Category Archives: Employment Counseling

November 30, 2015

Unlimited Vacation Policy: Is It Right For Your Company?

By Mark Wiletsky and Emily Hobbs-Wright

Paid vacation time is a perk that can attract and retain the best and brightest employees. It can also impact your balance sheet, as earned but unused vacation days remain a liability until used or paid out. A small, but growing number of companies are trying a new approach, offering unlimited vacation to certain segments of their workforce. Netflix, Best Buy, Virgin America, LinkedIn, General Electric, and others have adopted unlimited vacation policies, or “discretionary time off (DTO),” as it is sometimes called.

Colorado employers, along with organizations in other states, may be wondering whether to scrap existing paid time off or vacation policies and replace them with unlimited vacation. That is especially true given the recent—and sometimes conflicting—information from the Colorado Department of Labor and Employment concerning “use-it-or-lose-it” policies. To help you decide whether unlimited vacation policies are right for your organization, we’ll highlight the pros and cons. But first, some background.

Legal Implications For Vacation Pay

Generally, employers are not required by law to provide paid vacation time to employees. If you choose to provide paid time off for vacation purposes, you get to decide what your vacation policy will be. This includes specifying how much paid vacation you’ll provide, any eligibility requirements, which categories of employees are entitled to it, when it accrues or is “earned,” in what increments it may be taken, the request and approval procedures, whether it carries over from year to year, and other vacation procedures.

That said, state laws will factor into the implementation of your vacation policy. For example, many states classify accrued vacation as compensation or wages and will specify that earned vacation pay may not be forfeited. Such provisions mean that unused, earned vacation must be paid out upon separation of employment. These state laws also can prohibit “use-it-or-lose-it” vacation policies where an employee who fails to use his or her accrued vacation time within a specified time frame loses the accrual of paid time.

By way of example, Colorado wage law states that vacation pay earned in accordance with the terms of any agreement is considered “wages” or “compensation.” Colorado employers who provide paid vacation to employees must pay all vacation “earned and determinable” upon separation of employment. Although the Colorado Department of Labor and Employment recently indicated that a “use-it-or-lose-it” vacation policy is permissible, the Department also noted that such a policy may not operate to deprive an employee of earned vacation time. The Department will look to the terms of the agreement between the employer and employee to determine when vacation pay is “earned.”

Pros – Why Unlimited Vacation May Make Sense

Some organizations have implemented a single paid time off (PTO) policy, allowing employees to accrue a set amount of paid time off to be used for virtually any purpose, such as vacation, sick time, attending kid’s school events, going to appointments, etc. Getting away from traditional (and separate) vacation and sick time policies is believed to offer employees more flexibility while cutting down on administrative headaches for employers. Unlimited vacation, or DTO, goes even further. Here are the potential benefits of an unlimited vacation policy:

More Flexible Work Schedules – employees can take advantage of more flexibility to manage their work and personal time; often a great recruiting and retention tool
Avoid Keeping Accrued Vacation On Your Books – in many states, because vacation time is no longer “earned,” you arguably will no longer need to pay out any unused vacation time upon separation of employment, effectively eliminating the liability of carrying accrued vacation time on your balance sheet
No Cost/Little Cost Perk – if employees take about the same amount of time off under an unlimited vacation policy as under a traditional accrued vacation and sick time policy, employers do not experience any additional cost for the program; as long as the perk is not abused, there may be little financial cost to the company
Increased Productivity – reports suggest that employees become more efficient and productive while at work in order to ensure that they suffer no ramifications when utilizing their time off under the unlimited vacation policy
Morale Booster – trusting that employees can properly manage their time on and off the job can build morale and loyalty; it can shift the focus from putting in hours to getting results
Streamlining of Record Keeping Practices – by eliminating the need to track vacation accruals and usage, you may cut down on the administrative headaches associating with a traditional vacation policy

Cons – Why Unlimited Vacation May Not Work

An unlimited vacation policy may not be appropriate for all organizations. Depending on the nature of your business and the make-up of your workforce, you may determine that the following risks negate any good that could come from an unlimited vacation policy:

