¡ In other words, the Commissioners’ act of revocation was lawful, but their motives were not, so therefore the act was outside the scope of their authority.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ Where the Court Went Wrong: ¡ State courts are not meant to have any role in tribal gaming licensing, let alone decide whether tribal officials are in compliance with their own laws. ¡ The Commissioners’ motives for carrying out an otherwise official and lawful act are irrelevant for purposes of sovereign immunity. ¡ Decision allows plaintiff to sue Commissioners individually for an action of the tribe’s government. ¡ This means tribal officials may be held personally liable simply by voting or participating in a decision to effect a sovereign act of the tribe.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ It’s Not as Bad as it Sounds: ¡ The case has been “depublished,” which means it’s non-binding and cannot be relied on as precedent. ¡ Also, bear in mind this is a state court decision. ¡ Nonetheless, the case serves as a cautionary tale for TGRA officials and employees. ¡ Key question is: what can you do to avoid finding yourself in this situation?
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ In 2014, the Supreme Court decided Bay Mills , a case that reaffirmed the broad reach of tribal sovereign immunity. ¡ The vote was 5-4. ¡ The Court held that in suits involving commercial activities on nontribal land, tribes are immune from suit so long as federal law has not expressly waived sovereign immunity. ¡ The decision also noted in dicta that a state may use alternative, state-specific enforcement measures against individuals affiliated with the commercial activity ¡ Such suggestion has been interpreted by some as signaling approval of leaving the resolution of state-tribe disputes to the states.
TRIBAL SOVEREIGN IMMUNITY: MICHIGANV. BAY MILLS INDIAN COMMUNITY
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¡ The Supreme Court’s holding in Lewis v. Clarke (2017) effectively limited the scope of tribal sovereign immunity by effectuating a comparison between state and tribal sovereign immunity. ¡ That being said, the Court’s decision is relatively limited. ¡ In the opinion, Justice Sotomayer analogizes tribal sovereign immunity to state or federal immunity, acknowledging that tribal immunity is serious and legitimate in the eyes of the Court. ¡ Because it is a narrow opinion, the Lewis decision leaves many questions unanswered: ¡ Do tribal employees enjoy the same protections as their state and federal counterparts in respect to official immunity? ¡ Does tribal sovereign immunity apply when no forum will hear the case? ¡ This implication arose in Bay Mills and many hoped it would be resolved in Lewis .
TRIBAL SOVEREIGN IMMUNITY:
LEWIS V. CLARKE
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¡ Lewis was only decided in late April 2017, but it was quickly worked its way into lower court decisions that same year. ¡ Approximately two dozen lower court challenges to the extent and scope of tribal sovereign immunity have cited or relied upon the Lewis opinion.
TRIBAL SOVEREIGN IMMUNITY:
¡ So, what can we conclude? ¡ While the official and individual
LEWIS V. CLARKE
capacity tests are still the standards to determine when to bar tribal sovereign immunity, their application across different fields of law has drawn
different levels of scrutiny and consideration from the courts.
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FUNDAMENTAL PRINCIPLES FOR TGRAS
Act within the scope of your authority •TGRA may only exercise such power as it has been delegated and NO MORE
Act
Avoid arbitrary and capricious acts •There should be a rational connection between the facts examined and the action taken by the TGRA
Avoid
Interpret the law fairly and reasonably •Be unbiased (free of personal animus) •Avoid prejudging the outcome
Interpret
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PROCESS MATTERS
Fundamental Fairness:
• Fairness and consistency • Proportionality • Least adversarial means to achieve objective
Due Process Requires:
• Notice • Opportunity to be heard • Impartial adjudicator • Fair process
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¡ In other words, the affected person should always be advised of: ¡ What is happening? ¡ When and where it is happening? ¡ Why it’s happening? ¡ What could happen? ¡ And, what they can do if it does?
PROCESS MATTERS
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ADMINISTRATIVE RECORD
¡ Importance of an Administrative Record ¡ Create a paper trail documenting decision-making process and basis for agency decision. ¡ Record should reflect the following: ¡ TGRA collected the available information ¡ Considered all relevant factors ¡ Made a reasoned decision based upon credible, substantial evidence in the record ¡ The administrative record will be your greatest weapon in defending against challenges to agency actions.
