HR That Works Blog

“We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn.” – Peter Drucker

This issue discusses:

• Editor’s Column: Cases of the Week
• Blowing It
• DOL Launches New Web Site Cataloguing Employer Violations
• Will You Be Prepared If The Other Shoe Drops?
• What Employees Really Care About
• Electronic Signatures and Storage of Form I-9
• Southwest Airlines: You’ve Got to LUV Them!
• A Step-By-Step Process to Employee Problems Can Be Useful
• FMLA and Call-In Procedures
• Do Your Criminal Background Checks
• Disabled Employees and Assignment to Vacant Positions
• DOL Regulations May Require Employers to Demonstrate Compliance with Employment Laws
• Avoiding Overtime Claims

We have also provided you with the Form of the Month.

Please click here to view this month’s newsletter in PDF format.

Editor’s Column: Cases of the Week

As part of my ongoing research efforts to help our members, I discipline myself to review Find Law’s weekly appellate court case summaries. A few weeks ago, the review summarized 29 cases – count ‘em, 29:

1. Rent-A-Center West, Inc. v. Jackson
2. Granite Rock Co. v. Int’l. Brotherhood of Teamsters
3. Rodriguez-Garcia v. Miranda-Marin
4. Malone v. Lockheed Martin Corp.
5. Zakrzewska v. The New School
6. NLRB v. Talmadge Park
7. Durakovic v. Bldg. Serv. 32 BJ Pension Fund
8. Ruiz v. Cty. of Rockland
9. Edwards v. A.H. Cornell & Son, Inc.
10. Air Line Pilots Ass’n v. US Airways Group
11. Kemp v. Holder
12. Winnett v. Caterpillar, Inc.
13. Pickett v. Sheridan Health Care Ctr.
14. Kobus v. Coll. of St. Scholastica, Inc.
15. Ringwald v. Prudential Ins. Co. of Am.
16. Jones v. Nat’l. Am. Univ.
17. Hawaii Stevedores, Inc. v. Ogawa
18. EEOC v. Peabody Western Coal Co.
19. Simonia v. Glendale Nissan/Infiniti Disability Plan
20. Medlock v. United Parcel Serv., Inc.
21. Narotzky v. Natrona Cty. Mem. Hosp. Bd. of Trustees
22. Armstrong v. Geithner
23. Schaefer v. McHugh
24. Gonzalez v. Dept. of Labor
25. Murthy v. Vilsack
26. Bifulco v. Patient Bus. & Fin. Serv., Inc.
27. Myrick v. Mastagni
28. Baker v. Am. Horticulture Supply, Inc.
29. Faulkinbury v. Boyd & Assoc. Inc.

Of course, none of these companies planned on being a defendant in an employment lawsuit. So, what were all the lawsuits about? Five were ERISA cases. We’ve had ERISA experts on some of our Webinars.

There were also five union cases, including one in which the company was suing the union under the Labor Management Recording Act for damages caused by a strike. In one of the union cases, the 2nd Circuit invalidated an NLRB Bush-era decision that only had two judges on the board. This is the beginning of the undoing of those Bush-era NLRB decisions. Again, we have had Webinar guests on union avoidance.

There were four race and discrimination cases, including an interesting one against a coal company by Hopi and other Native American, claiming that the coal company discriminated by favoring Navajo workers.

There were two ADA cases, one FMLA case, one privacy case, one breach of contract case, and one age discrimination case. Of the three wrongful termination cases, one was brought by a group of neurosurgeons who sued a hospital for “constructive discharge” in part because after the surgery operations shut down and the doctors left, the hospital claimed that they had stolen equipment and ordered a search of their lockers. Apparently, the search didn’t find any equipment, nor did the hospital claim that any of the surgeons specifically stole anything. The court held that it was reasonable for the hospital to do this search because it focused on instruments that could only be used in surgery.

There was a wage and hour class-action suit in California (no surprise there), claiming that security guards weren’t paid properly for their rest and meal periods. Another lawsuit was brought by a whistleblower who was transferred after testifying in an ethics probe.

That’s nearly 30 appellate cases decided during a single week in a country with millions of employers. Employment practices liability exposures might not be frequent. However, I can tell you from reading the results in these cases they are certainly severe. According to Jury Verdict Research, the average verdict hovers around $270,000, with million-dollar verdicts seemingly commonplace. Whether a company won or lost in any of these cases, it probably spent at least $200,000 in attorneys’ fees.

What should you make of all this? Very simple – be prepared to handle compliance basics! Get proper advice on managing your benefits. Focus on developing effective employee relationships and work with competent attorneys to prevent unnecessary union organization, as well as bargaining with an existing union. Make sure your HR folks stay abreast of the ADA, FMLA, age discrimination, race discrimination, and sexual harassment exposures. We have a ton of tools on HR That Works to help with those.

If you’re an HR That Works member and have a question in any one these areas, you can rely on the Hotline support of the Worklaw® members and yours truly to help get you through any tough spot.

