This article recaps the main points of the Winter 2008 piece as respects hiring and, in a handy checklist format, also addresses the legal compliance issues involving other areas of human resources administration.
Hiring
1. Avoid asking discriminatory questions in the hiring process, especially those related to things like age, sexual orientation, marital status, disability, family care needs, race, national origin, and past employment-related claims.
2. Conduct criminal background checks on all employees. Make sure to comply with the Fair Credit Reporting Act (FCRA) disclosure notice requirements. Use our recommended resource www.GlobalHRResearch.com.
3. Conduct credit background checks of all employees in financially sensitive positions. Again, use www.GlobalHRResearch.com. Realize that the Equal Employment Opportunity Commission (EEOC) and many state legislatures are passing legislation limiting the use of credit background checks in the hiring process.
4. Conduct postoffer, prehire physicals so that you don't "hire" a workers compensation claim. The best approach: partner with a physician specializing in occupational medicine. Confine the disclosure of medical information so that medical details relate only to essential job functions.
5. Make sure to have your current compliance notice properly posted. Go to www.americanllc.com to obtain an up-to-date poster encompassing all the relevant laws, for only $29.95.
Harassment and Discrimination
1. Make sure to have up-to-date sexual harassment and discrimination policies in your handbook. Many companies will require that employees provide a separate acknowledgment of this document (in addition to the company's other HR policies). Conduct sexual harassment training for both managers and employees—regardless of whether or not it is required by law in your particular state.
2. Make sure to have "alternate reporting channels" for anyone wishing to file a harassment, discrimination, or other complaint.
3. Promptly and thoroughly investigate complaints and take appropriate disciplinary actions afterward.
4. Guard against possible retaliation claims once someone has made a complaint alleging discrimination or harassment. Remember: retaliation claims are the fastest-growing of all types of employment practices liability claims!
5. Evaluate your exposure to claims alleging violation of the Equal Pay Act. Statistically, women are paid 80 cents (or less) on the dollar, relative to their male counterparts in comparable jobs. As a result of the federal statute, the Lilly Ledbetter Fair Pay Act, passed in 2009, female employees now have a longer time frame within which to bring pay discrimination claims.
Wrongful Termination and Breach of Contract
1. Make every effort to preserve at-will employment status of all jobs, by providing notices to this effect in your employee handbook and in any offer letters.
2. Consider using mediation and arbitration agreements on a prehire basis, mandating that claims
against the company be resolved by one of these approaches. But since the courts construe such agreements narrowly (i.e., in favor of the employee in the event of any ambiguity), make sure to have yours reviewed by an attorney.
3. Have an up-to-date employee handbook that has also been reviewed by an attorney. HR That Works members can have their employment contract or employee handbook custom-built to suit the particular needs of their organization.
4. Document poor performance immediately—not later. Then, take the next step and have the employee complete the employee correction form. (http://portal.hrthatworks.com/AnonymousFrom/docs/EmpCorrectionFrm.pdf)
5. Take a checklist approach before terminating any employees, to eliminate the possibility of being accused of discriminatory or wrongful conduct. See "Pre-Termination Checklist" in the Fall 2002 issue of EPLiC.
6. Conduct an exit interview with all departing employees. If handled properly, exit interviews can often reveal management and potential legal problems.
7. Carefully handle employees who complain about improper conduct; whether such complaints pertain to the company, its employees, vendors, or business partners. Treat the complaint as you would a harassment or discrimination allegation, and perform a prompt and thorough investigation.
Managing Leaves
1. If you have more than 15 employees (just 5 in California!), you are subject to disability accommodation and discrimination laws. If you ever want assistance with an accommodation issue, you should view the Job Accommodation Network (JAN) website at http://askjan.org/.
2. Take a form-based approach when managing the Americans with Disabilities Act (ADA). See "FMLA Traps for the Unwary" in the Spring 2009 issue of EPLiC for more details on how to avoid the pitfalls associated with FMLA leaves.
3. Employers get in trouble when they give up on the accommodation dialogue too soon. Remember that the employee has the right to an accommodation unless the accommodation imposes an undue burden on your company, not simply an inconvenience.
4. If you have 50 or more employees, you are subject to the Family and Medical Leave Act, as well as similar state laws. The FMLA allows leave for a serious medical condition involving the employee or a family member, or for certain military reasons.
5. Managing the FMLA also requires a form-based approach. See www.dol.gov/whd/fmla/index.htm. Do not grant FMLA leave without the employee first completing the required medical certificate. Also, make sure your FMLA policy is up to the standards set forth by the Department of Labor.