Perception That Unlimited Vacation Means No Vacation – some employees may feel that taking away a specific accrual for vacation means that they’ve lost an important perk, especially if they believe that the company or their supervisor will not truly allow them time off when they want it
Additional Cost If Abused – if overall time off exceeds previous accrual amounts, and that additional time off is not offset by increased productivity, the perk may cost you more and be less predictable than an accrual-based vacation policy
Less Black and White – whether an employee is “abusing” unlimited vacation can be rather subjective; one employee may produce excellent work product while taking six weeks off per year while another employee fails to meet expected output taking only three weeks of vacation; as a result, supervisors may struggle with how to handle discipline and performance issues and create a perception of unfair or, even worse, discriminatory treatment
Not Tested, So Liabilities Unknown – it is unclear how state agencies and courts will handle potential wage claims based on an unlimited vacation policy
Scheduling Uncertainties – it can be difficult to cover shifts, schedule projects and meet production deadlines when employees have greater flexibility to use unlimited time off
Pay Issues For Non-Exempt Workers – an unlimited vacation policy would be difficult to apply to non-exempt hourly employees (e., employees who are eligible for overtime pay) as you need to track all hours worked and ensure that you pay minimum wage and an overtime premium according to applicable state and federal law

Bottom Line: Use Caution

If your workforce utilizes exempt employees (i.e., employees who are not eligible for overtime) who have a great deal of autonomy, such as in technology and creative fields, an unlimited vacation policy may attract and incentivize your employees. If you employ mostly non-exempt hourly workers, have a lot of turnover, or need more predictability in covering shifts and positions, an unlimited vacation policy may not work for you. Your best bet is to compare the pros and cons with the nature of your business to evaluate whether this new type of employee perk is appropriate for your organization. If in doubt, it’s always a good idea to consult with your employment counsel.

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September 15, 2015

Wyoming Discrimination Charges: A Look at the Numbers

By Brad Cave

Mark Twain is credited with saying that “facts are stubborn things, but statistics are more pliable.” The Wyoming Labor Standards Division and the EEOC both keep statistics of the types of discrimination charges the agencies receive from Wyoming employees. When it comes to discrimination charges, the allegations are almost always pliable, but the statistics show us some interesting things for employers to ponder.

Wyoming Labor Standards Charges

The Wyoming Fair Employment Practices Act makes it unlawful for employers to discriminate on the basis of age, sex, race, creed, color, national origin, ancestry, pregnancy or disability. The Wyoming Department of Workforce Services’ Labor Standards Division is the state agency that processes and investigates most complaints of employment discrimination filed by Wyoming workers.

In 2014, the Wyoming Labor Standards Division received a total of 203 discrimination charges. It processed 182 of those charges and deferred the remaining 21 charges to the federal Equal Employment Opportunity Commission (EEOC) because they were either untimely under state law or contained allegations of Equal Pay Act violations. The Division reports the breakdown of 2014 charges by allegation as follows:

Type	No. of Charges	Percentage of Total Charges
Retaliation	76	41.8%
Sex	55	31.2%
Disability	46	25.3%
Age	33	18.1%
National Origin	27	14.8%
Race	21	11.5%
Religion	7	3.8%

You math wizzes in the audience have already exclaimed that the percentages exceed 100%, and the author must be numerically challenged. But, many charges include allegations of multiple types of discrimination. Indeed, charges often include an allegation of discrimination on the basis of protected class, and an allegation of retaliation in response to complaints about the discrimination. As you can see, Wyoming had more retaliation charges than any other type of charge. That mirrors the nationwide statistics where retaliation charges lead the list of most-filed charges. Not far behind are sex discrimination charges, with disability charges as the third most-frequently filed.

EEOC Charge Statistics for Wyoming Charges

The EEOC also maintains charge statistics for each type of discrimination that is alleged under the federal discrimination laws that it enforces, and annually publishes those statistics on a state-by-state basis.The EEOC count includes charges under Title VII, which prohibits discrimination on the basis of sex, race, color, religion and national origin, as well as charges under other federal discrimination laws such as the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Genetic Information Nondiscrimination Act.

The EEOC’s most recent data for fiscal year 2014 (Oct. 1, 2013 through Sept. 30, 2014) shows that the federal discrimination charges for Wyoming received by that agency track the Labor Standards Division’s statistics, with retaliation charges leading the list. With a total of 69 discrimination charges filed with the EEOC by Wyoming workers in FY2014, here are the numbers by type:

Type	No. of Charges	Percentage of Total Charges
Retaliation	30	43.5%
Sex	29	42%
Disability	25	36.2%
Age	20	29%
Race	14	20.3%
National Origin	6	8.7%
Color	4	5.8%
Equal Pay Act	3	4.3%
Religion	2	2.9%

Wyoming employers received significantly more sex discrimination charges in 2014 than compared to 2013. The percentage of sex discrimination charges filed with the EEOC went up from 29.2% in FY 2013 to 42% in FY2014. Retaliation charges topped the list in both FY2013 and FY2014. The full list of EEOC charge receipts for Wyoming for the last five years may be viewed on the EEOC’s website at http://www1.eeoc.gov/eeoc/statistics/enforcement/charges_by_state.cfm#centercol.

