Monthly Archive: December 2011

TIP OF THE DAY – FIVE REASONS NOT TO MEDIATE AN EEOC CHARGE

EEOC charges are on the rise, filed by former employees hoping for a large settlement check and current employees trying to reverse a personnel action and avoid being fired. Of course there are cases where employees actually were wrongly discriminated against, but many, many claims are completely without merit. When an employee loses their job, it’s human nature to look for someone or something to blame; people rarely look in the mirror and admit, “I deserved to be fired.” Instead, some are quick to assume it must have been discrimination, while others feel they are simply “entitled” to whatever they can force the employer to pay.

As an employer, once you are notified that a charge has been filed against your company, the EEOC will invite you to participate in pre-investigation mediation. Here are five reasons to think twice before agreeing.

  1. Show me the money. Your willingness to participate in an EEOC mediation signals the employee that you are bringing your check book and there will be money on the table. The employee is dreaming of huge verdicts they’ve read about in the press (and they don’t realize most of those awards were either reversed on appeal or significantly reduced by the trial judge). If you have no intention of paying a settlement to the employee, don’t go to the mediation. You will not convince them that they have not been wronged. Instead, they will be disappointed that that they are not leaving with a large check, and your logical and well-reasoned argument explaining that the company did nothing wrong will only inflame them and make them more likely to press the case forward.
  2. People are watching. Yes, EEOC mediation settlements are supposed to be confidential. But when you pay money to an employee to settle a claim, word gets out. You do not want everyone whom you fire or even discipline to think they can get easy money quickly by filing an EEOC charge and going to mediation.
  3. Validation. Even if you don’t pay the employee a settlement at mediation, your mere participation validates that there is something to the claim. This encourages the employee to press forward, because you have now made it an interactive process. The better strategy is to take a hard line now; you can always reevaluate later whether this is a claim that should be settled.
  4. Most employees won’t file a lawsuit. Filing an EEOC charge is easy. The EEOC even does the paperwork for the employee. There are no filing fees and they don’t need a lawyer. But the majority of employees who file EEOC charges won’t end up suing the company. There are several reasons for this. First, most individuals can’t afford to hire an attorney and pay an hourly fee. They will have to find a lawyer who will take their case on contingency. And most contingency lawyers are reluctant to take a case that doesn’t have a strong settlement value, particularly against a company that has a reputation for not settling claims. If you are aggressive in preparing a position statement with documents and affidavits during the EEOC investigation process, your chances are good that the EEOC will find in your favor. A decision from the EEOC that there was insufficient evidence of discrimination makes it even more unlikely a plaintiff’s lawyer will be interested in taking the case. Once the EEOC issues its determination and notice of right to sue, the employee only has 90 days to file a lawsuit, or the claim is gone forever.
  5. Time is on your side. EEOC investigations take a long time. Although the employee has the right to request a right to sue letter after 180 days have passed, most don’t and some claims languish for two years or more at the agency. If you’ve done your job with the position statement, you already have all the documents and sworn witness statements you need. The employee, on the other hand, will be relying on former coworkers to testify and remember events from several years ago, by the time a lawsuit would ever be filed. And meanwhile, the employee has likely moved on with their life, and their commitment to pursing the matter tends to lessen over time.

So, when should you mediate? There are exceptions to every rule, and there are exceptions to the general strategy of avoiding pre-suit mediation of an EEOC charge. Here are some examples of when it does make sense to go to mediation:

  1. When it can only get worse. Sometimes there just isn’t any way to avoid liability. You’ve conducted an investigation, and discovered to your dismay that the employee in question was indeed sexually harassed by her supervisor, that she followed your HR policy regarding complaints, and that for whatever reason nothing was done to correct the situation. The more you look into it, the worse it gets, as you discover that after complaining to HR she was retaliated against by her supervisor. Her file documents that she had exceptional performance ratings prior to the complaint, and lousy ones afterwards, ultimately leading to her termination. Your best option is to go to the EEOC mediation, and resolve the case earlier rather than later. At this juncture, you can explore other options, including firing the harasser and reinstating the employee. Alternatively, you can offer severance, a positive reference and some outplacement services in exchange for a release – if the employee was recently fired, she is likely to be more optimistic about her future job prospects now than she might be six months or 12 months down the road when she’s become frustrated by a challenging job market, and her unemployment benefits are running out. She’s likely to be much more reasonable now about a settlement number than she would be after months have gone by and she’s applied for 150 jobs and still not been hired. And with facts like these, if you don’t settle, she’ll have no trouble obtaining counsel to file a lawsuit, and you could end up paying a substantial money judgment plus both your attorney’s fees and her attorney’s fees.
  2. When the situation can be salvaged. You may have a policy or practice that is in violation of law and can easily be corrected. If, for example, a disabled current employee is requesting a reasonable accommodation, this is something that might be able to be worked out in mediation and does not involve you writing a settlement check. In a perfect world, an issue like that would have been resolved internally, but it doesn’t always work that way, particularly since the recent amendments to the ADA went into effect. Many managers do not understand what is and is not a disability under the new regulations, and taking a fresh, objective look at the situation across the mediation table could mean the difference between clearing up a misunderstanding, and defending a costly lawsuit.

