Category Archives: Management

Running Off an Underperforming Employee Is Not a Viable Option

In my long experience as an employment law attorney, I have come to realize that employers really, REALLY hate to fire employees. Some employers are scared of confrontation, others hate admitting they made a bad hire, and some just can’t find the right words.

Whatever the reason for being unable to fire a poor performer, employers often ask me about “running off the employee”. Running off an employee usually means making the employee so miserable the employee will voluntarily quit.

The employer trying to run off an employee may give the employee the worst duties at the company, criticize the employee in front of others, deny the employee’s vacation request, cut the employee’s pay, transfer the supervision of the employee to the worst supervisor, or make the employee work the graveyard shift.

Of course, this approach to termination often also makes the employee so angry that when the employee leaves, he or she becomes much more likely to sue the employer.

Running off an employee is the layman’s way of doing what we in the legal field call a “constructive termination”. A constructive termination occurs when the employer makes the working conditions so intolerable that any reasonable employee would feel forced to resign.

When an employee quits with good cause because the employer made continuing to work there intolerable, there are numerous legal consequences, such as: Continue reading Running Off an Underperforming Employee Is Not a Viable Option

Sexual Harassment Prevention Training Essential

Training photo

Every employer with 15 or more employees needs to require employees to attend sexual harassment prevention training. That is the takeaway that businesses need to understand from a new task force report on harassment in the workplace that the Equal Employment Opportunity Commission published in June 2016.

The EEOC’s report states that businesses have “to reboot workplace harassment prevention efforts.” The EEOC is especially concerned that most sexual harassment  prevention training focuses only on defining harassment and telling employees what they are prohibited legally from doing.

Instead, the EEOC is encouraging (read: requiring) businesses to also include workplace civility training and bystander intervention training. If a disgruntled employee makes an illegal harassment claim against your business in the future, the EEOC, as the investigating agency, is going to immediately require your business to provide evidence that you thoroughly trained your employees on these new topics. If the harassment complaint goes to trial, this training will also be your best defense.

Bystander Intervention Training is defined by the EEOC report as training that helps employees identify unwelcome and offensive behavior and creates collective responsibility to step in and take action when they see other employees exhibit problematic behaviors. The training is geared towards empowering employees to intervene when they see unacceptable conduct and gives them resources to do so.

Workplace civility training focuses on teaching employees to abide by reasonable expectations of respect and cooperation in the workplace. The emphasis is supposed to be positive—what the employees should do—rather than those things they are prohibited from doing. The training needs to include navigation of interpersonal relationships, an understanding of conflict resolution and teaching supervisors how to be civility coaches. In other words, it is now the company’s responsibility to teach workers how to be responsible, respectful professionals. On the job training and supervisor modeling is fine, but you need to add formal in-house training also.

Interestingly, at the same time that the EEOC is “encouraging” employers to promote more civility in the workplace and to prevent bullying and harassment, the National Labor Relations Board is issuing decisions that punish non-unionized businesses for written policies requiring employees to be respectful to coworkers.

The NRLB has repeatedly found that a company is infringing on an employee’s labor rights when the employer enforces handbook policies like this one from T-Mobile’s employee manual: “Employees are expected to maintain a positive work environment by communicating in a manner that is conducive to effective working relationships with clients, co-workers and management.” The NRLB thinks that kind of policy has a chilling effect on employees who have a right to discuss with coworkers all of the terms and conditions of their employment. I’ve alerted you about the NRLB’s crusade against policy manuals before.

So you as an employer are left with trying to decide whether to be investigated and sued by the NLRB or the EEOC. Continue reading Sexual Harassment Prevention Training Essential

HR Director Can Be Individually Liable for FMLA Violation

Most human resources professionals and managers think that working for a corporation gives them some protection from being sued themselves by former employees, but a federal appeals court recently held that an HR director can be individually liable for violations of the Family and Medical Leave Act (“FMLA”). The federal Second Circuit Court of Appeals made this decision in Graziadio v. Culinary Institute of America, No. 15-888-CV (2d Cir., Mar. 17, 2016).

The Second Circuit decided that the HR director who instigated the firing of an employee who was out on leave to care for her ailing sons could be sued in addition to the company who formerly employed the plaintiff. The FMLA provides that for purposes of being a defendant in a lawsuit, an “employer” includes “any person” who “acts, directly or indirectly in the interest of an employer” toward an employee. Therefore, a manager, supervisor, vice-president, HR director, leave administrator and other decision-making employees could be sued along with their company if the FMLA isn’t administered correctly.