Blowing It

A July 2010 Corporate Counsel article analyzed a huge discrimination verdict rendered against Novartis in a Manhattan federal district court jury trial. The jury determined that the company discriminated against its female sales representatives, creating an insensitive and hostile working environment. Instead of taking a conciliatory approach during trial, Novartis pressed hard and according to the article, responded by labeling the plaintiffs in front of the jury with demeaning and harsh stereotypes. The jury awarded $3.36 million to the 12 named plaintiffs, plus an additional $250 million to a class of additional 5,600 other plaintiffs. Of course, Novartis plans to appeal.

Interestingly, Novartis noted that Working Mother magazine had recognized the company for 10 years in a row as one of the top 100 firms for working mothers (Integrity, anyone?).

Lesson learned: Anytime an employer goes to trial justifying its conduct, and in fact, laying it on even thicker, it runs the risk of an enormous verdict. A conciliatory approach will usually result in a settlement or smaller jury verdict. Read the article here.

DOL Launches New Web Site Cataloguing Employer Violations

The U.S. Department of Labor has launched a new Web site that reports (in a searchable format) employer violations. The site, http://ogesdw.dol.gov/, catalogues all DOL enforcement data regarding employer violations from the Employee Benefits Security Administration (“EBSA”), the Mine, Safety & Health Administration (“MSHA”), the Office of Federal Contractor Compliance Programs (“OFCCP”), the Occupational Safety & Health Administration (“OSHA”), and the Wage & Hour Division (“WHD”). The DOL’s goal in launching the site is to “make the enforcement data, collected by these agencies in the exercise of their mission, accessible and searchable, using common search criteria, by the public. It intends, also, to engage the public in new and creative ways of using this data.” The site will soon permit searches by company name. Companies should check the site frequently to ensure the accuracy of its content.

Article courtesy of Worklaw® Network firm Shawe Rosenthal (www.shawe.com)

Will You Be Prepared If The Other Shoe Drops?

There’s been a lot of press recently about the possibility of the nation falling back into a deep recession. Let’s hope not! But, just in case, are you and your management team prepared to slash costs by 10%, 20%, or more again? Do you have a Plan B for your workforce? The recession caught plenty of employers off guard. On the other hand, I know of many companies that had a Plan B in place and were able to deploy it rapidly.

Being prepared is essential for effective management of risks, whether you’re facing an economic downturn, exposure to a lawsuit, or an environmental disaster. If there’s another recession, remember that HR That Work has a number of tools to help you manage the layoff and termination process in a graceful and legal manner. I’d also recommend taking time to discuss this issue and identify the critical parameters to consider when or if the time does come.

What Employees Really Care About

I recently read that only 47% of 18-34 year olds “really care about the fate” of the enterprise for which they work – compared with 64% of those 55 and older. Although statistics like these make it easy to criticize the M generation, bear in mind that more than one-third of workers 55 and older feel the same way. So what are employees most concerned about? I won’t take you through Maslow’s Hierarchy of Needs. However, I encourage you to read the White Paper I wrote on it on HR That Works. Maslow talks in terms of survival, security, belonging, ego, and self-actualization needs. When it comes down to it, this is what most employees care about:

• A fair day’s pay. 99% of the population goes to work because they have to earn money. Depending on the employee’s needs and environment, pay can either be a major or minor motivating factor.
• An opportunity to grow at the company. Growth means job security, as well as more pay. Do your employees have a roadmap for this growth? How are you managing a situation in which there are few growth opportunities? Remember, people might know their present circumstances, but be uncertain their future. Don’t leave them guessing.
• A positive work experience. Work is innate to our souls. It’s a great source of meaning to us. Ultimately, people want to enjoy the work experience. As Joseph Campbell so famously stated, “Work can be a life-draining affair.” I hope this isn’t the case at your company, especially if you tend to retain your best people.
• A good relationship with their boss. This is perhaps the most critical part of the work experience. Do your managers empower employees or try to control them? Do they have a good bedside manner and do they encourage employees to take on new tasks and to grow in their jobs? Many a good company has lost many a good employee due to mediocre or poor managers.

Ultimately, employers must acknowledge that today’s loyalty is not to a company, but to project, career, and work relationships. Although addressing those needs might not produce the most loyal employees, it can certainly produce highly productive ones.

Remember, today’s best and brightest employees don’t have to work for you – or anyone else. What type of career and financial opportunities can you offer that they can’t get on their own or with someone else? As Daniel Pink notes, “This is a free-agent nation.” Businesses that recognize this reality will be the ones that succeed.

Electronic Signatures and Storage of Form I-9

On July 22, 2010, the Department of Homeland Security issued its Final Rule on electronic signatures and storage of Form I-9s. Under this rule, employers may:

• Complete, sign, scan, and store the Form I-9 electronically (including existing Form I-9s) so long as they meet certain “performance standards” (e.g., reasonable controls to ensure the integrity, accuracy, and reliability of the system).
• Use paper, electronic systems, or a combination to sign and store their Form I-9s

Southwest Airlines: You’ve Got to LUV Them!