TIP OF THE DAY – HOW TO HAVE A GREAT HOLIDAY OFFICE PARTY AND NOT GET SUED

Holiday office parties are a great morale booster but can also get your company in hot water. Follow these tips for a fun event that doesn’t unnecessarily expose you to a risk of liability.

(1) Social Host Liability. The problem: If an employee leaving your function is involved in a DUI causing bodily injury or property damage, you could be held liable. The solution: Limit alcohol consumption. Suggestions include having the event earlier in the day, offering lots of alternative non-alcoholic beverages, provide food, don’t have an unlimited open bar. Be alert, and if an employee seems to be under the influence, have someone drive them home.

(2) Sexual Harassment. The problem: People speak more freely in an informal, party atmosphere, especially if alcohol is served. “Jokes” get out of hand, and can be misinterpreted. The solution: Remind all supervisors prior to the party that inappropriate comments and interactions with employees will not be tolerated. If you or another manager sees or overhears something inappropriate, step in immediately to diffuse the situation (ignoring it gives the appearance that you are condoning it). Suggestions include making the party a family event (if spouses, significant others, and kids are in attendance, inappropriate behavior is less likely to occur), plan appropriate activities, have a definite beginning and ending to the festivities, and limit alcohol consumption.

(3) Discrimination. The problem: Employees with different religious beliefs may feel left out, and later use the party as an example of the company’s intolerance for their belief system. In addition, well-meaning gift spoofs can backfire when they focus on stereotypes about age, race, religion, disability or gender. The solution. Be inclusive. Suggestions include delivering a speech to employees that mentions a variety of religious and ethnic holidays and wishes everyone well, in printed announcements refer to the event as a “Holiday Party” rather than a “Christmas Party” or “Hanukkah Party” or “Kwanza Party,” etc., include decorations that are representative of different traditions, and solicit employee suggestions in planning the event. If you receive a complaint, take it seriously and listen to what the employee has to say. Discourage “gag” gifts that could be perceived as offensive.

The best advice is for you to be a good role model. You set the tone for how employees are expected to conduct themselves at an office party, and they will be looking to you to take the lead.

EMPLOYER ALERT – DOL AND IRS CRACK DOWN ON INDEPENDENT CONTRACTOR VS EMPLOYEE CLASSIFICATIONS

The IRS and the Department of Labor (DOL) are working together conducting random audits of companies looking for workers who have been improperly classified as independent contractors instead of employees. In 2011, the DOL hired an additional 250 investigators to conduct audits.

The IRS goal is to raise additional tax dollars, since employers do not withhold income taxes or FICA from independent contractors. The DOL goal is to require companies to pay improperly classified workers back pay for all overtime that would have been due if they were classified as employees. The consequence can be economically disastrous for your business, in terms of back overtime, liquidated damages, penalties, and tax liability. In addition, the improper classification of workers as independent contractors instead of employees has implications in unemployment compensation and workers compensation.

One of the red flags to both agencies is an employer who reclassified a group of workers during the year, resulting in issuance of both a W-2 and a 1099 to the same worker for performing, basically, the same services. If your company has made a decision to reclassify workers as a cost-saving measure, make sure those workers can legitimately be hired as independent contractors under the law, or the cost-cutting effort may backfire.

Both the IRS and the DOL look at the following factors.

How closely do you supervise and instruct the worker? Workers who must comply with your instructions as to when, where, and how they work are more likely to be employees than independent contractors. It’s the difference between telling them what to do, and telling them how to do it.