Lessons Learned

The charge statistics from the Wyoming Labor Standards Office and the EEOC reflect discrimination complaints filed by applicants and employees, not cases in which discrimination was determined to exist. Even so, the charge numbers for Wyoming suggest a number of action items for employers who want to avoid being included in next year’s statistics.

First, retaliation gets a lot less attention from employers than it should, as these numbers show. Whenever an employee complains about something at work that implicates a statutory right, like the right to be free from discrimination or harassment, or requests an accommodation or FMLA leave, the employee has engaged in protected activity. Most discrimination laws prohibit adverse actions because an employee has engaged in protected activity. And, it makes little difference whether the employee’s underlying complaint or request was valid – the employee is still protected against retaliation.

Employers need a strong, stand-alone anti-retaliation policy, not just a couple of sentences at the end of the policy prohibiting discrimination. Employers also need to train supervisors and managers about the significance of employee complaints, and how the law protects employees. And careful consideration should be given to any adverse employment action for an employee who has opposed discrimination in the workplace, been interviewed as part of an investigation, or participated in a discrimination proceeding.

Second, the prevalence of sex discrimination charges, which includes harassment charges, suggests that employers should review and update their discrimination and harassment policies, and continue periodic harassment prevention training. A strong harassment prevention policy, with understandable definitions and examples and multiple reporting options, is usually the best defense against a charge of sexual harassment. Of course, any observed or reported harassment must be investigated and any behavior which violates your policies must be stopped.

Finally, adopt a policy that guides employees who wish to request an accommodation, and train supervisors how to recognize employee requests that could be interpreted as a request for accommodation. Once a request is made, follow a thorough interactive process to explore reasonable accommodations that do not place an undue burden on your organization but will allow the person to perform their job. Only when you are absolutely sure that no reasonable accommodation is available should you terminate a disabled employee.

These action items will go a long way toward keeping you from becoming a statistic!

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September 8, 2015

Colorado’s Parental Leave For Academic Activities Ended September 1

By Emily Hobbs-Wright

The school year is upon us and working parents will once again find themselves juggling job duties and school functions. The juggling may be a bit more difficult for some parents this year, as those that work for larger Colorado employers are no longer guaranteed time off to attend their kid’s school activities. As of September 1st, Colorado employers with 50 or more employees are no longer required by law to provide parents time off to attend academic activities for their school children. The Parental Involvement in K-12 Education Act (Academic Leave Act) automatically repealed on that date, relieving covered employers of providing that leave.

Colorado Senate Committee Shot Down Extension of Academic Leave Act

In effect since 2009, the Academic Leave Act required employers with 50 or more employees to provide its full-time employees up to 6 hours in any one-month period, and up to 18 hours per academic year, of unpaid leave from work to attend a child's academic activities. C.R.S. §8-13.3-101 et seq. Part-time workers were entitled to pro-rated leave based on the amount of hours worked. Covered academic activities included attending parent-teacher conferences, and meetings related to special education needs, truancy, dropout prevention and disciplinary concerns.

The 2009 law specified that it would repeal on September 1, 2015. This past legislative session, Representatives John Buckner and Rhonda Fields introduced a bill that sought to extend the Academic Leave Act indefinitely. House Bill 1221 also attempted to expand the law to:

include pre-school activities, rather than just K-12;
add more covered activities to include attending meetings with a school counselor and attending academic achievement ceremonies; and
require school districts and charter schools to post on their websites and include in their district/school-wide communications information to parents and the community at large about the leave requirement.

The bill passed the House and was sent to the Senate. The Senate committee to which it was assigned voted 3-2 to kill the bill. By doing so, the bill never got to a vote in the full Senate and died. The result is that the Academic Leave Act was not extended and the original repeal date of September 1, 2015 remains.