I’m an unabashed promoter of Southwest Airlines. As someone who travels a great deal, I find the company’s customer service, pricing, and all-around flying experience to be the best in the industry. Amazingly, in 2009, Southwest continued its profitability streak for the 37th consecutive year, a remarkable feat amidst the worst recession most of us can remember. A review of their 2009 “One” Report helps define what makes Southwest so different: Its focus or passion in three areas – performance, people, and our planet.

In terms of performance, the company reduced overhead by eliminating the bottom least productive 10% of their flights. They also increased revenue with their early-bird check-in program, and trimmed costs where possible by offering voluntary early retirement, freezing overall comp and executives’ salaries, avoiding fleet growth, and conserving jet fuel.

According to Southwest, “With a Warrior Spirit, a Servant’s Heart, and Fun-Luving Attitude, our employees carried out the mission of Southwest Airlines – dedication to the highest quality customer service, delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Even in a recession, they donated $11.6 million and more than 45,000 employee volunteer hours to charity.

Finally, Southwest, like many other corporations, takes its green initiative seriously.

How hard could it be to follow their example in your business?

• Eliminate the bottom 10% of clients, customers, and activities.
• Put a hold on employee count and management salaries.
• Reduce overhead and trim where possible.
• Continue to give; knowing that it always comes back to you.
• Define your culture as one with a “Warrior Spirit, Servant’s Heart, and Fun-Luving Attitude.”

Of course, if this were as easy as it sounds, all the other airlines would do it too. Not surprisingly, just about every one of Southwest’s competitors is unprofitable, horrible to fly on, and certainly not having any fun. I’ll continue to fly Southwest, own its stock, and preach its way of business because I believe in them – as do millions of others.

Note: On page seven of Southwest’s report, you can see the numerous 2009 awards and accolades, including its rank as the seventh most admired company in the world and the world’s most admired airline company; according to Fortune Magazine. Not surprisingly, they also have the highest customer satisfaction rating and the best on-time performance of any airline. Interestingly, Alaskan Airlines comes in second in both categories and they have adopted many of the Southwest ways of doing business.

A Step-By-Step Process to Employee Problems Can Be Useful

Most people find that it’s easier to solve a problem if they take a step-by-step approach. Dealing with problems in the workplace is no different – employers benefit from having a systematic process that all managers and supervisors can follow. This “Wells Fargo” approach (going by easy stages) not only helps solve problems, but also promotes consistency and fairness, while reducing the likelihood of accidently discriminating against employees by treating them differently.

Because a process can be very useful to employers, the Job Accommodation Network (JAN) is developing a series of publications that provide sample processes that employers can use or adapt in their own workplaces.

• The first publication is Dealing with Hygiene Problems in the Workplace.
• The most recent publication is Dealing with Conduct Problems in the Workplace.

Courtesy of the Job Accommodation Network.

FMLA and Call-In Procedures

One of the greatest frustrations with the “old” Family and Medical Leave Act was how it regulated company call-in procedures. With the new and improved version, the Department of Labor pretty much allows a company to require compliance with its call-in procedures so long as it doesn’t restrict the rights of the FMLA.

As the preamble to the final rule noted:

“The Department recognizes that call-in procedures are routinely enforced in the workplace and are critical to an employer’s ability to ensure appropriate staffing levels. Such procedures specify both to whom and when an employee is required to report an absence. The Department believes that employers should be able to enforce non-discriminatory call-in procedures, except where an employer’s call-in procedures are more stringent than the timing for FMLA notice. Additionally, where unusual circumstances prevent an employee from seeking FMLA-protected leave from complying with the procedures, the employee will be entitled to FMLA-protected leave, so long as the employee complies with the policy as soon as he or she can practically do so.”

So, if an employee can’t call with a foreseeable leave 30 days in advance, then they should be able to do so at least, “absent emergency situations, where an employee becomes aware of a need for FMLA leave less than 30 days in advance, the Department expects that it would be practical for the employee to provide notice of the need for leave either the same day (if the employee becomes aware of the need for leave during working hours) or the next business day (if the employee becomes aware of the need for leave after work hours).”

This month’s Form of the Month is a standard leave notice requirement that incorporates in the FMLA language. As always, if you’re an HR That Works member and have any questions about the FMLA, please don’t hesitate to contact the Hotline.

Opinion Letter: FMLA 2009-1-A does a good job of summarizing the above.

Do Your Criminal Background Checks

In workshops, I joke that “it only takes one felon to ruin a day.” This really isn’t funny, especially if such a person happens to victimize your business. Unfortunately, despite the advice that all employers should do criminal background checks on all employees, many businesses still don’t do so because they think bad things only happen to other people, or they claim that they don’t have the time or money. Remember, folks with a felonious background sell drugs, rob people, assault people, kill people, defraud people, embezzle, and engage in many other sins. I’m not saying never hire someone with a felonious background. I have some printing company clients who run their Heidelberg presses 24/7 hours a day. Most of the workers on their third shift have a criminal record. At least these companies know what type of criminal they’re dealing with. Remember this too: If you use a temporary firm, recruiter, leased employee, etc. make sure that whoever provides this person for you has done their criminal background checks.

