Employees First

Dave Berkus is an accomplished speaker, author and angel investor.  He provides common sense advice to all businesses through his blog, Berkonomics.

His recent post deals with the frustrations of business owners who perceive that government regulations always favor employees.  His advice?  Recognize the realities of the times.

He's right!

Workplace Litigation Trends Report

This is the 7th year that Fulbright & Jaworski has surveyed senior corporate counsel regarding litigation.  I'm focusing on the responses that affect businesses - and selecting those answers.  The results are illuminating!

In which area is there the most litigation pending in the U.S.?

Contacts: 53%
Labor & Employment: 49%
Personal Injury: 27%
(participants could pick more than one type)

In which area has there been the greatest increase in multi-plaintiff cases whether they be class, collective action, or significant multiple plaintiff action?
Wage & Hour: 46%
Labor Union: 13%
Age: 11%
ERISA: 10%


[What types of cases] will see the greatest increase in 2011?
Discrimination: 39%
Wage & Hour:35%
Labor Union: 17%

ERISA: 5%

Firing an "At-Will" Employee

Gina Madsen is one of the really bright small business attorneys in Nevada.  She recently asked me to write an article on a 'real-life' situation - and I chose the concept of firing an at-will employee.

Even though most states abide by at-will concepts (you can fire an employee at any time for any reason - other than a few exceptions), there are many compliance and management principles that should be followed.

Here's the blog on her great website - http://www.madsenlawoffice.com/

Overtime Gets A Little More Complicated in California

An employee makes a false claim for overtime. He says it's a mistake, but you believe otherwise, so you fire him.

That's OK, right?

Uh..not so fast. A new court decision, Barbosa v. Impco Technologies, makes that a wrongful termination.

Here's the recap and implications from Christopher W. Olmsted of Barker Olmsted & Barnier.

California Alternative Workweek Schedules

One of the best ways of improving morale without costs is to consider Alternative Workweek schedules.  Up until January 1, it has been most difficult to implement.  However, California law regarding alternative workweek schedules have been eased somewhat as a result of AB 5.

Alternative workweek schedules allow non-exempt employees in a “work unit” to work in excess of 8 hours per day without incurring overtime. (California law includes a daily overtime requirement.) Generally, an employer may propose AWS work schedules of up to ten hours per day (12 for healthcare workers). Hours in excess of 10 per day, or 40 per week are overtime. Typically employers propose schedules consisting of four ten hour days or a “9/80” schedule. Special procedures describe advance disclosure and a secret ballot election prior to implementation of the AWS.

The AWS can apply to a “work unit” within a company, rather than to all employees. Previously, the Labor Code did not define “work unit,” although state regulations included a definition. The new law defines a work unit as “a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof.” The amendment also clarifies that even a single employee may qualify as a work unit as long as his job function meets the definition.

In setting up an AWS, an employer may propose a single work schedule, or it may propose a menu of work schedule options for workers to select. Can the “menu” include a traditional 5 day week for those employees who do not want to work longer days? The amended law clarifies that the menu options may indeed include a regular schedule of five eight-hour days in a workweek. Consequently, employees who do not wish to work an AWS schedule may still vote in favor of the AWS by choosing to work the regular 8 hour day. This change greatly increases the odds of achieving the 2/3 employee supporting vote need to implement an AWS.

Additionally, the new law specifies how often employees may move from one schedule option to another on the menu. For example, if an employee opts to work four 10 hour days, how frequently can he opt to go back to regular 8 hour days? As amended, Labor Code § 511 allows employees to move from one schedule option to another on a weekly basis.

Independent Contractor or Employee? Better Be Sure, And Fast!

Many employers incorrectly classify an employee as an independent contractor.  Some employers do it intentionally (to avoid workers' compensation and payroll taxes); but most are unaware of what the difference in classification actually is.

If you use Independent Contractors (also known as 1099's), you better audit all of them at once.  The IRS is about to launch comprehensive audits of 6,000 businesses.  The focus is - you guessed it - properly classifying employees.