Action Items

With the repeal of the Academic Leave Act and no federal law mandating this type of leave, Colorado employers with more than 50 employees no longer need to offer parents of school-age children leave to attend covered school functions. You may, of course, choose to voluntarily continue to offer parents time off to attend their child’s school functions. If you do, decide whether you will continue to offer it under the same terms as was mandated by law or if you wish to set your own parameters about eligibility, amount of leave, notice requirements, whether documentation of the activity is required, etc. Then, update your policies and let employees know about any changes.

If you choose not to offer parents time off to attend their child’s academic activities, update your policies and procedures to delete that type of leave. Revise your employee handbook and any intranet policies to reflect that academic leave is no longer available. Inform supervisors and managers so that they know how to handle any requests or questions. Importantly, communicate to employees that the academic leave provision was repealed and let them know about any other time off policies, if any, that may apply to allow them to attend school functions.

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August 11, 2015

Misclassification of Independent Contractors Under Increased Scrutiny

By A. Dean Bennett

The Idaho Department of Labor is stepping up efforts to identify companies that misclassify employees as independent contractors. It recently signed a memorandum of understanding with the U.S. Department of Labor to work together to help prevent the misclassification of workers. In doing so, Idaho joins 23 other states who have signed similar agreements, including Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Rhode Island, Texas, Utah, Washington, Wisconsin and Wyoming.

Why Focus on Independent Contractor Status?

Federal and state labor agencies care whether workers are classified as employees rather than independent contractors because the classification can determine whether the individual is entitled to important workplace benefits and protections. Many employment laws, such as those governing minimum wage and overtime pay, meal and break periods, family and medical leave, workers’ compensation, unemployment compensation, employment taxes and anti-discrimination, apply only to employees, not independent contractors. Consequently, if an employee is misclassified as an independent contractor, he or she misses out on the protections and benefits provided by such laws.

Another reason cited by David Weil, Administrator of the U.S. Department of Labor Wage and Hour Division, is that employers who follow the law by properly classifying workers as employees often cannot compete on a level playing field with employers who misclassify their workers as independent contractors. Companies who misclassify workers often avoid the added costs of properly paying, insuring and withholding employment taxes for workers who should be treated as employees. According to the DOL, this lower cost of utilizing independent contractors may give non-compliant companies an unfair advantage in the marketplace. For these reasons, remedying misclassifications is at the forefront of the agencies’ enforcement efforts.

What’s At Stake For You?

Companies that misclassify employees as independent contractors face substantial liability. Ken Edmunds, Director of the Idaho Department of Labor, suggests that even though businesses often use independent contractors because they think it will save them money, in the end, misclassifications can cost them “a whole lot more,” with the potential for severe monetary fines and even criminal charges.

The Internal Revenue Service (IRS) and state tax entities will pursue back taxes with interest based on the employer’s failure to withhold income taxes and make FICA contributions. Employers also remain liable for unemployment taxes related to the misclassified workers. In addition to the back taxes, employers may face criminal and civil penalties.

Employers also face wage claims for unpaid overtime pay that would have been due to the worker if properly treated as an employee. If the misclassified individual was denied leave under the FMLA or participation in a group benefit plan, the employer may face claims under those respective laws. Failure to complete I-9 forms or other employment eligibility requirements may result in additional liability. In short, you may become liable for failing to comply with or offer any benefit or protection that was denied to the individual because of the misclassification.

What Should You Do?

If your company uses independent contractors in your workforce, take steps now to audit whether those workers meet the tests for independent contractor status. Remember, you do not escape liability if the individual asks or agrees to be treated as an independent contractor. You must analyze whether the individual meets the requirements for that classification.

Although numerous factors go into determining whether a worker is an independent contractor, the Idaho Department of Labor lists two criteria that must be met:

The worker must be free from the right of direction or control in performing work, both under a contract of service and in fact; and
The worker must be engaged in an independently established trade, occupation, profession or business.

A fact sheet titled “Independent Contractor or Employee?” provides additional detail to help you determine the proper classification of workers and is available on the Idaho Department of Labor’s website. A similar fact sheet on Employment Relationships Under the Fair Labor Standards Act (FLSA) is available from the U.S. Department of Labor, Wage and Hour Division.

With both the federal and state labor departments stepping up efforts to audit companies to discover employee misclassifications, taking steps now to avoid the associated liability is warranted. It also will help your organization avoid costly lawsuits filed by independent contractors who missed out on overtime pay and other employee benefits.