As always, we recommend using our partner www.globalhrresearch.com.

Disabled Employees and Assignment to Vacant Positions

The statutory duty of employers to reassign disabled employees to vacant positions is mandatory. If a disabled employee can be accommodated by reassignment to a vacant position, the employer must do more than consider the disabled employee along with other applicants; the employer must offer the employee the vacant position. In a number of situations, reassignment would be unreasonable:

• It’s not reasonable to require an employer to create a new job for the purposes of reassigning the employee to this job.
• An employer is not required to reassign a disabled employee to a position that would constitute a promotion.
• An employer is not required to reassign the disabled employee in a way that would contravene the employer’s “important fundamental policies underlying with a legitimate business interest” (a very broad, case-by-case analysis).
• The job for which the disabled employee seeks reassignment must be vacant. In determining when a position is truly vacant, courts have ruled that “a position is ‘vacant’ for the purposes of ADA’s reassignment duty when that position would have been available for a similarly-situation nondisabled employee to apply for and obtain.” For example, if a company uses temp employees and under normal circumstances, nobody could apply for or obtain this job, it’s not considered vacant under the law.

DOL Regulations May Require Employers to Demonstrate Compliance with Employment Laws

The United States Department of Labor (DOL) recently announced Plan/Prevent/Protect, a sweeping regulatory agenda that will replace the “catch me if you can” method of assuring compliance with federal employment laws. Under the Plan/Prevent/Protect strategy, the DOL has directed the Occupational Safety and Health Administration (OSHA), Mine, Safety & Health Administration (MSHA), Office of Federal Contractor Compliance Programs (OFCCP), and the Wage & Hour Division (WHD) to propose regulations that require employers to develop programs demonstrating affirmative compliance with federal wage and hour, job safety and discrimination laws. As the name of the program, implies, the DOL will issue regulations that focus on:

• Planning. Employers will be required to create a plan for identifying and correcting risks of legal violations and other risks to workers, including the designation of people within the company to ensure compliance. Employees will have the opportunity to participate in the plan’s creation and must provide their workers with the plans so that “they can fully understand them and help to monitor their implementation.”
• Prevention. Employers will need to “thoroughly and completely implement the plan in a manner that prevents legal violations. The plan cannot be a mere paper process. The employer or regulated entity cannot draft a plan and then put it on a shelf. The plan must be fully implemented for the employer to comply with the Plan/Prevent/Protect Compliance Strategy.”
• Protection. Employers must ensure that plan objectives are “met on a regular basis. Just any plan will not do. The plan must actually protect workers from violations of their workplace rights.”

Employers who fail to “address comprehensively the risks, hazards, and inequities in their workplaces will be considered out of compliance with the law” and subject to remedial action by the DOL.

Among other things, the strategy will require the WHD to promulgate regulations requiring employers to provide workers with basic employment information, including the methods of calculating their pay. An employer who wishes to exclude a worker from coverage under the Fair Labor Standards Act would need to “perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it.”

Avoiding Overtime Claims

Overtime claims aren’t going away. A marginal claim filed by one disgruntled employee can easily turn into a class action involving dozens of workers. To help avoid such claims, follow these guidelines:

• Make sure employees that are appropriately classified as exempt. The FLSA and the State of California have done a great job defining the scope of these classifications. Unfortunately, many employers ignore them entirely or simply try to get by with a quick self-serving analysis. You’ll find the links to these definitions at http://www.dol.gov/elaws/esa/flsa/screen75.asp and http://www.dir.ca.gov/dlse/FAQ_Overtime.htm. HR That Works Members can also view the Wage and Hour Training Module.
• Don’t blow a legitimate exemption by docking pay. Remember, you must pay an exempt employee for the whole week, if they work any part of it. There are exemptions in which employees purposely decide not to come to work, etc. If you treat somebody like a non-exempt employee, so will regulators, regardless of their title.
• Job descriptions alone won’t cut it. Regulators will look at actual job duties and ask claimants to fill out timesheets describing their activities. Under Federal law, this is a qualitative analysis in which the “primary” activity is most important. Under California law, there is also a quantitative analysis which requires the employee to be engaged in their primary activity at least 50% of the time to be exempt.
• Watch out for unauthorized overtime. Assuming someone is classified properly as non-exempt, are they abusing overtime? One printing company that began using the HR That Works Overtime Authorization Form reduced its overtime exposure by $5,000 the first month! Ask yourself: If there is overtime, is it legitimate, and if so, how do we minimize it?
• It’s almost impossible to have more exempt employees than non-exempt employees. Few types of businesses (other than law firms, medical offices, engineering or CPA firms, etc.) can get away with this. Remember, if a person isn’t an executive, a real boss, in outside sales, or highly paid as a computer professional, they are not exempt –no matter how smart they are, no matter how long they’ve worked for you, and no matter how little you control them.

Form of the Month

Leave of Absence Request Policy (PDF)
Use this form to help ensure uniform leave request procedures.