6. When managing workers compensation return-to-work events, realize that both the ADA and FMLA may be involved. Lawyers refer to this as "The Bermuda Triangle" because no less than three different types of laws are involved. Ask me for a copy of the Federal and California Leave Law Charts by sending an e-mail to
don@donphin.com.
Wage and Hour Issues
1. The largest wage and hour claim exposure from a pure dollar standpoint emanates from failure to pay overtime. This results mainly from mistakenly classifying nonexempt employees (i.e., not exempt from being paid overtime) as "exempt" employees (i.e., exempt from being paid overtime). Most problems arise under the so-called managerial or administrative exemption to overtime laws. The DOL Wage and Hour Advisor (www.dol.gov/elaws/flsa.htm) site does a very good job of defining these exemptions. If you're in California, we encourage you to go to www.dir.ca.gov. This site effectively explains the exemptions in California, which, by the way, are much narrower than federal standards.
2. If you are unsure as to whether a person should be classified as exempt or nonexempt, it is better to classify them as nonexempt and pay them on an hourly basis, including overtime.
3. If an employee works unauthorized overtime hours, you still have to pay the overtime wages accumulated, although you may discipline the employee for working such hours without authorization. Consider using an overtime authorization form (one is available from HR That Works).
4. Be very clear about how your vacation or paid time off policy applies and whether or not vacation is an accrued benefit under state law, or if it is granted based on the policy itself. Make sure you obtain legal advice before claiming you have a "use it or lose it" vacation policy. Recognize that you may have the right to require employees to use vacation pay, paid time off (PTO), and sick pay—while on FMLA and other leaves.
5. Make sure to clarify your obligations under state law for rest and meal periods. While not required under federal law, there are a great many state-specific requirements in this area, especially in California.
6. Lastly, be explicit about the manner in which sales commissions are paid. Make sure all commitments are placed in writing. Be clear about what happens to any possible commissions that may be owed at the time of termination.
Independent Contractor Violations
1. The IRS and state agencies are looking to collect millions of dollars in what they believe is the rampant misclassification of employees as independent contractors, in an effort to avoid payroll and other taxes.
2. See the Internal Revenue Service (IRS) test (www.irs.gov/businesses/small/article/0,,id=99921,00.html) to find out what constitutes an employee. Also take a look at the site http://1099timebomb.com.
3. Remember, the single most important factor in determining independent contractor status is whether you exert control over their means and methods of production.
4. Make sure any person you classify as an independent contractor actually has his or her own licenses, business cards, insurance, and other indications that he or she is operating a business.
5. See "The 1099 Time Bomb: Avoiding the Perils of Misclassifying Independent Contractors" in the Winter 2010 issue of EPLiC for more details on how to avoid misclassification errors.
The Internet, Social Media, and Privacy
1. An employer is required to balance the company's right to protect its proprietary information and other property with an employee's right to privacy.
2. Make sure to have clearly defined e-mail, Internet, and social media use policies. See sample Social Media Policy in the Winter 2010 issue of EPLiC.
3. Engage your employees to provide ideas and feedback when developing these policies.
4. Think twice before conducting drug tests. Unless there is reasonable suspicion of illegal drug use, random drug tests generally create more problems than they solve. Moreover, random tests may not even be allowed in your particular state.
National Labor Relations Act (NLRA)
1. Realize that the NLRA applies to you, even if you are not a unionized company.
2. Employees have the absolute right to discuss the terms and conditions of their employment. This includes what they get paid and how they are treated by management.
3. If you allow employees to post information on company bulletin boards and websites, they will have the opportunity to do so for collective organizing purposes, as well.
Miscellaneous
1. Make sure you maintain your right to protect your company's proprietary property, whether through noncompete, confidentiality, nondisclosure, trademark, and other agreements. All of these agreements should be reviewed by counsel.
2. Consider using the HR That Works Compliance Survey twice a year, to ferret out and prevent any possible claims. (http://portal.hrthatworks.com/AnonymousFrom/docs/EmpComplianceSrvy.pdf)
3. Consider using a third-party hotline service for the reporting of harassment, discrimination, whistle-blower, and other complaints.
44. Consider the purchase of employment practices liability insurance. If you have it, be clear about your company's requirements under any "trigger" provisions, which would require you to report a possible claim. See the checklist "25 Key Points To Improve Your EPLI Policy" in the Spring 2002 issue of EPLiC.
5. Make sure to have a proper document retention program. We recommend you retain employee records for at least 6 years. There can be longer retention requirements when claims pertain to benefits or to safety programs/workplace injuries.
Source: International Risk Management Institute, Inc. (IRMI)