Please take a moment to review the criteria the IRS uses to determine whether a person should be classified as an employee or Independent Contractor.  It's about control.  I've had clients insist a person is classified as a 1099 simply because that person requested classification that way! (That's wrong as well, by the way).

Get a qualified consultant or employment attorney to audit your practices and procedures as soon as possible.

Courtesy Baker Hostetler

Managing Social Media in the Workplace

The impact of social media in the workplace is growing.  Time is being wasted, employees are 'friending' each other and liability for these issues is a litigation attorney's dream come true.

RSJ/Swenson has prepared a special report on Managing Social Media in the Workplace, based on Eric Swenson's recent presentation at the CalCPA Employment Practices Conference.  You can download the report here.

And bosses & managers: Don't "friend" your employees!

Managing Swine Flu in the Workplace

RSJ/Swenson has prepared a special report on managing swine flu in the workplace.

Click here to receive your free copy.

Nevada Wage & Hour Lawsuits

We've been warning employers for several months that wage & hour compliance issues will result in numerous lawsuits this year - especially in Nevada.

It's starting to happen.

Wells Fargo & AutoZone have been sued (class-action status is currently pending) for mis-classifying employees.

With Wells Fargo, business banking specialists were allegedly mis-classified as exempt (from overtime, meal and rest breaks) when they were required to be 'on-call' on certain evenings.

In AutoZone's case, Assistant Managers were not compensated for working overtime (this is a case very reminiscent of the Long's Drugstore case in 2004).

The federal government is taking Wage & Hour violations seriously: Labor Secretary Hilda Solis recently announced plans to add 250 field investigators, increasing staff by 33%. The DOL believes 7 out of 10 businesses are not in compliance with Wage & Hour laws.

Garry Mathiason of Littler recently wrote:

No employment-law trend is more certain, universal or important than the total wage-and-hour compliance initiative and stopping the epidemic of wage-and-hour class-action (lawsuits)...

More ominous and prescient are these words from Mathiason (and, I believe, completely true):

With thousands of plaintiffs' attorneys examining every aspect of the payroll process, employers must expect maximum scrutiny..."Every employee who is terminated or demoted, or who experiences an unpleasant workplace event, is encouraged by Internet and television advertising to seek the advice of counsel. In almost every intake interview, the attorney's questioning turns to wage-and-hour issues in an attempt to find additional claims. Inspired by the prospect of turning a small individual claim into a multimillion-dollar class-action, the organization's wage-and-hour compliance goes under the microscope."

Thanks to Las Vegas Sun.

Krispy Kreme Fined for hiring illegal workers

If Krispy Kreme didn't have enough problems already - here comes news they've been fined by the EEOC for hiring illegal (undocumented) workers in their Cincinnati factory. The fine amounts to $40,000.

What is remarkable about this fine is how easily it could have been prevented. The paperwork is easy - you just download an I-9 form off the internet. If there is any doubt about the documentation a candidate provides, just login to e-verify that's provided by the Department of Homeland Security. That would have been much cheaper than $40,000 and the embarassment caused by the resulting publicity.

And in case you think it might not happen to you - ICE has announced audits of 652 other businesses in the coming months (and we're sure there are more to follow!). The Obama administration has changed the focus from illegal employees to the employers that employ them.

References, Linkedin, and Common Sense

Just after posting my opinion on job references comes more comments. In a recent Wall Street Journal article, a job applicant was frustrated because potential employers wanted a minimum of three job references, but her prior employers had a policy of not providing such references.

Elizabeth Garone provided good advice, suggesting that supervisors no longer with the same company might be willing to be references (and because they're no longer with the company, may be more willing to talk to a prospective employer).

Again, if I'm leaning towards hiring a candidate, I'm not going to spend time calling references - more often than not, the reference can't give me any good information and the candidate is only going to list references that show that person in the best possible light! It's not worth my time! I can do criminal investigations, skills testing and personality/instinct testing that will more properly predict success than a reference check.

Now, many attornies are warning employers about the hidden dangers of LinkedIn. Specifically, attorneys are advising employers to be wary of giving glowing remarks about employees on the site because the employers risk having the recommendations used against them in a discrimination or harassment suit.