(HR That Works Users can access this form in Word format by logging on to the site).

Podcast

Please click here to listen to this month’s newsletter podcast.

“Most people don’t need a boss. They need someone to listen to them.”    – Maurice Mascarenhas

This month’s newsletter discusses the following topics:

• Editor’s Column: The Big HR Show
• ADEA Claims: What’s Reasonable?
• Employment Litigation in the News
• A Change of Schedule Can Create a Reasonable Accommodation
• Beware of Classifying All Managers in All Locations as Exempt
• Classifying Workers as Independent Contractors: Risky Business
• National Labor Relations Act Turns 75
• Speaking of the NLRB…
• Good Ol’ Boys Can’t Have It Their Way
• DOL Delivers on Promises to Help Workers
• Discovering Problems While Employees are on Leave
• Form of the Month: Two Kinds of HR

Please click here to view the newsletter in PDF format.

Editor’s Column: The Big HR Show

Since I hadn’t been to a SHRM convention in a number of years, I felt it was my duty to attend one since it was occurring here in San Diego. After poring through the workshops, speaking to dozens of HR professionals and vendors, and roaming the entire exhibit hall, here’s what I observed:

1. HR is BIG business. There are approximately 10,000 attendees and the convention takes up the entire San Diego Convention Center (which is quite large). There were more than 150 concurrent sessions over the four days of the convention. The keynote speakers were Al Gore and Steve Forbes, (neither of which I had any interest in listening to- and neither of whom have anything to share about HR. Just ask the folks who heard them!). Other well- known names included Marcus Buckingham, Dave Ramsey, and David Ulrich.
2. I’m sure many of the attendees were there to earn up to 29 recertification credits in one lump toward their PHR, SPHR, or GPHR certifications (60 are required every three years).
3. The convention discussed a wide variety of subjects, broken down into:
   • Employment law and legislation
   • Strategic management
   • International management
   • International HR
   • Total rewards
   • Personal and skilled development
4. The breadth of workshops offered was as broad as the HR experience itself: Everything from hiring employees to letting them go and everything in between. Frankly, I didn’t see much new except everybody’s increased panic on how to manage healthcare benefits.
5. For an HR professional to attend the program it cost at least $1,200 in registration fees, plus $750 on room and board, and $500 in plane fare unless they drove here. This expense alone rules out many small company practitioners.
6. The company size of attendee broke down this way:
   • Fewer than 100: 16.59%
   • 101-499: 22.90%
   • 500-999: 12.25%
   • 1,000-9,999: 27.09%
   • Greater than 10,000: 21.80%

When it comes to the “weight” of the total employee population, companies with more than 1,000 employees dwarfed the conference.

I spent time going through the enormous vendor floor. According to SHRM, there were more than 565 executive exhibitors in a variety of groups:

• Compensation and benefits
• Employee relations
• Employee selection/staffing
• Health, wellness, and safety
• HRM services
• HR information and systems
• Training and Development

By far, the largest vendors were the recruitment sites (Monster, Yahoo, HotJobs, etc.) and the Payroll/PEOs vendors (ADP, Ceridian, PayChex, etc.).

In trying to get a sense of where the “buzz” was, the longest line I witnessed was roughly 30 women waiting for Erik Estrada’s (yes, that Erik Estrada from CHIPs) autograph.

Experts were doing live presentations to small audiences, some with very interactive screenings of their programs, and there were surprisingly large number of educational providers. All in all, the experience reminded me very much of the last convention I attended in San Diego.

The reality is that most of the companies in the HR That Works range of 15-500 employees get very little play at this conference. There’s certainly plenty geared toward large organizations. I can see every reason why vendors have an incentive to focus there. Not a single vendor said that they focus on smaller employers.

Most of the companies that use our program don’t send their employees off for MBA programs, buy FMLA tracking software, use elaborate employee incentive programs, recruit globally, or need an elaborate performance management system. What these companies do need is to be great at HR basics — the blocking and tackling stuff:

• Hiring the right people
• Knowing how to make them productive
• Making sure that you can keep productive and trustworthy employees
• Training them to ratchet up their performance
• Getting them to play team ball
• Keeping your managers and employees from doing anything stupid that would get you sued

I came away from this convention ever more assured that we’re going down the right path by focusing on the needs of companies with 15 to 500 employees. Let me know how we can help your company!

ADEA Claims: What’s Reasonable?

In light of recent U.S. Supreme Court cases, the EEOC has proposed regulations to address the scope of the “reasonable factors other than age” (RFOA) defense available to employers under the Age Discrimination Employment Act (ADEA). According to the EEOC, there are six non-exhaustive factors to consider in determining whether an employment practice is reasonable.

1. Where the employment practice and manner of its implementation are common business practices.
2. The extent to which the factor is related to the employer’s stated business goals.
3. The extent to which the employer took steps to define the factor accurately and apply it accurately and fairly (e.g., training, guidance, instruction of managers).
4. The extent to which the employer took steps to assess the adverse impact of its employment practices on older workers.
5. The severity of the harm to the individuals within the protected age group, in terms of both the degree of injury and number of persons affected adversely, and the extent to which the employer took preventative or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps.
6. Whether other options were available and the reasons the employer selected the option it did.