Do you control the hours of work? Although there are situations when the work by its nature must be performed at a certain time or in a certain sequence, in general workers for whom you establish set hours of work are more likely employees. In contrast, independent contractors generally can set their own work hours. Also, an independent contractor usually doesn’t work for you full-time, although there are exceptions.

Do you provide training or did the worker obtain specialized knowledge from outside your business? The more training your workers receive from you, the more likely it is that they’re employees. The underlying concept here is that independent contractors are supposed to know how to do their work and, thus, shouldn’t require training from the purchasers of their services.

Where does the worker fit in your organization? The more important the worker’s services are to your business’s success, the more likely it is that they’re employees.

Does the worker need to perform the services personally? Workers who must personally perform the services for which you’re paying are more likely employees. In contrast, independent contractors usually have the right to substitute other people’s services for their own in fulfilling their contracts. Also, workers who are not in charge of hiring, supervising, and paying their own assistants are more likely employees.

Is the worker performing a specific project with an expected end-date, or do they provide continuing services? Workers who perform work for you for significant periods of time or at recurring intervals are more likely employees. Someone brought onboard for a particular project is more likely to be an independent contractor.

Where is the work performed? Workers who work at your premises or at a place you designate are more likely employees. In contrast, independent contractors usually have their own place of business where they can do their work for you.

Is the worker paid by the hour or by the job? Although there are exceptions, most independent contractors are paid by the job, not by the hour.

Who pays for expenses? Workers whose business and travel expenses are paid by the company are more likely employees. In contrast, independent contractors are usually expected to cover their own overhead expenses, as they factor it into their total charge as a cost of doing business.

Are you providing the tools and equipment? Workers whose tools, materials, and other equipment you furnish are more likely employees. Independent contractors, by contrast, usually have their own tools and equipment.

Does the worker have an investment in his or her business and the opportunity for profit or loss? The greater the worker’s investment in the facilities and equipment they use in performing their services, the more likely it is that they’re independent contractors. Similarly, the greater the risk the worker takes of either making a profit of suffering a loss in rendering their services, the more likely it is that they’re independent contractors.

Do they work for more than one client? The more businesses for which your workers perform services at the same time, the more likely it is that they’re independent contractors. Workers who hold their services out to the general public (for example, through business cards, advertisements, and promotional items) are more likely independent contractors. By contrast, an individual who works exclusively for your company is more likely an employee.

Are there restrictions on your right to fire the worker, or the worker’s right to quit? Workers whom you can fire at any time are more likely employees. In contrast, your right to terminate an independent contractor is generally limited by specific contract terms. Likewise, an independent contractor who has signed a contract to perform a specific project for your company will be in breach of contract if they abandon the project. An employee, however, is generally free to resign at any time.

Remember, no single one of these factors is determinative. The DOL and the IRS look at the combination of factors to determine whether the relationship is an employment relationship or an independent contractor relationship. How these factors are weighed can also vary based upon the specific type of business or industry.

IN THE NEWS – FEDERAL COURT RULES SEVERE OBESITY PROTECTED UNDER ADA

Firing an employee because they are severely overweight violates the Americans With Disabilities Act Amendment Act of 2009 (“the ADAAA”), according to a decision by a federal district court in Louisiana on December 6, 2011, denying an employer’s motion for summary judgment. The EEOC brought the case on behalf of Lisa Harrison, an employee who weighed 400 lbs when she was hired and weighed 527 lbs when she was fired, allegedly because her employer thought her excessive weight limited her ability to perform her job.

This is one of only a few court cases to tackle this issue since the ADA was amended in 2009, expanding the definition of an impairment that constitutes a disability. Under the new regulations, the definition of impairment does not include weight that is within a “normal range” unless it is the result of a physiological disorder. The EEOC (which investigates employment discrimination claims), states in its compliance manual for employers that although “being overweight, in and of itself, is not generally an impairment, . . . severe obesity, which has been defined as body weight more than 100% over the norm, is clearly an impairment.” The EEOC has also noted that other recognized disabilities, such as diabetes, hypertension or thyroid disorders, often go hand-in-hand with obesity.

Recently, the EEOC filed another obesity case in federal court in Texas against BAE Systems, Inc., alleging that the company fired employee Ronald Kratz, II, from his job as a material handler because he was morbidly obese. No ruling has been entered yet in that case.

