Is Your Business EEOC Compliant? How to Avoid Common Pitfalls.

Even if a business is eventually vindicated, claims of employee discrimination lawsuits are always costly. In addition to the legal cost related to defending the business, employee morale and business reputation are sure to suffer. For employers, maintaining U.S. Equal Employment Opportunity Commission (EEOC) compliance is a best practice as well as a protection against costly claims.
The EEOC prevents discrimination based on the following: age, disability, equal pay or compensation, genetic information, national origin, pregnancy, race, religion, retaliation, sex and sexual harassment.
All supervisors should be educated about the potential employee discrimination lawsuits that can occur in daily conversation.
While the categories of discrimination are fairly self-explanatory, employers often find themselves afoul of the EEOC when a casual conversation slips into the realm of discrimination. For example, consider this scenario: A supervisor and employee are discussing weekend plans and the employee mentions he will be attending a religious ceremony. The supervisor asks about the ceremony and then says, “That’s weird” after hearing the details. Now the employee can claim he was discriminated against for his “weird” religion if he is denied a raise, promotion or experiences any other real or perceived injustice.
Likewise, a supervisor noting that another employee has become “too emotional” as a result of pregnancy sets the stage for a potential claim.
Every business should have an anti-discrimination policy as a component of the employee handbook. It should state that discrimination in any form will not be tolerated and employees should sign-off that that have received, read, and will abide by the policy.
Many employers have deficiencies in the area of complaint reporting. Be sure that employees are given very clear instructions as to how they should report claims of discrimination. It’s also imperative that employees are given at least two options for reporting discrimination, in case the employee feels that one of the designated parties is not a viable option. For example, an immediate supervisor shouldn’t be listed as the point-person for discrimination complaints in case the supervisor is the offender.
Many companies create a flow chart illustrating how an employee should report discrimination. Having a predetermined method for managing complaints will ensure that managers appropriately handle the situation and that all claims are documented and investigated. While there isn’t a foolproof way to avoid discrimination lawsuits, it’s difficult for employees to allege discrimination at a later date if they were aware of a reporting mechanism and did not use it.
Another trap employers frequently fall into is that of retaliation claims, which are now the most common employee grievance filed with the EEOC. Such claims stem from the initial discrimination claim, when an employee indicates that they feel their employer has taken adverse actions against them as a result of their complaint.

Employers who fail to properly handle even the most ludicrous claims are at risk for an employee discrimination lawsuit. The worst thing a supervisor can say after an employee reports discrimination is, “Are you serious?” or “You’re crazy.” Take every complaint seriously.

Dealing with Smoke Breaks at Work

For one, you have to ensure employees who are smokers aren’t discriminated against for their choice, while making sure employees who smoke don’t take too many costly off-the-clock smoking breaks. For example, an employee who takes a 15 minute smoke breaks at work every two hours is spending one hour of each 8 hour workday not performing job-related tasks, a significant amount of paid time spent away from work.

As an employer, you can enact and enforce a workplace smoking ban. What you likely cannot do is outright forbid employees to smoke cigarettes on their own time. Though certain industries and select cities and state do permit employers
to unilaterally forbid employee smoking, such mandates have been challenged in the courts, creating costly battles for employers.

Employers should carefully outline all policies and expectations for smoke breaks at work in their employee and employee handbook.
Detroit attorney John Holmquist offers that a smoking ban for restaurants and work areas recently adopted by the state of Michigan has caused problems for some who want to smoke have to go outside, which in our winter is no treat,” says Holmquist. “I have seen employers basically ignore the issue and let the employees take smoking breaks as long as their work gets done and I have seen employers ban smoking on the outside premises.

Employers who do not address the policy are not taking into account the resentment of the nonsmoking employees.”

Employers should adopt a policy regarding smoke breaks as well as a plan for how employees will be monitored. Employees who smoke should not be given any additional breaks or consideration for smoke breaks at work. Any policy forbidding smoking both on and off the clock should be reviewed by an attorney prior to adoption to ensure that it complies with state and local laws and implementation won’t open the company to litigation.