The EEOC said that it also looks into whether supervisors (a) have unchecked discretion to assess employees subjectively;( b) evaluate employees based on factors known to be subject of age-based stereotypes; and (c) receive guidance or training about how to apply the factors and avoid discrimination. To avoid unnecessary disparate impact and other discrimination type claims, consider these factors whenever you make an employment-related decision, especially if you terminate a group of employees. 

Employment Litigation in the News

A review of employment cases during one recent month included these topics:

1. Public policy violation/whistleblower	10. Trade secret/non-competition agreements
2. Breach of contract/implied covenant	11. Workers compensation/OSHA
3. Fraud	12. Independent Contract
4. Defamation	13. Respondeat superior
5. Wage/hour	14. Privacy
6. Discrimination	15. Arbitration
7. Harassment	16. Attorneys and attorneys’ fees
8. Retaliation	17. Statutes of limitation
9. Interference with contractual relations	18. And others

Here are a few recent employment litigation-related headlines:

• Sales Representatives $480,000 Wrongful Termination Award is Affirmed
• Evidence Supported Whistleblowers’ Discrimination Claim, but Not Sexual Harassment
• Undocumented Workers Had Standing to Assert Violation of Prevailing Wage Law
• Employee Who Was Threatened and Assaulted by Co-Workers Stated Wrongful Termination Claim
• Employer Could Recover Training Costs from Employee, But Can’t Recover Same from Final Check
• Housekeeper’s Award of $70,000 in Unpaid Wages Affirmed
• Employee Who Provided Customer Service and Training Related to Company Software Not Exempt from Overtime
• Employer Bears Burden of Showing Reasonableness of Layoff Criteria in Age Discrimination Case
• $1.8 Million Judgment Affirmed in Favor of Employee Discriminated Against on the Basis of Race and Gender
• Employee Who Requested Medical Leave for Depression While Working for Another Employer May Have Been Improperly Terminated
• Court Upholds $1.088 Million Verdict in Favor of Terminated Italian National

These are just a few example of the numerous, off-the-wall HR exposures your business might face. None of these companies ever planned on getting in the headlines — at least not like this! As you can see from many of the titles, employment practice claims might not be frequent: but when you face one, they tend to be severe. By the way, I didn’t list headlines about case verdicts favoring employers. Although these are rare, they still end up costing companies tens of thousands, if not hundreds of thousands of dollars, just to be “right.” 

A Change of Schedule Can Create a Reasonable Accommodation

In Colwell vs. Rite Aid Corporation, defense counsel posed a unique argument that the court quickly dismissed. Essentially, a clerk at Rite Aid suffered from glaucoma and asked that she have her shift changed from nights to days since she felt it was dangerous to drive at night, given her vision problems. The manager refused to make the requested accommodation, saying it would not be fair to the other employees who would, of course, also prefer the day shift over the night shift There were also concerns that seniority and other factors justified not providing her the requested accommodation.

In a last-ditch effort to convince the court in the reasonableness if their denial, Rite Aid argued that she was fine while she was at work, where she did not need an accommodation, and that the act of getting her to work was not their problem. As you can imagine, the court made mincemeat of this argument, essentially saying that changing someone’s work schedule is a reasonable accommodation.

Here’s the specific language of the ADA:

“The term ‘reasonable accommodation’ may include a) making existing facilities used by employees readily accessible to, and usable by, individuals with disabilities; and, b) job restructuring, part-time, or modified work schedules (emphasis added), reassignment to a vacant position, acquisition; or modification of equipment or devices; appropriate adjustments or modifications of examinations, training materials or policies; the provision of qualified readers or interpreters and other similar accommodations for individuals with disabilities.”

As a side note, the employee quit, claiming a “constructive discharge: because of the failure to accommodate.” Although the court agreed with her accommodation argument, it did not agree with her constructive discharge case because she made little effort to resolve the accommodation issue.

Remember this: A company must engage in accommodation unless it creates an “undue burden.” The courts have reminded us that this does not mean an inconvenience for the employer; it means an “undue burden’ – a standard that Rite Aid could not meet. When discussing the breakdown in the interactive process which led to the workers constructive discharge, the court reminded us that, “A party who fails to communicate, by way of initiation or response, may also be acting in bad faith. In essence, courts should attempt to isolate the cause of the breakdown and then assign responsibility … the last act in the interactive process is not always the cause of a breakdown … the court must examine the evidence as a whole to determine whether the evidence requires a finding that one party’s bad faith caused the breakdown.”

Lesson: Don’t forget about the ADA language set forth above. The effort to make these accommodations is an employer’s obligation unless it results in an undue burden. Don’t give up on the interactive process. Employers run into trouble when they pre-suppose that something would be an undue burden to the company. Our advice is that unless safety, security, or other critical issues are involved, you should let the employee attempt the accommodation and only then determine if it is an undue strain on the employer.