The courts look at the “economic realities” of the situation, including whether the HR director had the power to hire and fire employees; supervise and control employee work schedules or conditions of employment; determine the rate and method of payment; and maintain employment records. Although a vice-president actually made the final firing decision in the Graziadio case, the evidence suggested that the HR director played an important role and the vice-president essentially just rubber-stamped the HR director’s recommendation of terminating the employee who was on leave.

These kinds of decisions are frightening to management employees who have to make hiring and firing decisions and those who have to administer the complex FMLA. However, this ruling should not come as a complete surprise to those of us who live and work in Texas, because the Fifth Circuit, which rules on federal cases in Texas, Louisiana and Mississippi, made a similar ruling ten years ago.

In addition, our Fifth Circuit court approaches the Fair Labor Standards Act (wage and hour) cases in the same manner. If the economic realities demonstrate that a supervisor was responsible for the misclassification of an employee as an independent contractor (meaning that the proper taxes weren’t paid, among other violations of employment laws) or the underpayment of minimum wages or overtime, then that supervisor may face a personal lawsuit by a former employee, along with the company being sued.

How can you as a manager or HR director protect yourself from a lawsuit that could endanger your personal assets? Continue reading HR Director Can Be Individually Liable for FMLA Violation

NLRB Crackdown on Employee Handbooks

Even if your HR department is on top of things, some of the policies in your employee handbook probably are now unlawful. Confidentiality policies, professionalism policies, employee conduct policies, solicitation policies, conflict of interest policies, social media policies, and others have come under intense scrutiny by the National Labor Relations Board (“NLRB”) in the last six months. The result could be an unfair labor practices claim filed against your company, even though your company is not unionized. Continue reading NLRB Crackdown on Employee Handbooks

Painkiller Addiction is on the Rise with Employees

The U.S. Centers for Disease Control and Prevention (CDC) reports that nearly 2 million people in the United States are addicted to prescription pain killers. One of those people might be your employee.

Opioid painkillers such as Vicodin and Oxycontin that are hydrocodone and oxycodone based are commonly prescribed to treat work-place injuries and other types of chronic pain. But these drugs are often over-prescribed and abused by patients and addiction is very common. In fact, in the last ten years, painkiller addiction rates have risen to epidemic proportions in the United States, the CDC said.

Injured or chronically ill workers who develop an addiction to painkillers represent a health and safety concern to themselves and to fellow workers. They can also create potential liability risks for you, the employer, and can lead to a less efficient and less productive workforce.

An obvious first-step in dealing with any kind of drug problem in the workplace is to be proactive and have a drug-testing policy in place that allows pre-employment testing, random drug testing, testing after workplace accidents and testing based on reasonable suspicion.

Then train your managers to look for the signs of substance abuse, particularly in employees who slack off at work, take unusual and frequent breaks, are no longer punctual, and who occasionally slur their speech or make unwarranted mistakes in their work.  While many employees may be able to manage their chronic pain responsibly and without abuse, you should be aware of the warning signs of abuse and educate your managers on them as well. These signs can include bloodshot eyes, sudden weight loss, a lack of grooming, poor attendance or other uncharacteristic behavior.

Before you take action against an impaired employee, you need to consider and weigh both the safety of your employees versus the risk of a lawsuit by the employee who is abusing drugs. The Family and Medical Leave Act or the Americans with Disabilities Act may apply to this situation, so don’t make any hasty decisions without legal advice.

Counting Consequences

One of the things I admire most about many of my clients in the Texas Panhandle is their entrepreneurial spirit. Many of them have created and nurtured several businesses to success. But there is a downside to owning many businesses: your employment headaches increase.

For example, if you have one employee who works for two of your businesses, such as a receptionist at your main office, you might be paying that employee out of two business accounts and not realizing that you have overtime obligations to that employee. Your two businesses may be “joint employers” of this receptionist if there are common officers or directors of the companies and/or there are common insurance, pension or payroll systems. If so, you must take the hours that receptionist works at all of your businesses into account when determining whether that employee should be paid overtime for working more than 40 hours in any one workweek.