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July 15, 2015

Independent Contractors: New DOL Interpretation Focuses on Economic Dependence of Workers

By Brad Cave

If you hire workers as independent contractors, you need to review that status with fresh eyes in light of a new Administrator’s Interpretation issued by the U.S. Department of Labor (DOL). In his July 15th Interpretation, Wage and Hour Division Administrator David Weil stresses that most workers are employees under the Fair Labor Standards Act (FLSA), not independent contractors. Multiple factors still come into play when determining independent contractor status but the DOL ultimately will look to whether the worker runs his or her own independent business or instead, is economically dependent on the employer.

Broad “Suffer or Permit to Work” Standard

The FLSA defines “employ” as “to suffer or permit to work.” According to Administrator Weil, this broad definition will encompass most workers. He notes that the definition had roots in state child labor laws which sought to ferret out employers who used children as laborers illegally.

He also cites Supreme Court and federal court cases that state that the “suffer or permit to work” standard has broad applicability and extends to the farthest reaches in order to achieve the goals of protecting workers under the FLSA.

Economic Realities Test

Noting that courts have developed a multi-factor “economic realities” test to determine whether a worker is an employee or an independent contractor, the Administrator’s Interpretation goes through each factor, providing examples and cases that help in the analysis. While the factors haven’t really changed, here are some important distinctions made in this Interpretation:

A contract setting forth an independent contractor relationship “is not relevant” in determining whether the worker is properly classified as an independent contractor; the actual working relationship is what matters, not the label given to it by the parties.
The individual’s opportunity to make a profit or realize a loss on the job must include whether the individual’s managerial skills result in that profit or loss; in other words, a worker’s willingness or ability to work more hours or work more efficiently is not enough to suggest independent contractor status, instead the individual must be making managerial decisions about hiring assistants, purchasing materials, advertising, etc., in order to support independent contractor status.
The worker’s investment in tools, equipment and doing the job must be compared to the employer’s investment; a worker who provides a few essential tools to do the job may not be enough to contribute toward independent contractor status; instead, the worker’s investment must be significant, particularly when compared to the entity’s investment in the job.
Being highly skilled in a particular type of work is not sufficient in suggesting independent contractor status as many employees are highly skilled in the services they provide to their employer; instead, an independent contractor must include “business-like initiative.”
The degree to which the entity controls the work of the individual should not play an oversized role in the analysis; many workers today are not under constant supervision of their employers but that lower degree of monitoring and control does not make them independent contractors.

The Administrator’s Interpretation establishes that no single factor in the economic realities test is determinative and each factor should be analyzed in terms of whether the worker is economically dependent on the employing entity or is truly in business for him- or herself.

Time to Review Your Independent Contractor Classifications

The DOL has made misclassification of employees a high priority for the past few years and with this Administrator’s Interpretation, it is signaling its intent to crack down even further on businesses who classify workers as independent contractors. We suggest that you review the Interpretation, study the examples and then audit your independent contractor relationships to determine whether your classifications will pass DOL scrutiny. In difficult cases, consult with your employment counsel for guidance. Conducting the review yourself and making any necessary changes will go a long way in avoiding headaches and potential liability should the DOL appear at your door for an audit. And, keep in mind that this Interpretation does not carry the force of law. The Administrator’s view will undoubtedly be challenged in court as the DOL ramps up its aggressive posture.

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June 26, 2015

Same-Sex Marriage Equality: What Employers Need to Know After Obergefell

By Sarah Wisor

Same-sex couples have a Constitutional right to marry and have their marriages recognized nationwide. In a 5-to-4 decision, the U.S. Supreme Court concluded that states are required to license a marriage between two people of the same sex under the Fourteenth Amendment. Obergefell v. Hodges, 576 U.S. ___ (2015). As a result, same-sex couples may now legally marry in all states. This ruling has massive implications, as rights and benefits extended to opposite-sex spouses will be available to same-sex spouses across the United States.

Marriage Equality Prevails

In an opinion authored by Justice Kennedy, the Court recognized that same-sex couples were not seeking to devalue the institution of marriage, but instead sought for themselves the respect, rights, and responsibilities that accompany a legal marriage. The Court held that under both the Due Process and the Equal Protection Clauses of the Fourteenth Amendment, same-sex couples have the fundamental right to marry.