Beware of Classifying All Managers in All Locations as Exempt

In Arenas vs. El Torito Restaurants, a California appellate court ruled on the possibility of a class action lawsuit for the misclassification of all managers at the El Torito restaurants as exempt.

Although the court gave a lengthy analysis about the appropriateness of the class action case, for our purposes, what’s important was that it warned employers that just because managers might be exempt at one store they might not be exempt at another store. It depends on the circumstances.

At some El Torito restaurants, many of the managers also did work performed by the staff or busboys. In other larger, busier restaurants, they did less of this work. Employers should determine whether managers are exempt on a case-by-case basis unless there’s complete uniformity in operations.

The plaintiff’s complaint also lays out the laundry list of exposures employers face by misclassifying managers as exempt; violation of wage and overtime regulations, failure to furnish wage and hour statements, or not providing rest and meal periods.

Classifying Workers as Independent Contractors: Risky Business

JustMed v. Byce, a decision by the 9th Circuit Court of Appeals, involved whether Byce, a programmer, owned the source code of devices owned by JustMed.

The court ruled that, given the facts of the case, Byce was an employee rather than an independent contractor. If the court had decided that Byce were an independent contractor, he would own the rights to the source code because it was not contracted to be a work for hire. This is one of the risks of using the independent contractor label – something many early-growth employers do to avoid the burden of managing payroll and other functions.

Lesson: If you’re going to hire an independent contractor to work on a project that you want to own, make sure that the independent contractor agreement contains “work for hire” language in it. Otherwise, it’s safer to treat this person as an employee for payroll and other purposes, so that their employment status would make their contribution become a work for hire.

National Labor Relations Act Turns 75

Whether you love it or hate it, the NLRA created a worldwide watershed in industrial relations. They have put up an excellent website celebrating the historical event.

Speaking of the NLRB…

On July 1, 2010, the NLRB outlined its plan for considering two-member cases in wake of the Supreme Court’s New Process Steel ruling.

In response to numerous inquiries, the National Labor Relations Board outlined its plans for handling returned cases following the Supreme Court’s recent decision in New Process Steel v. NLRB that the Board no power to decide cases when three of its five seats were vacant. [Editor’s note: This decision gave the green light to the process of dismantling the Bush era pro-employer decisions.]

During a 27-month period that ended with the recess appointments of two members last March, the Board operated with two members: Current Chairman Wilma Liebman and former Chairman and Board Member Peter Schaumber. They decided nearly 600 cases on which they could agree, while those remaining were held for additional Board members.

At the time of the June 17 Supreme Court decision, 96 of the two-member decisions were pending on appeal before the federal courts – six at the Supreme Court and 90 in various Courts of Appeals. The Board is seeking to have each of these cases remanded to the Board for further consideration.

Each of the remanded cases will be considered by a three-member panel of the Board, which will include Chairman Liebman and Board Member Schaumber. Consistent with Board practice, the two other Board members not on the panel will have the opportunity to participate in the case if they so desire.

It’s unclear at this time how many of the two-member Board rulings not already challenged in the federal appellate courts can or will be contested and how many may now be moot.

For the first time since December 2007, the Board is now at full strength, with the addition of Member Brian Hayes, who was sworn in on June 30. Last week, the Senate confirmed Mr. Hayes and Board Member Mark Pearce. Member Pearce originally received a recess appointment to the Board from President Obama in March, along with Board Member Craig Becker.

The National Labor Relations Board is an independent federal agency vested with the power to safeguard employees’ rights to organize and to determine whether to have unions as their bargaining representative. The agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions.

Lesson: The NLRA passed, creating the NLRB, 75 years ago to protect employees due to manipulative and abusive employer practices. Like it or not, the Bush administration was the most employer friendly in 30 years; In effect they purposely paralyzed the NLRB by not adding new appointments. Now the pendulum is swinging back. If you’re an HR That Works Member, we encourage you to watch the Webinar “Union Organizing and the New National Labor Relations Board: What You Need to Know to Be Prepared.”

Good Ol’ Boys Can’t Have It Their Way

In Merritt vs. Old Dominion Freight Line, the plaintiff claimed that the company discriminated by refusing to make her a short-haul truck driver. She argued that she was denied positions twice, when she was more qualified than the males who were hired. Then after suffering an injury on the job, she claimed the company used this injury as an excuse to terminate her as being “unfit for duty.”

Unfortunately for Old Dominion, the plaintiff’s (male) manager had made frequent statements such as “This is no place for a woman”. Eventually the manager, who had already made it known that he didn’t like women driving trucks, fired her when she failed the fit-for-duty exam which was used primarily for pre-hire physicals. Not only was the exam far too broad in scope for her injury, the company did not give it to many of the men who suffered similar injuries.