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¡ Cases may be non-binding, but that doesn’t mean it can be ignored. ¡ The Supreme Court has left questions unanswered that may lead to state interpretation like the depublished opinion. ¡ Sovereign Immunity is an affirmative defense, which means the tribe or tribal official must present it when suit is filed.
FINAL THOUGHTS
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END
ELIZABETH LOHAH HOMER HOMER LAW CHARTERED 1730 RHODE ISLAND AVE NW SUITE 510 WASHINGTON, DC 20036
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2/22/2017
Journey of Submission What happens when a gaming machine is sent to a gaming test lab? February 15, 2017
company confidential
Different laboratories… Do different testing.
Electrical
Safety
Gaming
And many more…
company confidential
General Process
Manufacturer submits to a lab
The lab tests according to requested standards
The lab issues a report
The TGRA makes a finding based on the report
company confidential
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Submission to the lab 25 CFR 547.5 (c) Submission, testing, and approval – generally. Except as provided in paragraph (b) and (d) of this section, a TGRA may not permit the use of any Class II gaming system, or any associated cashless system or voucher system or any modification thereto, in a tribal gaming operation unless: …
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Submission to the lab (1) The Class II gaming system, cashless system, voucher system, or modification thereto has been submitted to a testing laboratory;
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Submission to the lab What does the lab need?
Hardware including peripherals, i.e. BV, printers
Submission letter
Math
Software
Servers
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Testing (2) The testing laboratory tests the submission to the standards established by: (i) This part; (ii) Any applicable provisions of part 543 of this chapter that are testable by the testing laboratory; and (iii) The TGRA ;
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Testing Scope of work / Submission management • Each submission is entered into a project tracking system • Kick off meeting – Engineers are assigned to the project
– Resources assigned – Timeline established – Any foreseen compliance issues
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Testing Random Number Generators (RNGs) • Source code review • Algorithm implementation • Samples • Analysis against Die-Hard battery
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Testing
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Testing Math Analysis • Review all combinations / patterns (wins & losses) • Calculate the game cycle • Calculate the game volatility • Calculate the RTP / hold or edge • Calculate the top award odds • Compare with manufacturers math • Emulate combinations on device and verify payouts
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Testing Functional testing
• Generate list of test scripts to be used • Based on Part 547 & 543 for Class II • Based on GLI-11/NV for Class III • Additional tests based on location or tribe the device will go to.
company confidential
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Results of Testing (3) The testing laboratory provides a formal written report to the party making the submission, setting forth and certifying its findings and conclusions, and noting compliance with any standard established by the TGRA pursuant to paragraph (c)(2)(iii) of this section;
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Results of Testing (4) The testing laboratory’s written report confirms that the operation of a player interface prototype has been certified that it will not be compromised or affected by electrostatic discharge, liquid spills, electromagnetic interference, radio frequency interference, or any other tests required by the TGRA;
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Results If everything works • Technical reviews of the testing • A draft report is generated
• A regulator and/or client review of the report • Final report issued to both regulator and client
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Results What happens if issues were found during testing? • Document the problem(s) • Steps to reproduce and/or show frequency • Assign a severity (Low to High) • Resubmission or withdrawal of the submission
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Final part of a submission (5) Following receipt of the testing laboratory’s report, the TGRA makes a finding that the Class II gaming system, cashless system, or voucher system conforms to the standards established by: (i) This part; (ii) Any applicable provisions of part 543; and (iii) The TGRA.
company confidential
Key Items for Class II • Bingo Patterns • Ball Draw Process • Bingo card distribution / generation • Minimum number of players • Game Ending Pattern • Bingo game type • Disclaimers
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Key Items for Class III • RNG Review & Analysis • Game Determination
• Game Play • Accounting • Game Recall • Emulation • Security
company confidential
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11/29/22
CREATING A NEW APPROACH TO SURVEILLANCE
Presented By: Bo-Co-Pa & Associates
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CHANGING THE TRADITIONAL CULTURE OF SURVEILLANCE
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QUICK QUESTION; CAN YOU JUSTIFY YOUR POSITION? CAN YOU JUSTIFY THE DEPARTMENT?
