Category Archives: Termination

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

Employee Free Speech on Facebook

Is your employee free to post a Facebook rant about one of your supervisors that says, “Bob is such a nasty M___ F___ don’t know how to talk to people!!! F___ his mother and his entire f___ing family!!! What a loser!!! Vote YES for the UNION!!!”?

Many of my West Texas employers would fire the employee on the spot for that Facebook post.  But if you called an employment attorney, you would be advised against that termination because the National Labor Relations Board (NLRB) just decided last month that the employer involved in this mess had to reinstate the foul-mouthed employee and pay him lost wages.

The NLRB reasoned that the employee’s vulgar rant was “protected, concerted activity” protected by the federal act relating to the formation of unions. The NLRB noted that the harassment policy in the company’s handbook didn’t prohibit vulgar or offensive language, even though that policy was cited as the basis for the discharge. No employee had ever been fired by this employer before for obscene language. In addition, the company was in the middle of an election to decide if the workplace would be unionized.

However, even if your workplace will never be unionized, your actions as an employer can be scrutinized on the basis of employees engaging in “protected, concerted activity” to improve their pay and working conditions. For a summary of the cases that the NLRB has pursued against non-union employers, see the NLRB’s new website dedicated to their enforcement of that law. http://www.nlrb.gov/rights-we-protect/protected-concerted-activity

The NLRB has also been very busy telling non-union employers what can and can’t be in an employee policy manual. On March 18, 2015, the NLRB’s general counsel released a memo concerning those employment policies that the NLRB believes have a “chilling effect” on employees’ rights to engage in protected activities. http://www.nlrb.gov/reports-guidance/general-counsel-memos

Here are precautions you can take as an employer to avoid running afoul of the NLRB or a crafty plaintiffs’ employment lawyer that sues you for your “illegal” handbook policies: Continue reading Employee Free Speech on Facebook

TWC Creates Calculator to Estimate the Effect of Unemployment Claim

Whenever a Texas employer receives a Notice of Application for Unemployment Benefits, the first question that runs through the employer’s head is “How much is this going to cost me?” The answer to that question can influence whether the employer decides to protest the unemployment decision, how much time, effort and worry to invest in the protest and whether to hire a lawyer to protest the unemployment award. The cost estimate has been a difficult question for employment lawyers to answer. But now the TWC has provided all of us a calculator that will estimate how a particular employer’s tax rate will change if the former employee collects the maximum unemployment benefits.

When you receive the initial notice, go to this site and input your former employee’s salary for four of the last 6 quarters and the tax rate information off of your annual Tax Rate Notice from the TWC to get a tax rate estimate. With that estimated tax rate, you can compare it to your previous TWC reports and see the change that will occur in the Texas unemployment taxes that you will pay based on that one employee receiving unemployment benefits. Remember as you make that comparison that your tax rate increase will be effective for three years, not just one, after an employee files a successful unemployment claim.

Employer’s Liability for New Employees

Bob Smith started working for you four weeks ago. He has already missed two days of work, been tardy, left early one day and when he is at work, his production is mediocre. You have a 90-day probationary period in your employment policies and it is becoming clear to you that Bob is not going to make it through that probation. Can you fire this four-week employee without any unemployment or discrimination liability?

Unfortunately, the answer in Texas is “no”. As soon as Bob became your employee, he became your problem. This is one reason that the hiring process ought to be very demanding, including checks of all of his past employers, criminal records, drug screening, etc. to discover at least the most obvious problems before you put him on the payroll. But many past employers won’t tell you anything about Bob’s dependability, so it is not surprising that he got through the hiring hurdles.

So if you decide to fire him today, what kind of liability can you face as an employer? In Texas, you will probably be charged back for his unemployment benefits by seeing an increase in your unemployment tax rate on all of your employees for the next three years. That is a stiff price to pay. There is a chance you will get lucky and not get the charge back if Bob falls into a narrow category based on how much he worked before you hired him. The explanation for that can be found on the Texas Workforce Commission website (click here).