Another consequence of owning more than one business is that the number of employees working at all of your businesses may need to be combined when deciding whether you have to comply with various federal employment laws, such as Title VII (which goes into effect when you employ 15 employees), the Americans with Disabilities Act (which requires 15 employees), the Age Discrimination in Employment Act (which requires 20 employees), the Family and Medical Leave Act, which requires that you provide up to 12 weeks of unpaid leave to your employees if you have 50 names on the payroll, or the Affordable Care Act, which mandates that employers with 50 or more full-time equivalent employees provide health insurance to their employees beginning in 2015 or face substantial penalties.

The Department of Labor and the EEOC will apply an “integrated employer” test to determine whether separate but related businesses are deemed to be a single entity for counting the number of employees (names on the payroll) to determine whether you are liable for discrimination under Title VII, the ADA, the ADEA or the FMLA. This test looks at four factors: common management of the two companies, interrelation between the operations of the companies, central operation of labor relations and some degree of common ownership or financial control. If your companies are integrated, you need to count names on all of your payrolls to determine if you need to be complying with these federal laws.

The Affordable Care Act counts employees a little differently and combines related companies differently also. The ACA requires that related entities count employees as if they were employed by one business to determine if you employ at least 50 full-time equivalent employees (and remember that the definition of “full-time” under the ACA is 30 hours per week). If your related companies all together employ 50 FTEs or more, you will have to provide your employees with health insurance beginning in 2015 or be ready to pay the penalties imposed on employers who do not comply. The ACA combines into one employer related entities such as parents and their subsidiaries, brother/sister companies where the same five people or entities own the equity in two or more companies, and affiliated service groups such as law firms, accounting firms, civic organizations and temporary staffing companies that are linked by at least some ownership (the statute refers to a 10% threshold) and closely collaborate in the services they provide.

Accurately counting the number of employees you employ when you own more than one business can be much more complicated than it initially appears. But getting that accurate count is essential to operating your businesses legally.

Stop Employee Theft

In 25 years of practicing employment law, I have unfortunately had to advise many clients who have been robbed by their own employees. They have lost thousands of dollars to theft of cash and inventory. In most instances, when my client has called me with questions about employee theft, the business has already been ripped off by its employee and is now just trying to figure out whether to prosecute and if there is any way to put in an insurance claim. I would rather see my clients take some preventative measures to stop employee theft before it happens.

Prevention starts by screening applicants with thorough reference and criminal background checks. Any employee with access to the financial records, bank accounts, credit cards, cash or inventory should have a clean record both with past employers and with law enforcement.

You should also assign overlapping job duties. Many of my employers who suffered losses to employee theft trusted just one person to handle the finances, the checkbook, cash receipts, reimbursement of business expenses or the bank deposits and didn’t require a second set of eyes on these records. Even if you don’t constantly have two people double-checking these records, learn a lesson from banks. Most banks require employees in sensitive financial jobs to take their vacation time in at least one week segments so that another employee can get a good long look at the vacationing employee’s records.

Every employer should also identify those areas of the business that are at high risk for theft and conduct audits every quarter or every six months on expense reporting, cash reconciliation, firm credit cards, etc. If you stock inventory, then performing a regular count of your inventory is also important. You should protect your inventory by watching for cars parked close to loading zones, unlocked exits that should remain locked, and bulging bags.

Finally, you should know your employees. The U. S. Chamber of Commerce recommends that you watch your employee’s behavior for unusual working hours, poor work performance, defensiveness when reporting on work, an unexplained close relationship or favoritism with a supplier or customer and/or a personal lifestyle that doesn’t match the employee’s salary.

One word of caution. If you suspect an employee of theft, don’t make the mistake of falsely imprisoning that employee or defaming that employee. If you detain an employee in the workplace by restricting his movement in some way, you could be guilty of false imprisonment. Let him leave if he wants to, and then let the police track him down and arrest him later if you have proof of theft. Defamation involves publicizing to others (such as your other employees) that an employee stole from you before that fact has been clearly established. In most instances, there is no reason for anyone else to be notified that you are accusing your employee of a crime. Only when the employee has been convicted of theft can you safely report to others, such as prospective employers who call for a reference, that your former employee stole from you.

Relativity in the Workplace

There is an old Hollywood story that warns of family-run businesses:

Despite their joint ownership (with Albert and Sam) of Warner Brothers studios, little love was lost between Jack and Harry Warner (who once chased Jack around the Warner Brothers lot brandishing a lead pipe, threatening to bludgeon him).