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Traditional surveillance: Ø React: No proactive approach, react to what you see on screen
Ø Observe:watch what happens at the end of the camera lens, good, bad or indifferent. Not necessarily required to have any results, just recorded activity.
Ø Report: What was seen on the screen as well as what was shared from floor staff.
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REACTIVE
We have been taught throughout the years that you only do something when you have been notified…..well for the most part.
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OBSERVE: UNUSUAL ACTIVITY OR OCCURRENCES
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REPORT: CYA! JDLR! TRUST BY VERIFY!
This Photo by Unknown Author is licensed under CC BY-NC-ND
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GOING BEYOND
What does this mean? q Not just observe and report.
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NEW SURVEILLANCE (MITIGATING OUR RISK)
Going beyond the “observe and report philosophy”
Utilizing new technology in the department,
Reports that add value to the whole organization,
Justification of the department and job positions,
Department Plan development and execution,
Risk based observation/surveillance,
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This Photo by Unknown Author is licensed under CC BY-NC-ND
UTILIZING TECHNOLOGY
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UTILIZING TECHNOLOGY:
Identify what technology you currently are using.
What is your knowledge of the technology?
Be honest of your level of understanding and how the department uses it.
Where do you start?
What currently happens to your data?
Its important to know what you are doing with your data now and what you want to do with it when identify risk. Your failure to use data that is currently being use could cause more risk. Don’t work under the assumption that someone else is doing or review it.
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VALUE ADDED REPORTING
This Photo by Unknown Author is licensed under CC BY-SA
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Key Performance Indicators (KPI): items found in the data that we determine to be of value, this helps us gain valuable information. This data helps us understand what is happening in the operation. Data Points : Locations where data is created, produced and/or a combination of both. Measurable Data Points : Filtering through all the data and identifying what data is good data and what data is not measurable. Design Analysis Reports : Developing a reporting structure from all of the data that is provided to you from data received. Key Performance Objectives : Obtained for the analysis report. This will help us to determine what our goals should be. Data Mining : is the computational process of discovering patterns in large data sets involving. (Wikipedia)
TERMS WE SHOULD GET COMFORTABLE WITH
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RISK BASED OBSERVATION
The trend is changing in how we observation the casino, we are going from “observe and report” to “risk-based observation” This is being done because we need all departments to either generate more revenue or find places in the organization that are losing revenue, whether through detecting cheats and scams or just inefficiencies or ineffective processes.
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WHY RISK-BASED SURVEILLANCE?
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RESULTS!
Risk based observation delivers results rather than just develop more data that just sets in the file cabinet or on the network
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IDENTIFY THE RISK
This Photo by Unknown Author is licensed under CC BY-SA
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MODIFY R.A. FOR SURVEILLANCE
Discussion: What is a low-risk department? What is moderate-risk department? What is a high-risk department?
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RISK-VS-PRIORITY
Discussion
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SURVEILLANCE DEPARTMENT AUDITS
What are your roles and responsibilities?
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Use department audit reports to assist you in making the decisions of assigning Risk,
What's the purpose?
When do I use them?
How do they work?
DEPARTMENT AUDITS=DATA
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ANALYTICAL DATA
Analytical data comes in many different areas, some of the most common areas are: q Point of Sales : critical areas to analyze. q Slot machine accountability systems : know what your systems is and what data it can generate. q Players Club : point scams is one of the fastest growing crimes in the casino, q Surveillance audits : these audits create data that is truly valuable.
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RISK BASED SURVEILLANCE
Identify your purpose, 1
Identify the processes that will be used, 2
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Identify your level of risk, 4
Identify how you will receive the data that will be generated, 5
Identify what you will do with the data that is shared with you, 6
Identify your risk,
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Key Performance Indicators Let them guide the way.
IDENTIFY THE DATA
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Questions???
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Thank you
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12/1/22
Cheats & Scams: Surveillance
Abe Martin, CFE, CSP abe@casinocryptology.com 931-CRYPTIC (279-7842) www.casinocryptology.com 1
Warm-up
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Methodology
• Team
• Less burden and risk • Regardless of game, one member is usually responsible for keeping the dealer’s attention • Not all members will bet the same • Members may change, or change positions
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Methodology
• Individual –
• Greater burden and risk • May be more aggressive in betting and play • More attention to surroundings (rubber necking)
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What is a Scam?