It seems clear, however, that we can expect a growing number of obesity discrimination cases to be filed under the ADAAA. Some cases will involve individuals who clearly fit the definition of severe obesity. Whether the law applies in other cases, where the employee is simply overweight, will hinge on whether or not the employee’s weight is a result of an underlying physiological disorder. And still others will involve “perceived disability” – the law also protects individuals who, although they are not actually disabled, are discriminated against by their employer because their employer regarded them as having a disability. Accordingly, if a supervisor assumes that an overweight person is substantially limited in the ability to perform their job and discriminates against the employee on that basis, your company could be liable under the ADAAA regardless of whether the employee’s weight problem actually was severe enough to qualify as a disability.

More than one-third (33.8%) of Americans are obese, according to a study released by the Center for Disease Control (“CDC”) this year. And the number has been increasing steadily over the past 20 years. See http://www.cdc.gov/obesity/data/trends.html. The CDC measures obesity using height and weight to calculate a person’s body mass index (“BMI”). An adult with a BMI over 25 is considered overweight. If their BMI is 30 or higher they are considered obese. For example, an individual who is 5’9” and weighs 169 lbs. is overweight, according to the CDC. And if they weight 203 lbs. or more, they are obese. See http://www.cdc.gov/obesity/defining.html.

What does this mean for your business? It means roughly one-third of your workforce (and one-third of your job applicants) fall into the definition of obese. Those individuals may or may not be actually considered disabled under the ADAAA. But remember – even if they are not severely obese, they still may be protected under one of two other ADAAA qualifiers: (1) if their excessive weight is a result of a physiological disorder (not something you’ll be inquiring about during a job interview); or (2) if you perceive them to have a weight-based disability.

The bottom line: although weight is not a “protected class” like race, sex, age, national origin and religion under Title VII, it is being increasingly recognized by the courts as a disability under the ADAAA, a law which prohibits discrimination against individuals based on their disability. And the EEOC has made it abundantly clear that it views obesity as the new frontier for enforcement.

The best practice is to make sure all hiring and supervisory personnel in your organization are instructed not to make any employment decisions based on an individual’s weight or any stereotypes about overweight workers. Of course, employees must be able to perform the actual physical requirements of the job, but you should steer clear of making assumptions about an individual’s ability based on obesity. And employee requests for reasonable accommodations based on weight should be taken seriously.

EMPLOYER ALERT – FLORIDA MINIMUM WAGE INCREASES JANUARY 1

Effective January 1, 2012, Florida’s minimum wage for non-tipped employees will increase to $7.67 an hour, a 4.9 percent increase from the $7.31 an hour minimum for 2011, according to an announcement by the Florida Department of Economic Opportunity. Wages for tipped employees will increase to $4.65 an hour.

This increase is based on the increase of the federal Consumer Price Index for urban wage workers in the southeastern United States.

In accordance with a 2004 constitutional amendment, Florida automatically raises the minimum wage rates based on the CPI. The federal minimum wage (currently $7.25 an hour) cannot be raised except by an act of Congress.

Florida employers must pay the higher, Florida minimum wage rate.

EMPLOYER ALERT – FACEBOOK FIRINGS COULD PROMPT LEGAL ACTION

Companies who fire employees for making negative comments about their jobs on a social media site could end up in hot water with the NLRB – even if the company’s employees are not unionized.

The National Labor Relations Board (“NLRB”) enforces the National Labor Relations Act, a federal law pertaining primarily to union activity, which has been around since the 1930s. In the past, courts have held that, to a limited extent, this law also protects non-union employees, in areas such as the right to have another employee present during an employee disciplinary meeting (these are called “Weingarten Rights”), and the protection of “concerted activity” – i.e. the right of employees to meet and discuss issues such as wages, benefits and workplace safety, and to approach management to discuss those issues.

Recently, the term “concerted activity” has been applied to social network postings by employees, and civil complaints have been filed and are pending before the NLRB against companies that fired employees for positing certain comments. Not all comments are protected – they have to fall within traditional definitions of concerted activity, qualifying as a discussion between employees regarding protected activities. A recent article appearing in the Chicago Tribune provides details and insights into this evolving issue. See: http://www.chicagotribune.com/business/breaking/chi-workers-fired-over-facebook-twitter-posts-turn-to-1935-labor-law-20111202,0,6526315.story

The best approach is to review your current HR policies to ensure that they do not prohibit protected “concerted activity” by employees, and obtain legal advice on this issue before you terminate an employee based on their use of social media to air complaints about a supervisor or other workplace issues.