Albert Einstein was given a tour of the Warner studios. “This is the great Professor Albert Einstein,” an executive declared by way of introduction to Jack Warner. “He invented the theory of relativity.”

Warner suddenly perked up. “Well, Professor, I have proved a theory of relatives, too,” he remarked.

“Really?” Einstein replied.

“Yes,” Warner declared. “Don’t hire them!”

In my law practice, I often advise businesses in which several of the owner’s family members are employed. While many families are able to successfully avoid stepping on the landmines that are planted just below the surface of family businesses, others seem to blow up either the family or the company by forgetting to follow a few simple principles to avoid the explosives:

  • Make sure your family members are qualified to work in the role they are fulfilling in the company. I know of a successful entrepreneurial husband who wasn’t interested in worrying about the day-to-day tax, employment, accounting and management details of his business. He was a salesman and a very good one. So he left all those other details to his wife. She had no MBA, no training and no experience with the technical and financial aspects of running a business. Their business eventually suffered several large setbacks because neither spouse was qualified to manage the niggling but necessary details with which every business has to deal. The moral: either hire qualified non-family members to do the jobs which you and yours cannot perform, or require immediate and extensive training for any family member whom you expect to perform unfamiliar job duties.
  • Don’t discriminate between family and non-family members. If you have a policy manual that prevents all employee from smoking in the building, prohibits the use of alcohol while on duty or pornography on the company computers or requires all employees to show up on time, do not allow family members to break these rules. In fact, in my experience, the family members should meet even higher standards to set a good example and because they are always under more scrutiny by employees to determine whether there is a double standard applied.
  • Be careful about practicing your family’s faith in the workplace. I never advise an employer to cut out all references to faith in a business, particularly since following the tenets of your faith can create a much more ethical and wholesome workplace. However, the more family members or others of the same faith you have working in your business, the greater the possibility that applicants or current employees will feel like they have to pass a faith test to work in your business. This would of course be discriminatory, so you will have to be even more diligent about enforcing your equal employment opportunity policies, hiring employees of varying faiths, and making disciplinary decisions without regard to an employee’s beliefs.
  • Watch out for apparent authority problems. In Texas, those with apparent authority to speak for the company can bind the company to contacts and get the company in legal hot water for employment decisions. If it is well-known to your vendors and employees that your daughter is working at the company and is being groomed to one day take over the business, don’t be surprised if she is treated legally as having authority to make all decisions for the company, even if, as the owner, you don’t believe she is experienced or mature enough yet to actually make those decisions.
  • Family dysfunction can really cripple your business. If your son and daughter-in-law both work at the business, what will happen if their marriage starts to fall apart and they eventually divorce? Will you automatically fire your soon to be ex-daughter-in-law? Could this create a sexual discrimination issue? Could she make a claim in the divorce for part of the ownership of the business as community property? Those business owners who plan for the worst and hope for the best address these kinds of issues long before problems arise by requiring buy/sell contracts, pre-nuptial agreements and employment contracts with family members.

Popular Culture in the Workplace May Be Inappropriate

Michael’s co-worker liked rap music. He liked it so much that he constantly played it and rapped along. Even though the songs contained the “N-word”. Even though Michael is African American. Even though Michael complained several times over a year’s time to his supervisors that the lyrics he was forced to listen to were offensive.

Because his supervisors didn’t correct the problem, Michael contacted the Equal Employment Opportunity Commission (“EEOC”). The EEOC sued on Michael’s behalf for racial harassment and settled the suit against Michael’s employer last year for $168,000.

In announcing the settlement, the EEOC claimed that it is not in the business of judging anyone’s musical taste, but then made it clear that racially offensive language does not belong in the workplace even when disguised as popular culture. The employer had numerous chances to stop the wanna be rapper from offending his co-worker, but never effectively did so.

This kind of culture clash creates difficulties for employers. While television, movies and music have adopted an “anything goes” attitude, the harassment laws require that almost nothing offensive is ever said in the workplace. Every movie that Judd Apatow (“Knocked Up”, “40-Year-Old Virgin”, etc.) releases lowers the bar a little more on what passes for polite discourse in our society, yet every sexual harassment decision raises the standard for what is acceptable conversation on the job. In the middle of this struggle is the employer, trying to build widgets and make a profit, all while having to monitor every employee’s words and conduct.