• Usually falls under fraud; defined as: • The intentional use of deceit, a trick or some dishonest means to deprive a victim of money, property or legal right. • BASIC Elements of fraud are: • A purposeful deception • Intent to deprive the victim of something • The victim suffered an actual loss as result of the fraud
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What is a Scam?
• Theft could also apply; defined as: • The unauthorized taking of property from a victim with the intent to permanently deprive them of it. • BASIC elements of theft are: • A taking of someone else’s property • The requisite intent to deprive the victim of the property permanently.
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Then came “Cheating”
• Most (gaming) jurisdictions now have laws against cheating; generally defined as: • Manipulating the outcome of a game or payments made • BASIC elements of cheating are: • An intentional act that • Effects the outcome of a game resulting in • Gain or advantage • Devices make it EASY for us!
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So….advantage play?
When a player uses their own mind, or other legal method to reduce/eliminate the house advantage in a game.
LEGAL OR ILLEGAL?
What if they refuse to give a name or show ID?
What if they are confirmed at another casino?
What if they are using a calculator?
© 2022 Casino Cryptology, LLC all rights reserved
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advantage play?
How about in these scenarios?
• Hole carding • Bonus Chasing • Edge Sorting
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Training for Surv
• Just watch people • Watch out for the scatoma:
Medical term to describe floating blind spot(s) in vision. Also used in psychology referring things the mind ignores in order to prevent overload and maintain sanity.
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SCATOMA
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SCATOMA
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SCATOMA
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SCATOMA
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SCATOMA
FINISHED FILES ARETHE RESULT OFYEARS OF SCIENTIFIC STUDY COMBINEDWITH THE EXPERIENCE OF YEARS.
© 2022 Casino Cryptology, LLC all rights reserved
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SCATOMA
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid Aoccdrnig to rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh?
© 2022 Casino Cryptology, LLC all rights reserved
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JDLR
© 2022 Casino Cryptology, LLC all rights reserved
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Abe Martin, CFE, CSP abe@casinocryptology.com 931-CRYPTIC (279-7842) www.casinocryptology.com
© 2022 Casino Cryptology, LLC all rights reserved
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11/29/22
Employment Issues and Gaming Regulation
IGA Level II Commissioner Training
Charlene D. Jackson
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Learning Objectives
• Overview of Employment Law • Considerations • Jurisdiction • Applicable Law/Procedure and/or Regulation • Regulatory Authority • Companion Reading • Constitution • Case Law, including regulatory agency decisions • Policy • Gaming Compacts and Appendices
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• Generalized information for educational and discussion purposes only • Not to be taken as legal advice • Does not create an attorney-client relationship • Cases discussed may be overturned – please consult with legal counsel to determine relevancy and applicability
The Small Print
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Law Interpretation 101 – Important Considerations
• Mandatory v Discretionary Terms • Qualifying language • And/or • Commas • Hereafter • Notwithstanding • Including but not limited to
• Legislative Intent • Definitions
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Examples:
• The power of a comma • Let’s eat Grandma! • Let’s eat, Grandma! • Qualifying Language • That’s not something I’m expecting. • That’s not something I’m expecting, right now. • Definitions
• Language
• The board shall consider the following: 1. Application, 2. Education; and 3. Experience • The board may consider the following:
1. Application, 2. Education; or 3. Experience
• Gaming Device • gaming device
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Edward Employee – Where do you begin?
• Card dealer – required to stand for long periods of time • Long time employee, 50 years old • Union Rep – engaged in wage dispute • Picked up something heavy at work – hurt on the job • Medical release from work; returned with limitations and pain medication • Workmen’s compensation paperwork submitted but left on Secretary’s desk; Employer part of paperwork not completed
• Returned with reasonable accommodations request; granted by HR but not implemented by supervisor • Supervisor required employee to return to regular duties • Routine drug test – failed • Reaggravated injury at work; transported to hospital; hospitalized and missed work • NC/NS • Return to work – resign or be terminated
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I’m a Gaming Regulator – Employment Law is “HR” • Overlap • HR - Operational • Suitability – Skills/Knowledge/Experience • Job performance • Commission – Regulatory • Threat to public interest, regulation of gaming • Creation of unfair or illegal practices in the conduct of gaming • Awareness important
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Federal Employment Law Generalized Review
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Wait …. Do federal employment laws apply to Tribes and Tribal Enterprises??