Assuming that you don’t get that lucky or you don’t want to count on luck, you can document Bob’s problems, give him a written warning and then fire him for misconduct as you would any longer-term employee so that you have a way to fight the unemployment claim. This will go better for you if your policy manual makes it clear that absenteeism during the probationary period is not allowed. There is nothing wrong with requiring your new employees to show up every day for the first three months. You would think that most new employees would want to do that just to prove themselves, but I am constantly amazed by the slackness that many new employees bring to the workplace.

What about discrimination? Surely you can’t be held liable for something that happens to a new employee in the first few weeks? Think again. The United States Sixth Circuit Court last year upheld a $1.2 million sexual harassment claim for an employee who had only worked for five weeks at the company. In her third week of employment, she complained to her trainer and supervisor about the comments, touching, whistles and lewd gestures she was receiving. The supervisor moved her, but unwisely said, “That’s just how they treat their women over there,” and requested that she not tell the human resources department.

After another two weeks without improvement, the new employee told the human resources manager about the problem. He promised to investigate, but didn’t, so she filed a charge with the EEOC and later, a lawsuit. The trial court and the appellate court found that the employer’s response to the employee’s sexual harassment complaints showed reckless indifference to the new employee’s federally protected rights, supporting not only a judgment against the employer, but also an award of punitive damages.

There are all kinds of problems with the supervisor and the human resources manager’s responses to the sexual harassment complaint that have been discussed in other entries on this blog, but suffice it to say here, the fact that the employee only worked five weeks did not insulate the employer from any liability in this case. Your responsibility as an employer to protect your employees from discrimination kicks in on their first day of work and continue throughout their employment.

Protecting Your Company from Departing Employees

I may be naive, but I believe that most employees leaving one job for another want to leave in as amicable a way as possible. Most of them have no intention of stealing your trade secrets, unfairly competing against you or hurting your business in any way.

But then there are the other departing employees. They are the ones who take your customer preference lists, use your resources to set up a competing business, steal your trade secrets or sabotage your computer system as they leave. These are the bad apples that we have to address in non-competition agreements and confidentiality statements.

I think one of the most effective ways to protect your company from these pirates is to have a written policy explaining to your departing employees what is and is not proper behavior at the time of termination. You might want to include some or all of the following:

  • You may not take, copy nor provide to anyone outside of the company our list of current or prospective customers or [name other confidential documents];
  • You may not use our resources (computers, e-mail, telephones, offices, etc.) to start or run your own business or to aid or communicate with your new employer;
  • While you are still employed here, you may not encourage our customers, employees or vendors to end their relationship with us and join you in any new business or other company;
  • You cannot publicly announce your new position or business until you have left our employ;
  • You cannot remove files, manuals, papers or other documents from our premises if they belong to the company or address company business;
  • You cannot transfer any company information or data electronically to another employer or to yourself off premises or to any disc, flash drive, or other electronic storage device;
  • You may not delete, remove or destroy any data from the company computer system prior to your leaving your employment;
  • On your last day of work, you must return all keys, credit cards, laptops, cell phones, or other equipment that belongs to the company. You may request to remove personal information from this equipment under the supervision of a company representative;
  • If you have not already done so, you will be allowed to remove personal items from your office at a mutually convenient time after work under the supervision of one of our managers

This list certainly won’t address every way in which a departing employee may pilfer valuable information or equipment from your company, but it should get you started thinking about the problems you’ve had in the past which you would like to avoid from now on. If you have had more serious piracy in your workplace, such as the misappropriation of trade secrets or patented processes, you will want to consult with an employment attorney about an enforceable employment agreement that includes a noncompetition provision, as well as other protections for your intellectual property.

Weathering the Recession Without Extra Burden of Litigation

As an employment lawyer, I frequently am asked the question that all business people are asked these days: “How is your business faring in these troubled economic times?” I am personally happy that I can say, “My business is booming.” What I am not happy about is the reason for my current volume of business: more companies are being sued by their former employees, probably because the recession has created more “former employees”.