Another way to keep your company out of the courtroom is to keep breaks fair. For example, smokers and non-smokers should be entitled to the same breaks. “A smoker should be allowed to use their break any way they wish. If the break is
15 minutes, then a smoker has 15 minutes to leave and have a smoke,” says Liz Cosline, an author and motivational speaker who specializes in leadership and team building. “If you are allowed one break in the morning and one in the afternoon with a lunch break, then that is the time that a smoke break can be taken. It is the same for all employees on breaks; some will take a walk, some will get a snack, and some will smoke.” Though employers may feel it’s easier to assume that smokers won’t take advantage of your trust and time, their co-workers will likely be monitoring their breaks,
watching to be sure they aren’t enjoying extra time off.
“I actually worked in one place where the resentment (over smoke breaks) caused morale problems. ‘Don’t ask, don’t tell’ is not a good policy.”

April 2011

Lawsuits Challenging Criminal Background Checks on the Rise

Employers increasingly are being challenged in court for their use of criminal background checks, according to a March 23, 2011, report by the National Employment Law Project. The report notes that the U.S. Equal Employment Opportunity Commission (EEOC) has stated that “an absolute bar to employment based on the mere fact that an individual has a conviction record is unlawful under Title VII.” Yet it also observed that Title VII does not wholly bar the use of criminal records in employment decisions.

Instead, the EEOC has provided a framework for assessing criminal records when making an employment decision. An employer’s consideration of criminal records may pass muster under Title VII if an individualized assessment is made taking into account:

• The nature and gravity of the offense or offenses.
• The time that has passed since the conviction and/or completion of the sentence.
• The nature of the job held or sought.

March 2011

The U.S. House of Representatives passed legislation Thursday to repeal a controversial provision in the federal health care reform law that would have required more paperwork for small businesses.

The original provision would have required business owners to use 1099 IRS tax forms to report all transactions greater than $600 each year, beginning in 2012. That would have been a significant expansion of the current 1099 reporting requirements.

This is great news for business owners who have said that if the new rules passed last March as part of the Patient Protection and Affordable Care Act would be a huge administrative burden to small companies.

February 2011

Distracted Driving Policies Are Becoming More Restrictive

Distracted driving policies are trending toward out-and-out bans on cell phone use while driving, that is where the Occupational Safety and Health Administration is headed and the one that is the safest.

There is technology that can help employers monitor whether this type of restrictive policy is being complied with, David Gevetz, an attorney with Baker Donelson in Atlanta, added. The software syncs into GPS chips in cell phones and can tell if a cell phone is moving faster than a certain number of miles per hour. The software gives the employer the ability to lock out outgoing calls except emergency 911 calls and provide auto messages for incoming calls when the phone is in motion. It allows for automatic alerts for suspected violations of the policy. So, if someone tries to override the no-outgoing-call default, an e-mail would go to someone enforcing the policy and to the employee. Also, the software can tell if a Bluetooth device or headphones are attached for hands-free conversations, if a company permits them. The software can be used on company phones; Gevetz said it can be installed on many personal cell phones as well.

Some employers permit hands-free calls for important calls, but not when there is inclement weather, Gevetz noted. The most permissive policies permit hands-free calls in general.

Other employers require employees to turn off phones when they get in the car, while some require employees to pull off to the side of the road before speaking on the phone or texting. Some policies that permit hands-free conversations require employees to limit how long they speak on the phone, noted Steven Adler, an attorney with Cole, Schotz, Meisel, Forman & Leonard PA in Hackensack, N.J.

Thirty states, the District of Columbia and various municipalities ban texting while driving, Belcher noted. Eight states and the District of Columbia prohibit drivers from using handheld cell phones while driving.

“It’s a big issue for all employees, but particularly young drivers,” who tend to be the biggest users of cells and texting and are in the most texting- and cell-related accidents, he added.

Certain insurers prohibit customers from using cell phones while driving and deny coverage if texting or cell phone use occurred in an accident, Gevetz observed.

And Adler said negligence actions against employers held vicariously liable for employees in car wrecks while texting or talking on their cell phones have run into millions of dollars.

It’s more difficult to ensure that young employees who are used to instant messaging are complying with a company policy. It can be difficult to change their texting habits, Adler noted. He said the best way is to go over the policy when employees are hired and to remind them constantly because there is potentially huge liability.

The policies are undermined if they are on the books but not enforced, Gevetz noted. Managers need to refrain from systemic patterns of calling or e-mailing employees when they know they are on the road, he added. And they should discipline anyone who violates company policy or state law.