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The General Rule
• General statutes by their own terms “applying to all persons includes Indian tribes and their “property interests”. • Federal Power Commission v. Tuscarora Indian Nation, 362 US 99 (1960). • Exceptions: • Intramural matters – application would impose on exclusive rights of self-governance • Application of the law would abrogate treaty rights • Congressional intent that law does not apply • Donovan v. Coeur d’Alene Tribal Farms, 751 F.2d 1113, 1116 (9 th Cir. 1985)
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• What does the statute say? • If it says it applies … it applies • If it says tribes are exempt, tribes are exempt • What if it’s silent? • Does the tribe/entity meet the criteria outlined in statute? • If yes, likely to apply • If no, argument that the statute doesn’t apply • What are the Facts? • Do one of the exceptions apply? • Intramural matter • Interfere in treaty rights • Congressional intent that it doesn’t apply
Ask ….
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Title VII of the Civil Rights Act of 1964
• Prohibits discrimination due to race, color, religion, gender or national origin • Applies to employers with 15+ employees for each working day in 20+ calendar weeks • Excludes US, US owned corporations and Indian Tribes • Exemption does not extend to enterprises with mixed ownership (Tribe and non-native owner) • Myrick v. Devils Lake Sioux Manufacturing Corp., 718 F. Supp. 753 (D.N.D.1989)
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What about an entity of the Tribe?? • McCoy v. Salish Kootenai College , D.C. No. 9:17-cv-00088-DL (Nov. 20, 2019) (unpublished) • Plaintiff resigned his position and claimed he was forced to resign due to hostile work environment based on allegations of sex-based harassment • Defendant moved to dismiss arguing the they were an arm of the Tribe and excluded from the definition of employer under Title VII. • Lower court ruled the Defendant was immune under Sovereign Immunity as an arm of the Tribe and exempted from the definition of employer under Title VII • 9 th Circuit upheld lower court decision – Considered: • Method of creation of the economic entity • Purpose of the entity • Structure, ownership, and • Management, including the amount of tribal control • Tribal Intent re: Sovereign Immunity • Financial Relationship between the Tribe and entities
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Indian Preference Under Title V II
• Indian preference is permitted for employers meeting the applicability criteria on or near reservations
• Exceptions: • No preference for members of a particular tribe over other tribes if employer is not tribally owned • Dawavendewa v. Salt River Project Agricultural Improvement Power Dist., 154 Fed.3d 117 (9 th Cir., 1998) See also Dawavendewa v. Salt River Project, 276 F.3d 1150 (9 th Cir., 2001)
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Tribal Specific Hiring Preference • EEOC v. Peabody (No. 12-17780 (9 th Cir, 2014) • Peabody entered lease agreements with Navajo Nation that included Navajo hiring preference. Leases approved by DOI • EEOC sued – tribal specific preference is violation of Title VII • Rounds of litigation – procedural issues • Sovereign Immunity – tribes cannot raise sovereign immunity as a defense against a lawsuit filed by the federal government • DOI cannot be joined without consent and only DOJ can bring an EEOC suit against a government agency • USSC – denied review in 2011 – allowed claim against Peabody to proceed on remand • Held: Tribal hiring preferences in Peabody leases are based upon tribal affiliation – a political classification - allowable • Despite Dawavendewa v. SRP , there are times when differential treatment serves to fulfill a trust obligation to tribes • Indian Mineral Leasing Act of 1938 purposes – advance tribal independence
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Does Title VII apply? • Answer: It depends … • Ownership • Tribe – probably not
• Tribal Entity – Depends – Structure/organization/purpose • Non-Tribal owned corporation operating on/near reservation - Depends • Factual considerations
• Generalized exceptions • Application of other law
• EEOC/Tribal MOU: Effort to address discrimination Case Processing • Jurisdictional Considerations • Training, Assistance and Reporting • Opportunity for tribes/Tribal TERO to resolve issues
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Age Discrimination in Employment Act • Prohibits discrimination based on age • Applies to employees and applicants for employment over 40 years old • Liability may be avoided if employer can show a bona fide occupational qualification requiring an employee to be younger • Silent on applicability to Tribes