In discussing the return-to-work exam, the court stated:

“We begin by acknowledging that, if indeed, Old Dominion had such a policy (to conduct a full exam of all return-to-work employees) and faithfully abided by it, that fact would, as Old Dominion suggests, be a neutral and legitimate business practice. Old Dominion has understandable safety concerns, especially since its employees are responsible for driving large trucks and carrying heavy freight. A policy of the sort Old Dominion claims to have is sensible, because it helps prevent an injured employee from further aggravating an injury, thereby jeopardizing the eventual recovery; ensure that an employee’s job performance is not so impaired as to endanger public safety, diminish employee morale, or generate customer complaints; and limit Old Dominion’s workers compensation claims and tort liability. Moreover, it is not to say what policies a company should or should not adopt, if the policies it does adopt are gender-neutral.”

As the court stated, the problem with the policy lies not in theory but in practice.

Lesson: Whether it’s an all-male truck-driving environment or an all-female nursing environment, employers cannot create smokescreens in order to discriminate. In this case, there were no HR checks and balances on the manager’s decision to fire the plaintiff. It’s a good idea to have a policy, enforce it uniformly, and make sure someone else in the organization (preferably the HR department, if you have one) signs off on all termination decisions.

DOL Delivers on Promises to Help Workers

Several recent events prove that the U.S. Department of Labor (DOL) is set to deliver on its previous promises that it will go to great lengths to help workers, at the expense of employers.

As we’ve informed you in previous newsletters, the DOL has received significant funding for investigating employers who misclassify workers as independent contractors or as exempt from the overtime provisions of the Fair Labor Standards Act. A DOL news release issued April 22, 2010, indicated that the DOL has requested $12 million for this initiative in 2011 alone, and that the department is working closely on these initiatives with the Vice President’s Middle Class Task Force. In the news release, Secretary of Labor Hilda Solis vowed to “help middle-class families remain in the middle class.”

Just before this, in March 2010, the DOL announced its intent to stop a longstanding practice of issuing fact-specific opinion letters to employers. For nearly a decade, employers with questions regarding federal wage and hour laws could seek the department’s opinion on whether they were in compliance, which could serve as evidence of an employer’s good faith efforts if they were sued. Now, however, the DOL will only issue opinions that “set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision at issue. The DOL contends that this will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the facts could change the outcome.” This position is set forth on the DOL Web site at www.dol.gov/whd/opinion/opinion.htm. Of course, the net effect of this shift away from fact-specific opinion letters is even less guidance for employers than before.

The department made this announcement about the same time that it issued an opinion letter finding mortgage loan officers non-exempt (despite employers’ arguments that they were white-collar administrative employees in accordance with a prior DOL opinion letter issued during the Bush administration, which found such employees exempt).

Also, in May 2010, Secretary Solis signed a Workers’ Rights Joint Declaration along with Ambassador Sarukhan of Mexico, committing to “inform Mexican workers in the United States about their labor rights through information sharing, outreach, education, training, and exchange of best practices.” This declaration will clearly lead to more complaints, investigations, penalties, and the use of employer resources.

Lesson: Collectively, these actions amply demonstrate that the current DOL is preparing (if it has not already begun) to get tough on employers. Consequently, you should redouble your efforts to classify workers properly and make sure that your pay practices comply fully with the law.

Article courtesy of Work law® Network firm Pilchak Cohen & Tice (www.mi-worklaw.com).

Discovering Problems While Employees are on Leave

In responding to HR That Works Hotline calls over the years, one of the greatest concerns employers express involves handling the situation in which a worker is on leave when the employer discovers their inefficiencies, wrongful conduct, etc. The employers worry about the employee’s argument that any discipline or termination alleging these deficiencies is really masking retaliation for being on ADA, FMLA, or other types of leave.

In Schaaf vs. Smith Kline Beecham the United States District Court in Georgia ruled that the plaintiff’s management style, as well as deficiencies discovered in her absence, led to her being demoted from regional vice president to a district sales manager while on maternity leave. In a novel argument, the plaintiff’s claim went like this: (1) Smith Kline Beecham (SKB) learned of her shortcomings while she was on leave, and (2) the company would not have discovered these derelictions had she not taken leave. Thus, taking leave caused her demotion! In dismissing such nonsense, the court reminded the plaintiff that, “The fact that the leave permitted the employer to discover the problems cannot logically be a bar to the employer’s ability to fire the deficient employee.” Even though the FMLA leave allowed the employer to uncover prior deficiencies does not mean that the termination was because of the FMLA leave. Most telling in this situation is that the plaintiff had very little evidence to prove the motivation of the employer was discriminatory, other than her demotion while on maternity leave.

Lesson: Employers can easily fall into a trap when they discover deficiencies while employees are on leave. If you choose to discipline or terminate the employee because of these deficiencies, you might well face a claim of retaliation – unless you can prove your argument about their deficiencies to a judge or jury.

Form of the Month

Two Kinds of HR (PDF)

Which kind are you? Use this form as a “head check” on how you view yourself in the HR role. This holds true for full-time practitioners, as well as for the folks wearing three hats. Even if you do HR part time, your goal should be to do it well.

(HR That Works Users can access this form in Word format by logging on to the site).

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