The Due Process Clause provides that no state shall “deprive any person of life, liberty, or property, without due process of law.” The Court determined that same-sex couples may exercise the right to marry under this Clause for four reasons:

the right to make the personal choice of who to marry is inherent in the right of individual autonomy; choices concerning family relationships, whether to have children, and whether to use contraception are protected intimate decisions that extend to all persons, regardless of sexual orientation;
the right of couples to commit themselves to each other and enjoy intimate association extends to same-sex couples just as it does to opposite-sex couples;
protecting same-sex marriage safeguards children and families because without the recognition and stability of marriage, children of same-sex couples suffer harm and humiliation as well as material costs because of the stigma attached to “knowing their families are somehow lesser” than families of opposite-sex couples; and
marriage is a “keystone” of our country’s social order and national community; governmental recognition, rights, benefits and responsibilities depend in many ways on marital status and same-sex couples should not be denied the benefits that accompany marriage.

The Court also ruled that the right of same-sex couples to marry is a liberty protected by the Fourteenth Amendment’s guarantee of equal protection of the laws. The Court admonished that state laws that ban same-sex marriage deny same-sex couples the benefits afforded to opposite-sex couples, disparage same-sex couples’ choices, and diminish their personhood. The Equal Protection Clause prohibits such “unjustified infringement of the fundamental right to marry.”

Recognition of Marriages Performed in Other States

The Court also ruled that a state may not refuse to recognize the same-sex marriages lawfully performed in another state. The result is that any lawful marriage that has already taken place in the United States, whether same- or opposite-sex, must be recognized in all 50 states.

What This Means for Employers

Multi-state employers that have been dealing with state-specific policies that were dependent on state-law recognition of same-sex marriages may now want to implement a uniform policy that applies to all locations. Here are steps you should consider in light of the legalization of same-sex marriages nationwide:

FMLA leave: Same-sex spouses will be deemed spouses under the Family and Medical Leave Act (FMLA) no matter where the marriage took place or where the employee resides. This means that you need to permit eligible employees to take FMLA leave to care for their same-sex spouse with a serious health condition, for qualifying exigency leave if the spouse is being deployed and other qualifying reasons. Update your FMLA policies, forms and practices to permit this leave.
Bereavement and other leaves: If you offer bereavement leave for the death of a spouse or in-laws, you should update your policy to reflect that this leave includes same-sex spouses and relatives of the same-sex spouse. If you offer any other leaves that define immediate family or extend to familial situations, such as non-FMLA medical leave or military leave, update those definitions as well.
Marital status discrimination: If you operate in states that prohibit discrimination based on an employee’s or applicant’s marital status, you will be prohibited from discriminating based on same-sex marriages.
Emergency contacts and beneficiaries: Employees with a same-sex spouse may want to update their emergency contact or beneficiary information listed on group life insurance or retirement plans. Be prepared to administer these changes.
Employee benefits: Group insurance, retirement and other employee benefit plans will need to be reviewed and updated. Be certain to consult your benefits attorney and plan administrators for advice on required changes.
W-4 Forms and tax updates: In light of potential income tax implications for newly recognized same-sex spouses, some employees may want to change their tax withholding information. Be prepared to update W-4 and state withholding amounts upon request.

These and additional policies and procedures impacted by the Court’s ruling may require that you update your employee handbook, policies on your intranet, plan documents, forms, beneficiary designations and other personnel documents. Be sure to notify and train your human resources professionals and supervisors on all changes.

The Court’s landmark decision grants “equal dignity in the eyes of the law” to same-sex couples. Take this opportunity to review your employment policies and practices so your company does the same.

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May 11, 2015

Recruiting Employees By Making False Promises Can Cost You

By Mark Wiletsky

You desperately want to hire a competitor’s top sales person, so to lure her away, you promise that she can expand the scope of her sales while continuing to serve her existing customers nationwide. What’s the harm if after she joins your team, you limit her territory and the type of products she can sell? For one computer company, it cost over $370,000 in damages and interest to the disgruntled, former employee. Add in the time and expense of defending the lawsuit and those seemingly innocuous recruiting statements can really come back to bite you.

Misleading Statements Meant to Entice

Hiring experienced executives, managers and sales persons can be tricky because the best performers are in high demand. In order to entice a quality person away from his or her existing company, you likely have to sweeten the compensation package, offer a promotion or growth potential, provide a better cultural fit, or some combination of these conditions of employment. You wine and dine your candidate and make assurances that things will be better if they leave their current, lucrative job and join your company.

But what if your promises don’t come to pass? What if your regional sales structure does not allow the sales executive to continue to service their national clients? What if the growth you promised isn’t in the cards? You could face a lawsuit alleging negligent misrepresentation, fraudulent inducement, promissory estoppel or other claims.