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Case Law • ADEA applies in “capacity as proprietor” of bingo facility, at least when claimant is not a tribal member. • EEOC v. Forest County Potawatomi Community , No. 2:2013mc00061 (E.D. Wis. 2014) • Tribe enjoys sovereign immunity from ADEA • Williams v. Poarch Band of Creek Indians, No. 15-13552 (11th Cir, October 18, 2016) • ADEA may not be applicable - generalized exceptions • Intramural matters • EEOC v. Cherokee Nation , 971 F.2d 937 (10th Cir. 1989) • Treaty rights • EEOC v. Karuk Tribe Housing Authority, 260 F.3d 1071 (9 th Cir. 2001)
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Americans with Disabilities Act of 1990 • Elimination of discrimination against individuals with disabilities • National mandate with enforceable standards • Federal enforcement • Congressional authority – including 14 th amendment and to regulate commerce to address discrimination • Note: Disability is a specifically defined term
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Titles of ADA • Title I • Employment opportunities • Requires Reasonable Accommodations
• Title III
• Prohibits exclusion, segregation or unequal treatment in public accommodations and commercial facilities • Can apply to a public accommodation run by a tr ibe • Cannot be enforced by a private person against a tribe in non- Indian forum due to SI; compliance can be compelled by US AG
• Employers with 15+ employees • Excludes: US, US owned corporations and Indian Tribes • Equal opportunity to benefit from programs/services • No mention of applicability to tribes • Tribes may be exempted by sovereign immunity
• Title II
• Florida Paraplegic Assoc. v. Miccosukee Tribe of Indians of Florida , 166 F.3d 1126 (11 th Cir 1999)
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Definitions • Disability
• Physical or mental impairment that limits one or major life activities; • History of an impairment that substantially limited on or more major life activities; or • Regarded as having such an impairment • Major Life Activities • Include but not limited to: walking, seeing, caring for oneself, learning, working, thinking, communication and operation of bodily functions – neurological/functions • Recovery
• In recovery; • Ceased use; • Participating in supervised rehabilitation program; or • Successfully rehabilitated
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Addiction and Substance Abuse • Addiction – current or past is • Substance Use
considered a disability • Factual considerations
• Protects a person in recovery who is no longer engaged in illegal use of drugs • Illegal: • Use of illegal drugs – heroine/cocaine • Use of Rx medications • No valid or a fraudulent prescription; or • Using more than prescribed • Legal use is protected by ADA but taking more than prescribed may not be covered
• Can require employee to meet same standards of other employees • Need not make accommodation to support/enable use but may need to make accommodation for rehabilitation
23
Fair Labor Standards Act
• Standards for minimum wages and terms of payment for overtime • Employers prohibited from • Payment of wages less than statutory minimum • Work week in excess of 40 hours unless employees are compensated at time-and-a-half their regular wage • Exploiting child labor • No specific mention of tribes
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Case Law
• FLSA applies to business operated on tribal land and owned by tribal member • Chao v. Matheson , 2007-WL-1830738, No. C-06-5361 (W.D. Wash., June 25, 2007) • FLSA applies to tribally owned retail store on tribal land • Solis v. Matheson , 563 F.3d 425 (9 th Cir 2009) • LEO not entitled to protections because tribal law enforcement is traditional governmental function • Snyder v. Navajo Nation , 371 F.3d 658 (9 th Cir. 2004)
25
National Labor Relations Act
• Authorizes unions to organize and engage in “protected concerted activity” • Prohibits employers from prohibiting exercise of rights or engaging in conduct that may have a “chilling effect” • Applies • Employers with $50,000 in annual business • Private employers operating on or near reservations • Does NOT apply to US • No express applicability or exemption for tribal governments
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11/29/22
Protected Concerted Activity
• 2+ acting together to improve working conditions/wages • 1 if he/she involves others before acting or acts on behalf of others • Union membership not required
• Excludes
• Reckless or malicious behavior • Sabotaging equipment • Lies about a product
• May exclude
• Revealing trade secrets • Hate speech
27
Examples
