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Ring in the New Year with a Close Look at Employment Practices Year-end is a perfect time to take stock and, where necessary, implement changes for the coming year. To that end, we have compiled a top-ten list of steps you can take to improve your company's labor and employment practices and help reduce the risk of problems in 2008. Number 10: Are your independent contractors properly classified? Companies and independent contractors often agree regarding independent contractor status — at least when the relationship is going well — but state and federal law may say otherwise. It isn't the agreement of the parties but the realities of the situation that dictate whether an individual is truly an independent contractor or is really an employee. If the individual is legally an employee, the company may face liability under a number of statutes and from a variety of governmental agencies. Number 9: Are you using required forms and posters? Are you using the new Form I-9 [link]? Have you posted the new federal Department of Labor minimum wage poster? Have you recently checked your state's Department of Labor Web site to ensure that you have all required postings? Remember that changes in state and federal laws are often accompanied by changes to required postings, notices and forms. Number 8: When did you last review your employment handbook and other forms? Changes in state and federal statutes, as well as case law developments, may dictate certain modifications to handbooks, employment applications, severance agreements and other such documents. For example, see the accompanying articles regarding release of USERRA claims [link] and the need to have a harassment policy that is understandable to all members of your workforce [link]. Remember that as the law changes, so too must your forms and agreements, so please don't rely on a document that one of our attorneys drafted or reviewed for you in the past. Give us a call and we'll get you a new one! Number 7: Have you recently conducted supervisor training? Training managers and supervisors regarding discrimination, harassment, reasonable accommodation, retaliation and other workplace policies (including wage and hour laws), can go a long way to protect against legal violations and the liability that follows. Remember that California requires harassment training for most supervisors and managers. Other states (for example, New Jersey) tie certain defenses to claims of harassment to whether the employer properly trained employees regarding its policy. Number 6: Do you have restrictive covenants with the right employees? Confidentiality agreements, non-compete agreements, non-solicitation agreements and other restrictive covenants should be carefully considered for all officer/director level employees, as well as for employees in sales and certain other positions. However, whether you can have such agreements, and whether they will be enforced, depends on a number of factors, including state law and whether the agreement is drafted appropriately for the situation. A "one size fits all" approach to restrictive covenants is not effective, and overbroad restrictive covenants may be deemed unenforceable or, worse, unlawful. Number 5: Are you collecting and reporting required data? Certain laws require that companies complete annual reports regarding their workforces. For instance, Federal EEO-1 Forms must be filed by most employers. (Note the revised EEO-1 report now available through the Internet.) Federal contractors also have certain data collection and reporting obligations under Executive Order 11246, the Vietnam Era Veterans' Readjustment Assistance Act of 1974. Number 4: Have you recently analyzed your bonus/merit increases? Bonus and salary policies and practices that appear unequal will often give rise to discrimination claims. Being deliberate about compensation decisions — and checking to make sure they are fair — goes a long way to both prevent and defend against such claims. Review your compensation decisions to ensure that there isn't a disparate impact on a particular class of employees and to guard against perceived unfairness. Number 3: Are you using best practices with employee reviews and personnel files? Make sure your supervisors are documenting counseling/disciplinary sessions, and are being honest and thorough in their written employee reviews. Inflated, positive reviews may feel good to deliver but become a headache when the company decides to take an employment action. Personnel files should include employee reviews, disciplinary reports, handbook and policy acknowledgements, grievances, and commendations, as well as other job-related information. Personnel files should not include medical records, I-9 forms and payroll records — all of which must be kept in separate files. Number 2: Are you paying your employees the amounts required by law? Federal minimum wage rates and several state minimum wage rates increased in 2007, and are set to increase again in 2008. Make sure that you are paying the applicable minimum wage to all employees. Also, consider whether your clocking and payroll systems provide compensation for all time worked, including time spent before the employee clocks in and after he clocks out. Number 1: Are your "exempt" employees really exempt? Take a long hard look at the employees whom you are classifying as exempt from overtime requirements. Remember that actual duties, not titles, determine whether an employee is exempt from state and federal overtime requirements. The Schiff Hardin Labor and Employment Group wishes you all a very happy holiday season and a wonderful new year.
The California Court of Appeal recently decided in Perez v. Uline, Inc. that a general release was ineffective against a later claim for wrongful termination in violation of public policy based on the Uniformed Services Employment and Reemployment Rights Act ("USERRA"). However, this decision appears to be inconsistent with a 2006 Georgia federal court decision which suggested that USERRA claims are waivable, provided that the release is "clear, convincing, specific, unequivocal, and not under duress." USERRA contains language which states:
In Perez, on the day the plaintiff, a captain in the United States Marine Corps Reserves, returned to work, he was told that his employer no longer needed his services. He signed a "severance agreement and release" in return for six weeks' salary. Subsequently Perez sued his former employer alleging, among other things, wrongful termination in violation of public policy — including termination of members of the armed services in violation of USERRA. Applying USERRA's language that it supercedes any contract or agreement limiting rights under that statute, the Court of Appeal held that releases of USERRA claims are invalid. USERRA claims are likely to become more prevalent as more soldiers return to work from active duty, and employers need to be aware of their obligations under this law. How other courts decide the question of whether USERRA claims are waivable remains to be seen, but Perez should serve as a caution to any employer seeking to have such claims released. We strongly encourage you to consult with your Schiff Hardin Labor and Employment attorney before entering into any severance agreement or other release with an employee who might have rights under USERRA.
A recent Seventh Circuit case clarifies employers' responsibilities with respect to maintaining effective internal complaint procedures for reporting harassment and unlawful discrimination. In E.E.O.C. v. V & J Foods, a teenage fast-food restaurant worker brought claims against her employer alleging a hostile work environment, sex discrimination and retaliation. The district court granted summary judgment on the hostile work environment claim on the grounds that the teenage employee failed to activate the mechanism which the Company had implemented for reporting harassment. The Seventh Circuit reversed the district court's decision, finding that the reporting mechanism that the employer had in place was not reasonable. The court reasoned that "what is reasonable depends on the employment circumstances and therefore, among other things, on the capabilities of the class of employees in question." In the opinion, the court noted that V & J employed many teenage employees in its restaurants and that the mechanism in place was too complicated for the average teenager to have known how to utilize it. As a result, it was not reasonable and could not serve as a defense. The Seventh Circuit found that while employers are not required to tailor complaint procedures to the competence of each individual employee, when an employer has a certain population in its workforce, the employer is obligated to suit its procedures to the understanding of the average individual in that population. For example, the court suggested that if an employer has a significant Spanish-speaking population in its workforce, it must ensure that those individuals understand how to utilize the mechanisms and procedures for reporting harassment and unlawful discrimination, potentially requiring the employer to post signs regarding reporting harassment and unlawful discrimination in both English and Spanish. This case stands as a stark reminder that in order to claim certain defenses to harassment allegations, employers are responsible for creating a clear path for complaints of harassment, discrimination and retaliation. If this path does not match the capabilities of its employees, it may subject the employer to liability. Recent Alerts November 9, 2007 October 25, 2007 Schiff Hardin on the Road
Schiff Hardin Labor and Employment Group |
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