Do References Matter?

You're about to make a job offer to a candidate. Should you call his or her references?

Some people say yes, others say no. I'm in the latter category.

First, unless the candidate is a complete moron, they're not going to give you names of people who provide a negative reference. And most previous employers are understandably nervous about providing any information on a former employee.

Some of our clients like to verify the candidates dates of employment or compensation. Fine - ask the candidate for a copy of their most recent W-2 form or paycheck stub. Other than that, calling references is a lot of time for a very little reward.

Following standard procedures, you can require a background check, drug testing or even skills testing to verify information and make sure the candidate is you he/she says they are.

Here's an article in the South Jersey Courier Post that talks about the reference controversy. However, I seriously disagree with parts of the article that suggest visiting a candidates social networking sites as a pre-hire investigation. As I wrote back in May, using google and social networking sites to evaluate potential candidates is a really bad idea.

What does calling references accomplish?

Nevada Expands Parental Leave Requirements

Effective August 15, Nevada has expanded its parental leave entitlements for employees who wish to attend or participate in school activities of their children.

AB 243 allows parents, guardians and custodians of children in private or public schools up to 4 hours of unpaid leave per school year for each child.

The law requires employers who have 50 or more employees to grant that unpaid leave.

More detailed information from Rick Roskelley of Littler Mendelson.

Can You Prevent Employees From Leaving?

We live in a free society, and all businesses (except Montana and limited other exceptions) must abide by the 'at-will' employment concept - employees can leave at any time for any reason.

Many employers ask us what they can do from preventing valued or critical employees from leaving (and taking their clients or proprietary information with them). The answer is - not much, unless you have a really good employment attorney.

Let's review the basic components (adapted from a terrific article by Joseph Shelton of Fisher & Phillips LLP)

Non-Compete Agreements

A non-compete provision prohibits a departing employee from competing with the former employer after termination. Most states highly restrict their use.

Non-solicitation

Non-solicitation provisions allow an employee to work for a competitive business, but prohibit the solicitation of specific customers. The employee is free to compete and is free to work in whatever territory he or she desires, so long as the employee does not solicit business from a specific group of customers.

Non-recruitment

A non-recruitment (or no-raid) clause is designed to protect your employees from being hired away by former employees. Non-recruitment covenants restrict departing employees from trying to take others with them.

Non-disclosure

A confidentiality (or non-disclosure) provision usually limits the employee's ability to disclose information learned about customers, suppliers, or the employer's operations. While non-disclosure agreements often include the term "trade secrets," most states have a trade-secrets statute that prohibits misappropriation of such information even without a contract.

Return of property

A return of property agreement typically states that the employee must return all company property and all documents related to the company upon termination of employment. While all employers expect their employees to return company property upon termination of employment, there is oftentimes a dispute as to what is company property and what is the employee's property.

For example, many employees may claim that their rolodex or list of business prospects is their "property," despite the fact that such information was assembled on company time and with company resources. A return of property agreement may help an employer avoid such disputes by defining via contract what the company considers to be its property rather than the employee's.

Bottom Line: These agreements are highly legal in nature and should only be implemented with the input and agreement from a qualified employment attorney.

California Labor Complaints - 2008

The California Department of Fair Employment & Housing released its statistics for 2008 last month, and there are some ominous signs that all employers should know:

1. Complaints to the DFEH increased by more than 15% in 2008 (3,000 more complaints);
2. Disability claims were most frequently filed, followed by retaliation, sexual harassment and age discrimination;
3. In fact, disability claims comprised more than 36% of all claims;
4. Prosecutions of employers increased by 28 percent.

California also has a disproportionate ratio of total employee complaints - one out of every 5 complaints in the country is from California.

Time to get your house in order!

And a good analysis of these statistics is found from Christopher Olmstead of Barker Olmsted & Barnier.

English Only In The Workplace? Bad Idea

It's very tempting for employers to mandate their employees speak only English during working hours.

It's also - in most cases - very wrong.