Employees need to turn off their cell phones and personal digital assistants while they are in the car, turn them to silent, or ignore them, Gevetz stated. “We think we can multitask more effectively than we can, which is especially true while driving,” he remarked.

December 2010

New tax law delivers savings–and benefits changes–that affect HR

On Dec. 17, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, a broad piece of legislation that addresses a slew of tax issues, many that affect HR.

The centerpiece of the legislation—an across-the-board extension of the “Bush tax cuts” enacted in 2001—means employers won’t have to adjust federal tax withholding on employee paychecks.

Those tax rates were scheduled to expire on Dec. 31, 2010. Without the law, the average employee would have paid about $3,000 more in federal income taxes next year.

Note: Employers don’t have to take any action as a result of the extension of current tax rates.

A break on Social Security taxes

However, another part of the new law means that most employees will see their take-home pay increase in 2011. The law created a one-year “payroll tax holiday” by lowering employees’ share of Social Security withholding to 4.2%.

The 2011 Social Security tax had been pegged at 6.2%, which means an employee earning $50,000 will now save $1,000.

Note: Consult your payroll provider or your accounting staff to find out how soon employees will start seeing more money in the pay envelopes.

Because the new law was enacted so late in the year, it may take a couple of payroll cycles for the new Social Security tax to show up. Providers and accountants need time to input the new rates into their payroll software programs.

“It could be the third paycheck of the year before [employees] see a ‘normal’ check,” Scott Mezistrano, senior manager of government relations of the American Payroll Association, told CNNMoney.com.

Other changes affecting HR

Tuition reimbursement: The new law also extended tax breaks for employer-paid tuition reimbursement. Employees can continue to receive up to $5,250 tax-free from an employer plan to pay for qualified higher-education expenses, including graduate school tuition. Employers can take a full deduction for those payments.

This tax exclusion was scheduled to expire after 2010. The new law extends it through 2012.

Commuter benefits: The law extends tax-free commuting benefits designed to encourage employees to use mass transit to get to work. The maximum benefit for monthly transit passes was recently increased from $120 to $230 for the 2010 tax year, and the new law preserves that amount through the end of 2011. Without the change, the maximum monthly benefit would have dropped back to $120.

Note: The same benefit can also pay for van pooling and employer-provided parking.

On-site child care: The new law extends a 25% tax credit employers may take for qualified expenses (up to $100,000 per year) related to providing child-care facilities to employees. An extra 10% credit is allowed for child-care resource and referral services.

The new law extends this tax credit for two more years through 2012.

Incentives for hiring disadvantaged workers: An employer may qualify for the Work Opportunity Tax Credit (WOTC) if it hires qualified workers from certain target groups. The WOTC was scheduled to expire after Aug. 31, 2011. In a pre-emptive move, the law extended the credit through Dec. 31, 2011.

The WOTC is generally equal to 40% of the first $6,000 of the worker’s first-year wages.

Note: Recent tax legislation added unemployed veterans and “disconnected youth” to the list of target groups.

November 2010

Update on Paycheck Fairness Act

In a procedural vote, 58 senators voted to end a filibuster of the bill; however 60 votes are needed to stop debate and advance legislation toward approval by the full Senate.

The Paycheck Fairness Act stalled in the U.S. Senate on Nov. 17, 2010, when supporters failed to gather enough votes to advance the legislation (S. 3772).

The legislation would have made compensatory and punitive damages available as remedies in Equal Pay Act cases, would have allowed class actions governed by the Federal Rules of Civil Procedure and would have required the Equal Employment Opportunity Commission and the Labor Department’s Office of Federal Contract Compliance Programs to offer wage bias training and other employer outreach programs. This is good news for employers.

Looking beyond FMLA

Many employers, from small firms to Fortune 500 companies, use a rigid approach when handling an employee’s request for leave, which may expose the company to some legal risk.

In short, these employers evaluate whether the employee is eligible for leave under the Family and Medical Leave Act (FMLA). If the employee is eligible, they grant him or her up to 12 weeks of FMLA-mandated leave. However, once the FMLA leave is exhausted, the employers expect the employee to return. If the employee is unable to return, these employers move to terminate the employee.

Unfortunately for employers, the Equal Employment Opportunity Commission (EEOC) and certain federal and state courts hold the view that such a practice is unlawful.

The EEOC and many state and city human rights agencies argue that under the Americans with Disabilities Act (ADA) and local human rights laws, an employer must “reasonably accommodate” any physical or mental condition that qualifies as a “disability.”