• Social media comments • Sharing own confidential information – wages/corrective action • Rules restricting criticism of management • Rules requiring employees to be respectful • Rules prohibiting resistance to proper work-related orders or discipline, even though not overt insubordination
28
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11/29/22
Case Law • Tribal law prohibiting union membership as a condition of employment did not violate NLRA. The tribe has sovereign authority to govern its own territory. • NLRB v. Pueblo of San Juan , 276 F.3d 1187 (10 th Cir. 2002) • NLRA applies to casino wholly owned and operated by a tribe on the tribal reservation because the operation of a casino is not an exercise of self-governance or a governmental function • San Manuel Indian Bingo and Casino v. NLRB , 475 F.3d 1306 (D.C. Cir. Feb 2007), reh’g enbanc denied (D.C. Cir., June 8, 2007)
29
Family Medical Leave Act
• Employers with 50+ employees must provide 12 weeks of unpaid leave in a year for family and medical reasons • Eligibility • Employed 12 months and 1,250 hours;
• Birth, adoption, placement of child in foster care; • Care of seriously ill child, spouse or parent; or • Own serious illness • Return to same or equivalent position upon return • Tribes not specifically mentioned • DOL position that FMLA applies to Tribes • 2020 – Extended Family Medical Leave Act
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11/29/22
Case Law
• Must exhaust tribal court remedies • Sharber v. Spirit Mountain Gaming, Inc., 343 F.2d, 724 (9 th Cir. 2003) • FMLA does not abrogate tribal sovereign immunity and without a waiver in gaming compacts or by policy, the court will not infer one • Muller v. Morongo Casino Resort & Spa , ED-CV-14-02308-VAP (C.D. Cal, July 17, 2015)
31
Other Federal Employment Laws
• Employee Retirement Income Security Act • Standards for voluntarily established pension or welfare-benefit plans • Not applicable to benefit plans if it covers employees in traditional governmental roles • Applicable to plans where the tribe is engaged in commercial activities • Consolidated Omnibus Budget Reconciliation Act • Requires continuation of health insurance for up to 18 months after an employee leaves • Not applicable to insurance plans maintained by tribes if employee is employed in a traditional governmental role • Applicable to plans for commercial tribal enterprises
32
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11/29/22
Workers’ Compensation Laws
• Generally – State labor and employment laws not applicable to employers operating solely on a reservation • California v. Cabazon Band of Mission Indians , 480 U.S. 202 (1987) • Except …. • 40 USC § 290 provides state authority to apply workers’ compensation laws to all lands owned or held by the US with a state • So … State workers’ compensation laws may apply • Other factors
• Gaming Compacts • Other documents
33
Take Away • Failure to include or exclude tribes does not make law inapplicable • Ownership and structure matters • Purpose/intent matters • Internal tribal issue • Treaty Rights involved • Traditional governmental role • Structure matters • Applicability based upon other factors • Constitution • Other law • MOU/MOA • Compacts
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11/29/22
Remember Edward Employee?
• Card dealer – required to stand for long periods of time • Long time employee, 50 years old • Union Rep – engaged in wage dispute • Picked up something heavy at work – hurt on the job • Medical release from work; returned with limitations and pain medication • Workmen’s compensation paperwork submitted but left on Secretary’s desk; Employer part of paperwork not completed
• Returned with reasonable accommodations request; granted by HR but not implemented by supervisor • Supervisor required employee to return to regular duties • Routine drug test – failed • Reaggravated injury at work; transported to hospital; hospitalized and missed work • NC/NS • Return to work – resign or be terminated
The Gaming Commission received an employment action notice and a request to act on EE license … what are your concerns??
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36
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6/15/24
GAMING CRIMES AND BAD ACTS
1
GAMING CRIMES ARE NEWS MAKING EVENTS
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6/15/24
WHY IS THIS PROBLEMATIC? • The integrity and safety of tribal gaming is paramount not only to the bottom line, but to the continued health of the industry. • Criminal activities at tribal casinos: • Undermine public confidence in the safety and fairness of tribal gaming, driving patrons away • Provide detractors with political ammunition to undermine tribal gaming.