The EEOC provides some examples where English-only would be justified by business necessity:

• For communications with customers, co-workers, or supervisors who only speak English.
  
  
  
• In emergencies or other situations in which workers must speak a common language to promote safety.
  
  
  
• For cooperative work assignments in which the English-only rule is needed to promote efficiency.
  
  
  
• To enable a supervisor who only speaks English to monitor the performance of an employee whose job duties require communication with co-workers or customers.

If you wish to mandate an English-only workplace, we strongly suggest you review the policy with an employment attorney prior to implementation.

It's not worth it!

Employers & Body Art

We've previously discussed the growing number of employees (mostly under the age of 30) who have body art. What can you as an employer do about it?

Recently, a Texas hospital wanted to develop dress code and grooming policy for all employees. The proposed policy required all tattoos to be covered, and piercings to be limited to earlobes and a nose stud only.

The proposed changes sparked vigorous debates among employees and even press coverage. It's a sensitive subject!

Even employers that permit piercings or tattoos should set limits. A detailed dress code and grooming policy should clearly spell out what is permitted.

If you permit tattoos, for example, you should prohibit the display of sexually graphic, violent, or otherwise offensive tattoos, or require employees limit the number of visible tattoos.

Traditional dress code and appearance standards are being challenged today more than ever. Employers still retain wide latitude, but the increase in body art is mandating more careful consideration of requests.

Seek employee input before making major changes to employee appearance standards.

When At-Will Works

At-will employment - the concept that employer or employee may terminate their relationship at any time, for any reason - is subject to so many exceptions that people frequently despair. Depending on the state, at-will can be exempted for such things as violations of public policy, discrimination, or a 'contracted' employee.

Montana is the only state that does not follow the at-will doctrine for general employment. However, an employee in Montana who is still within the company-determined probationary period (or, if the company does not have a probationary period, the first six months of employment) can still be termed under what is essentially an at-will relationship.

HOWEVER - there's good news. Done properly, at-will can benefit the employer. The most important thing is to mention at-will every time (or at least most times) an employee or job candidate signs a document.

Case in point - Radio Shack. A former employee alleged that Radio Shack terminated her for medical reasons. But the employee:

• First, expressly agreed with the terms of her “Preliminary Online Application” that, if employed by the Company, she would be employed at-will. The document also provided that if she was hired, her at-will employment could only be modified by a separate written document signed by the employee and an executive officer of the Company.
• Second, in her formal “Application for At-Will Employment,” the plaintiff again agreed to these same terms.
• Third, in acknowledging receipt of her “Team Answer Book,” the plaintiff signed a form confirming her at-will employment status with the Company.
• Moreover, there was also evidence of a personnel record noting the plaintiff had taken a leave of absence, which stated that “The below named person is an AT-WILL employee and no information on this form shall change the employment status.”

That's a lot of documentation to support the at-will concept. And a good reminder with what to do is here, from McGuire Woods LLP.

Ways To Improve Morale

In the down economy, with layoffs all over the place, its critical for management to take steps to maintain and improve morale of their existing employees. After all, you need your existing employees to do more now that there are fewer people to do the work.

How do you increase morale when budgets are so tight?

The key is constant, frequent, and candid communication with employees. They deserve to know what's going on and what you're doing about this frightening economy.

An excellent summation (including, thankfully, the call for transparency and communication) is found in this Wall Street Journal post about a case study at a company in Boston - Greenough Communications.

Wage & Hour Issues Dominating Employment Laws

One of the management trends we previously identified for 2009 is the additional assault of wage & hour claims by employees.

It is clear that - in a down economy - terminated employees employment elsewhere (at least not quickly). With time on their hands, those former employees are talking to their friends and attorneys about the 'abuse' they had working for their former employer - you.

In the meantime, attorneys LOVE wage & hour claims. They are relatively easy to prove, are frequently not understood by employers, and the opportunity for a class action is available.

So - what do you do?

First, audit your operations.

Second, read this article by John Skousen of Fisher & Phillips - some excellent practical advice for all employers.