The federal court in Colorado recently handled such a case in which a successful computer sales person with national accounts left her lucrative position to join another computer company who had promised that she could keep her current accounts and expand the scope of her sales beyond mainframe computer systems. After her new employer assigned many of her lucrative accounts to other sales representatives and told her that she would not be able to sell outside of the mainframe area, she sued. Although her new employer claimed that its recruiting statements were nothing more than predictions or statements of future intent, a jury found in favor of the sales person on her claim of negligent misrepresentation. The jury awarded her damages in the amount of $231,665 and, after an appeal, an additional $139,625 in prejudgment interest. David v. Sirius Computer Solutions, Inc., 779 F.3d 1209 (10th Cir. 2015).

Don’t Make Promises You Can’t Keep

Tempting as it may be, refrain from making guarantees or promises to job candidates that you can’t fulfill. Executives and high-level sales persons typically have a lot at stake when switching companies, which consequently leads to significant damages should they sue.

In addition, be careful when putting any terms, such as pay, bonuses, commissions and benefits, in writing. If the terms can be changed or will be reviewed periodically, be sure to include that in the written document. If the employment relationship is “at-will,” be sure to specify that so there is no misrepresentation about a guaranteed period of employment. In short, when seeking to induce high performers to leave their current positions, talk up the attributes of your organization but be careful about making promises that you may not be able to keep.

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April 8, 2015

Steps to Prevent Workplace Bullying

By Anthony Hall

This year, employers in California must include anti-bullying training for company supervisors as part of their required biannual sexual harassment training. Even though other states, such as Nevada, have not yet mandated such training, employers should take notice of potential liability that may arise from workplace bullying and take steps to prevent it.

Workplace Bullying Statistics

According to a 2011 survey by the Society for Human Resource Management (SHRM), 51% of responding organizations reported incidences of bullying in their workplaces. Twenty-seven percent of employees surveyed by the Workplace Bullying Institute in 2014 reported a current or past direct experience with abusive conduct at work. An earlier study of U.S. workers found that 41.4% of respondents reported experiencing psychological aggression at work in the past year (Schat, Frone & Kelloway, 2006). These numbers are significant, indicating that workplace bullying is alive and well in U.S. companies.

Effects of Bullying on the Workplace

Effects of workplace bullying are felt not just by the victims of the bullying but also by the organization itself. Some potential effects on your company may include:

High employee turnover, resulting in increased recruiting, hiring and training costs
Low productivity, as workers lose motivation and take more breaks or sick time
Drain on HR staff and supervisors having to deal with bullying incidents and lost productivity
Bad publicity and damage to reputation as word gets out that bullying takes place at your organization

The negative effects of bullying result in a significant drain on an organization’s time, resources and finances. But because it hasn’t been explicitly “illegal,” companies have been slow to address it.

Potential Claims Based on Bullying

Despite the lack of explicit federal or state laws prohibiting abusive workplace conduct that is not based on a protected characteristic, employers should be aware that other types of claims could be raised as a result of bullying. To the extent that an employee suffers a physical or mental injury or illness as a result of bullying at work, it could result in a workers’ compensation claim. In addition, depending on the nature of the bullying and the position/title of the bully, abusive conduct could support claims such as intentional infliction of emotional distress, intentional interference with employment contract, negligent hiring, retention or supervision, battery or assault.

Tips to Prevent Workplace Bullying

Despite the lack of laws prohibiting workplace bullying, it is a sound employment practice to take steps to prevent and address abusive conduct in your organization. Get beyond labeling behavior as legal or illegal, harassment or bullying. If there is unprofessional, potentially harmful behavior occurring at your place of business, you need to ask questions, conduct a thorough and timely investigation and take steps to stop any misconduct.

To help your organization be proactive in preventing bullying, consider the following steps:

Implement a standalone anti-bullying policy or incorporate the subject of bullying into your anti-harassment policy or code-of-conduct policy;
Train all employees on your policy, including your zero tolerance for workplace bullying;
Train supervisors and managers on recognizing bullying and what to do if it occurs;
Offer employees numerous avenues for reporting bullying and ways to get help, both internally and through an employee assistance program or outreach agency;
Be inclusive so that all employees feel comfortable speaking up and participating in company projects and activities; and
Treat complaints of bullying behavior seriously and launch a workplace investigation.