In addition, these courts and agencies believe that an employee’s request for leave beyond 12 weeks may be “reasonable” in certain situations.

Steps You Can Take

Unfortunately, there is no bright-line guidance on how to reach a firm conclusion. However, you can implement the following best practices right away to avoid leave-related claims:

• Seriously consider the employee’s request for an extended leave.

• Interview supervisory staff to determine how the employee’s work has been absorbed and may continue to be performed.

• Document the various alternatives the employer has examined to extend leave.

• If you are about to terminate an employee because his or her leave has been exhausted, make sure you can justify—in documents—the business rationale for the decision.

• Review these factors with your HR professional or legal counsel.

Employers should be very reluctant to terminate an employee solely because the employee has exhausted his or her FMLA leave or some other company-provided leave. Companies should be prepared to evaluate each request on a case-by-case basis and be able to defend with evidence any decision that denies the extension of leave.

October 2010

Complying with the new I-9 requirements;

In October the Department of Homeland Security Secretary revealed that in fiscal year 2010, U.S. Immigration and Customs Enforcement (ICE) enforcement numbers climbed to historic high numbers. This surge included a 500% increase in penalties from worksite enforcement actions, a nearly two-fold increase in I-9 audits (2,200), a record-breaking 180 criminal prosecutions of employers and the debarring of more than 97 businesses (compared to 30 last FY). Average fines exceeded $110,000.

Many employers assume that as long as they fill out Employment Eligibility Forms I-9, they should be in good shape. They also assume that only truly bad employers get in trouble with Immigration and Customs Enforcement (ICE). This thinking is outdated, and can lead unsuspecting but well-intentioned employers down a path toward steep fines and penalties.

Employers are responsible not only for the people they hire but also for the internal systems they choose to utilize to manage their employment process, and those systems must result in effective compliance. An employer includes an agent or anyone acting directly or indirectly in the interest of the employer, and may include independent contractors and subcontractors. The use of temporary or short-term contracts cannot be used to circumvent the Form I-9 employment authorization verification requirements.

Employers may be liable for:

• Employing unauthorized workers;

• Failing to complete an I-9 for every employee;

• Failing to complete the I-9 Form at the proper time;

• Accepting wrong documentation for I-9 verification;

• Requesting more documents than required;

• Requesting specific documents;

• Discriminating on the basis of citizenship or nationality;

• Failing to reverify Form I-9 if employment authorization should be reverified;

• Failing to properly retain Forms I-9; and

• Many other sometimes complex aspects relating to completing Form I-9 and verifying employment eligibility of all workers.

Definition of ‘Plan Year’ Is Unresolved in Some Instances

For health care plans, the plan year dictates when the age 26 coverage requirement and other new mandates must be implemented. The requirement to insure children up to age 26, for example, applies as of the start of plan years beginning on or after Sept 23, 2010. But when do plan years begin?

“Plan year” is not separately defined by the Patient Protection and Affordable Care Act (PPACA). For any group health care plan subject to the Employee Retirement Income Security Act (ERISA), the plan year will be the same as the 12-month plan year that ERISA requires to be disclosed in the plan’s summary plan description. For a plan that files a Form 5500, the plan year is disclosed on the form.

If a plan is not required to file a Form 5500, such as a fully insured plan with fewer than 100 participants, or the plan is not required to have or has failed to prepare a summary plan description, the plan year generally will be the policy year, presuming that the plan is administered based on that policy year. So, if a policy renews on Jan. 1 and any annual open enrollment changes take effect Jan. 1, the plan year likely will be deemed to start Jan. 1.

But if the policy renews on July 1 and open enrollment changes become effective on Jan. 1 of each year, the lack of a summary plan document leaves the plan year determination unresolved. An employer in that situation probably would want the plan year to start on July 1 to delay the date the plan has to comply with the health care reform requirements. But if the plan is administered on a calendar-year basis, the U.S. departments of Health and Human Services (HHS) or Labor (DOL) could reasonably argue that the plan year is the calendar year.

This is one reason why employers subject to ERISA who are not in compliance with ERISA’s written plan document or summary plan description requirement, or both, should come into compliance with these requirements, to support the employer’s position that the group health plan timely complied with the health care reform requirements.

September 2010

The supreme Court may rule on the pay bias lawsuit.