Miller Brewing Company tried in 1993 to enforce professionalism by firing a manager named Jerold who repeated the punchline of a “Seinfeld” episode to a female coworker. In the episode, Jerry Seinfeld forgot the name of a girl, but remembered that her name rhymed with a female body part. The joke was that her name was “Dolores”. Jerold’s female co-worker didn’t get the joke, so Jerold found a dictionary and pointed out the definition of the rhyming body part. She complained and Jerold was fired a week later. Even though the company overreacted slightly to this one incident, Miller Brewing probably thought that its professionalism policy had done its job and that was the end of it.

The twist in this story is that Jerold sued Miller Brewing Company and the female coworker saying he was wrongfully terminated. The jury found that the woman was not really offended by the Seinfeld joke because she was known to participate in some graphic references herself. The jurors also found that Miller lied about the reasons it really fired Jerold. Jerold was awarded more than $20 million, although he never saw a dime of that money since an appeals court overturned the damages award.

In another music case, the Vail Corporation did not restrict employees listening to music with profanity or lyrics promoting violence against women, which Lisa said offended her. Stupidly, the company did tell Lisa, a Christian employee, that she could not listen to Christian music while on duty because it might offend other employees. The EEOC claimed that the employer also failed to accommodate Lisa’s religious beliefs in some scheduling requests and sexually harassed her by letting managers tell sexual jokes and make graphic comments in the workplace. The Vail Corporation paid $80,000 to settle that religious and sexual discrimination suit.

So do you as an employer have to police your workplace to rid it of all references to popular culture? Good luck with that. Realistically, there are some steps you can take to assure that professionalism reigns in your company:

  • Have clear, written policies expressing the company’s prohibition of racial, sexual, religious and other slurs and harassment, as well as a detailed procedure that your employees can employ to complain if they are offended. Enforce the policy with progressive discipline before any situation gets out of control.
  • Train your employees. So many young people (and some older ones) entering the job market are completely clueless about what “appropriate” or “professional” behavior and conversation actually look like. Yes, their parents and their schools failed them. But now they are your problem and you are going to have to be the one to educate them.
  • Take complaints seriously. Michael’s concern about hearing the “N-word” frequently in his co-worker’s musical selections should not have taken a year to be resolved. Even if you think your employee is being overly sensitive, investigate the complaints objectively and promptly.
  • Set a good example yourself. If dirty jokes, racial epithets or religious slurs ever sneak into your conversations, you can be sure that your employees are watching and taking note. Why should they strive to be professional and appropriate if you don’t bother to do so yourself?

Beware New ARRA Whistleblower Law

More than just Big Brother is watching you. Your employees are watching too, and can use the protections of a new whistleblower law to protect their jobs if they report any kind of wrongdoing by your business.

The new whistleblower law is included as a tiny piece of the massive American Recovery and Reinvestment Act (“ARRA”). Employees of any company that is a recipient of any stimulus money provided by ARRA are protected from job terminations if the employee discloses a problem involving stimulus funds to a supervisor or an enforcement agency. The protection applies when the employee reasonably believes he/she is disclosing a problem related to stimulus funds, such as:

  • Mismanagement or waste; or
  • Danger to public health or safety; or
  • Abuse of authority; or
  • Violation of a law or regulation governing a grant or contract relating to stimulus funds.

Companies that may receive stimulus funds include healthcare companies, especially technology providers in the healthcare field, airports, alternative energy companies, contractors rebuilding infrastructure, companies retrofitting closed industrial facilities, medical researchers, scientists, libraries, schools, shelters, and many other businesses. Therefore the employees of these companies may have a new and unprecedented level of employment protection from the ARRA whistleblower regulations.

What should a company expecting to or already receiving stimulus funds do in response to this whistleblower liability?

  • Hire and train a quality control expert or contract administrator to oversee the efficient and safe use of the stimulus funds.
  • Prepare ethics guidelines for the handling of funds and the work to be accomplished and have every employee sign off on them.
  • Train your managers and supervisors to immediately report any complaints about efficiency, public health, contractual violations, etc. from their employees to the quality control officer.
  • Be very careful about terminating employees. Document all reasons for terminations. If an employee has made complaints inside or outside of the company, talk to an employment lawyer about your company’s exposure to whistleblower liability before you terminate the employee.