Workplace bullying is an ongoing problem that can affect your reputation and bottom line so don’t wait for legislation or a lawsuit before enacting these proactive measures.

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March 23, 2015

FMLA and FLSA Lawsuits Are Increasing

By Mark Wiletsky

The U.S. federal courts saw a whopping 26.3 percent increase in the number of Family and Medical Leave Act (FMLA) lawsuits filed last year over the prior fiscal year, according to statistics recently released by the Administrative Office of the U.S. Courts. Wage and hour lawsuits alleging a violation of the Fair Labor Standards Act (FLSA) were up a significant 8.8 percent. These filings are the highest they’ve been in the past 20 years of annual statistics reported by the courts.

The increasing numbers of lawsuits brought under those two employment laws may reflect how difficult it is to understand and administer wage and hour and leave laws. The increase also may be due to the heightened awareness by workers of their rights and benefits under these laws. Regardless of the cause of the increase, the numbers suggest that it is worthwhile for employers to focus their compliance efforts in these two areas.

Self-Audit Your Pay and Leave Practices

Before you find yourself defending a lawsuit, take the time to review your payroll and FMLA policies and practices, including these often tricky issues:

Classifying workers as exempt versus non-exempt from minimum wage and overtime pay requirements
Calculating each non-exempt employee’s regular rate of pay and overtime rate
Rounding time at the beginning and end of shifts
Automatic deductions for meal periods
Treating workers as independent contractors rather than employees
Tracking time worked remotely or “off-the-clock”
Providing FMLA notices within required time period
Calculating FMLA leave for workers with irregular schedules
Administering intermittent FMLA leave
Not penalizing employees who have taken FMLA leave

If your self-audit reveals any irregularities, take steps to revise your policies and practices to bring them into compliance with the applicable laws. Don’t forget state and local laws that may impose additional requirements related to pay and leave administration. If in doubt, don’t hesitate to consult with your legal counsel so that you don’t become one of next year’s statistics.

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March 17, 2015

Utah Adds Sexual Orientation and Gender Identity to Anti-Discrimination Laws

By Cecilia Romero

On March 12, 2015, Utah signed into law a bill that protects individuals on the basis of sexual orientation and gender identity in employment and housing. The law contains certain exceptions for religious organizations and permits employers to maintain reasonable dress codes and sex-specific facilities. Here are the details on the employment protections.

Discrimination, Harassment and Retaliation Prohibited

The new law adds sexual orientation and gender identity to the list of protected characteristics under Utah’s employment discrimination law, making it unlawful for Utah employers to refuse to hire, promote, discharge, demote, terminate, retaliate against, harass or discriminate in compensation or any other terms of employment because of an individual’s sexual orientation or gender identity. The full list of protected groups under Utah law is now race, color, sex, pregnancy/childbirth, age, religion, national origin, disability, sexual orientation and gender identity.

Sexual Orientation and Gender Identity Defined

Sexual orientation is defined as an individual’s actual or perceived orientation as heterosexual, homosexual or bisexual. Gender identity is defined by reference to the Diagnostic and Statistical Manual (DSM-5) which refers to individuals who see and feel themselves to be a different gender than their assigned gender.

Reasonable Dress Codes and Sex-Specific Facilities Permitted

The new law specifically addresses two frequent concerns for employers. First, the new law allows employers to adopt reasonable dress and grooming standards and second, employers are allowed to adopt reasonable policies that designate sex-specific facilities, such as restrooms, shower rooms and dressing facilities.

Exemptions for Religious Organizations and Protecting Religious Expression

The new law protects religious organizations and the expression of religious beliefs. The list of excluded religious groups was expanded through this law to include not only religious organizations, associations and corporations, but also religious societies, educational institutions and leaders, and the Boy Scouts of America.

State Law Trumps Local Laws

This new state law supersedes and preempts any laws, ordinances or regulations related to the prohibition of employment discrimination passed by a city, county or other local or state governmental entity. This should help employers maintain uniform policies statewide without having to account for local anti-discrimination laws. Complaints will be handled by the state antidiscrimination division. Recovery under the law is limited to actual damages, not punitive damages.

Practice Points to Employers

These new employment protections will affect many of your employment communications so take time now to:

Review and understand the new law;
Revise harassment and retaliation policies to include sexual orientation and gender identity as prohibited bases for harassment and retaliation; remember such statements might be contained in your employee handbook, on your job applications, in recruiting and training materials and on your website; and
Train managers and supervisors on the new law.

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