Walmart has asked the High Court to overturn a 9th Circuit ruling that allows a class-action suit alleging widespread discrimination against women to proceed. At stake: $1 billion or more. The class of potential plaintiffs includes more than 1.5 million past and current female Walmart employees, the largest pay-bias class action ever.

House Committee Holds Hearing on Bill Limiting Employment Credit Checks

On Thursday, the House Financial Services Committee held a hearing to discuss the Equal Employment for All Act (H.R. 3149), legislation that would make it unlawful, with certain limited exceptions, to base adverse employment decisions against prospective and current employees on consumer credit reports. While a number of panelists spoke in support of limiting the use of such employment-based credit checks, others testified that doing so is unnecessary and could put employers at risk. Read more at http://www.dcemploymentlawupdate.com/2010/09/articles/discrimination-in-the-workplac/house-committee-holds-hearing-on-bill-limiting-employment-credit-checks/

Fired for poor judgment? That’s not enough ‘misconduct’ to nullify comp.

In most states, employees terminated for misconduct aren’t entitled to unemployment compensation. However, what rises to the level of misconduct requires an individualized assessment. As the following case shows, using poor judgment alone isn’t misconduct. Employees who make a mistake are eligible for benefits.

Are you following the new FMLA Notice Requirements?

The FMLA’s notice requirements for employershave been the subject of considerable confusion in the past. Under the Department of Labor regulations that went into effect January 2009, the notification requirements are consolidated into a single section (29 C.F.R. §825.300), and conflicting provisions and time periods in the former regulations have been eliminated.

Employers who fall under the FMLA (50 or more employees within a 75 mile radius) must provide the following notifications:

(1) General Notice to Employees. The employer must provide general information about the FMLA through a poster (available from the DOL) placed in a conspicuous place, and by including the information either in the employee handbook or in written material given to the employee at time of hire. A notice that may be used by employees is available from the DOL at:

www.dol.gov/esa/whd/fmla/index.htm.

(2) Eligibility Notice. Once an employee requests FMLA leave, or the employer has a basis to believe that the employee’s leave maybe for an FMLA-qualifying reason, the employer must provide an “Eligibility Notice” to the employee within five (5) days, absent extenuating circumstances. This notice must either advise the employee that they are eligible for FMLA leave, or explain why they are not. A form eligibility notice is available for download at the DOL website referenced above.

(3) Rights and Responsibilities Notice. The employer must also provide a “rights and responsibilities notice.” This notice can be combined with the eligibility notice, and is a single document on the DOL form described above. Part A of the form is the eligibility notice, and Part B explains the rights and responsibilities of the employee. This notice should include the following, as applicable:

a. a statement that the leave is counted against the employee’s 12-month entitlement under the FMLA, and an explanation of which method the employee uses to calculate the FMLA year (i.e. calendar, rolling, etc.);

b. any obligation for the employee to provide a certification of serious health condition, exigency (military), etc. and the consequences of failing to provide such certification. A copy of the certification form required by the employer may be included with this notice;

c. the employee’s right to substitute paid leave (consistent with the company’s leave policies), or the employer’s requirement that paid leave be substituted;

d. any requirement that the employee pay a portion of the health insurance premium during leave, and the consequence should the employee fail to do so;

e. any designation of the employee as a “key employee” under the FMLA, and the effect of that status on job restoration;

f. the employee’s right to maintain health insurance benefits during leave and restoration after leave;

g. the employee’s liability for health insurance premiums paid by the employer during leave, in the event that the employee fails to return to work after the leave;

h. any other appropriate information that should be communicated to the employee – for example, a requirement that the employee make periodic reports to the employer regarding intent to return to work.

(4) Designation Notice. The designation notice must be sent within five (5) days of the determination that in fact the leave is covered by the FMLA. This determination can be made in some cases when the initial request for leave if submitted by the employee, and in other cases will not be made until the employer receive a certification of serious health condition. This form must specify the number of hours, days and weeks that will be counted against the employee’s FMLA leave entitlement (if known). If the employer requires a fitness-for-duty certificate for the employee to return to work, that requirement should be stated in this notice. A form designation notice (with boxes to check off) is also available at the DOL website.

Don’t wait until an employee requests FMLA leave – take time now to review your company’s FMLA notice procedures to make sure they are in compliance with the current regulations.