3
PUBLIC CONFIDENCE IN THE SAFETY AND FAIRNESS OF GAMING • Public confidence is hurt when patrons hear about financial crimes or improprieties • Loss of public confidence not only negatively impacts player participation but also endangers the continued ability of tribal entities to conduct gaming, which could be negatively altered through negative legislation or regulations
4
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PROTECTING AGAINST CRIMES BEFORE AND AFTER THEY HAPPEN • Tribal gaming regulators can both prevent crime and mitigate the negative effects of any crime that does occur by: • Knowing what crimes are commonly committed against tribal gaming operations and how they’re committed • Understanding the circumstances that allow for crime to occur
5
THEFT/FRAUD GENERALLY
• According to the Association of Certified Fraud Experts (ACFE) 2020 Report: • Organizations lose ~5% of revenue to fraud each year. • The average fraud case lasts 14 months before detection and causes a loss of $8,300. • 54% of organizations did not recover any losses. • The United States had 829 reported fraud cases in 2020. • 44% of these cases were committed by an employee 6
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6/15/24
Improper sheltering of taxable gains by passing third-party transactions through Indian tribes Disguising enterprises to appear tribally-owned to evade Federal Unemployment Tax and oversight by state insurance regulators
EXAMPLES OF ABUSES AND SCHEMES
Embezzlement from tribal enterprises
7
Use of tribal credit cards for personal gain
EXAMPLES OF ABUSES AND SCHEMES
Use of casino comps for purposes unrelated to gaming play Illegal activities (i.e., bribes and kickbacks) in enterprises where tribes lack adequate internal control
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6/15/24
Employment tax irregularities
EXAMPLES OF ABUSES AND SCHEMES
Improper tax treatment of net gaming revenue, including misclassification of tribal member distributions Misrepresentation of federal status of the tribe to attempt to obtain tax advantages
9
Misrepresentation of treaty provisions to claim improper tax relief
EXAMPLES OF ABUSES AND SCHEMES
Claiming nonresident alien status through the filing of false Forms W- 8BEN
Schemes related to income derived from the land
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6/15/24
Occupational Frauds by Category -- Frequency
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
86%
89%
83.50%
43%
35.40%
38%
10%
10%
9.60%
Asset Misappropriation Corruption
Financial Fraud Statement
2020 2018 2016
11
Occupational Frauds by Category – Median Loss
$975,000
$1,00 0,000
$954,000
$900,000
$800,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$250,000
$200,000
$200,000
$200,000
$114,000
$125,000
$100,000
$100,000
$0
Asset Misappropriation
Corruption
Financial Fraud Statement
2020 2018 2016
12
6
6/15/24
Median Loss Per Month of Different Fraud Schemes
Expense Reimbursements Payroll Skimming Cash Larceny Billing Check and Payment Tampering Noncash
$6,000
$4,600
$4,200
$4,000
$2,900
$2,600
$1,400
$0 $1,00 0 $2,00 0 $3,00 0 $4,00 0 $5,00 0 $6,00 0 $7,00 0
13
18 U.S.C. 1163 Embezzlement and Theft from a Tribal Organization
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6/15/24
Stealing
Embezzling
Knowingly converting
ELEMENTS
Willfully misapplying or permitting to be misapplied Knowing of anyone stealing, embezzling, converting or misapplying
15
ELEMENTS
• Any:
• Money • Funds
• Credits • Goods • Assets or • Other property • Belonging to an Indian Tribe or an Indian Tribal Organization (ITO)
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6/15/24
INDIAN TRIBAL ORGANIZATIONS • Any tribe, band, or community of Indians subject to U.S. law. Also includes any corporation, association, or group organized under such laws. • Something is an ITO if it is subject to the Tribe’s control and conforms to federal laws regarding Indian affairs. • Examples: Great Lakes Intertribal Council, Indian Land Tenure Foundation, All Indian Pueblo Council
17
Real property and theft from individual members of a tribe is not included under this statute This statute includes both principal actors and members involved in a conspiracy
1163 is used most often for employees of tribal establishments or for members of a tribe.
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