There are two approaches I recommend to prevent becoming just another company involved in expensive and frustrating employment litigation during this economic downturn:

  1. Don’t cut back on the practices that help prevent employee lawsuits. That means keeping your policies updated, training all of your managers annually on employment law issues like discrimination, continuing to use progressive discipline, and carefully documenting every employee interaction, particularly ultimate employment actions such as hiring, promotions, demotions, reduction in force and terminations. You’ll find lots of postings on this blog giving you more information about how to take these measures if you are a Texas employer.
  2. Prevent lawsuits by using severance agreements when you have to terminate employees. That’s what I want to discuss today.

Texas law is supportive of severance agreements, which are contracts between the exiting employee and the company giving the employee more pay than he is due in exchange for a release of most possible employment law claims. In 2008, 93 percent of U.S. companies who paid any additional severance pay to a departing employee required that employee to sign a release, according to a new study by consulting company Lee Hecht Harrison.

The study found that the traditional idea of severance pay based on tenure (one week for every year worked, for example) is being replaced by packages negotiated by the employees themselves, sometimes before they are even hired. The study found that nationwide, the minimum number of weeks paid in 2008 for all executive employees was 13 and the maximum was 38.

These figures are higher than what I see in the Texas Panhandle. I find that generally my clients are willing to pay 3-6 months of severance to key executives who are departing, while 4-12 weeks of severance compensation is much more commonly paid to lower-level employees when the company doesn’t want to mess with litigation.

Not every departing employee needs to be paid severance compensation, because you do not need a release from every terminated employee. If you have paid attention to the preventative actions described above, have strong written policies, used progressive discipline and documented everything, you may be able to terminate a low-performer without fear of litigation.

However, there are many instances where the firing is not so neat and clean, where the employee is known to be litigious, or where your gut (or your lawyer) just tells you that you need an extra measure of protection when letting a particular employee go. That’s when the severance agreement is helpful.

A severance agreement is a contract which has certain legal requirements to make it enforceable. So kids, don’t try this at home. Call an experienced employment attorney in the state in which the employee is located to help you draft an agreement that will relieve your company of liability and protect the business from the cost and burden of a lawsuit.

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.

Sexual Harassment for all Ages

Texas courts have considered sexual harassment at both ends of the age spectrum lately. One case involved a teenager as a victim and the other involved a 62-year old harasser who claimed age discrimination when he was fired. Both cases have lessons to teach employers about sexual harassment, still one of the most common employment claims that companies face.

The case involving the teenager was tried in Houston last year. The EEOC filed the case on behalf of a 19-year-old who was hit upon by the owner of the dry cleaners in which she worked. The evidence showed that the owner inappropriately touched his young female employee, made many offensive comments, and held her against his will in her car while he graphically related his sexual desires and threatened her with sex against her will. The jury found that the owner had harassed the employee and awarded her $105,000.

A couple of things need to be learned from this case: Continue reading Sexual Harassment for all Ages

Firing without Fear

Many Texas business owners and managers that I know are extremely authoritative and competent until it comes to firing an employee. Then the most confident bosses become fearful. Getting sued by an employee scares them and rightfully so. But times are tough economically and you may have to terminate some employees just to keep your business afloat. So how do you fire without fear of the legal fallout?

A “good” termination doesn’t happen overnight. I have often advised employers that even though quick, decisive action is needed, the employer may need as long as six months to fire someone if the employer hasn’t been diligent about policy-making, documentation and training before then. So before you can fire without fear, here are some preliminary steps:

  1. Make sure you have a great employee policy manual that is up to date and makes clear your expectations of all employees. Policies that clearly prohibit illegal harassment, discrimination, drugs, Internet pornography and violence, as well as strict procedures for reporting violations of these policies, can dramatically reduce your exposure in lawsuits.
  2. Training of your supervisors is essential to firing without fear. Day to day careless comments made by a first line supervisor often comprise the most damaging evidence in an employee lawsuit. Make it clear through training of every person with any supervisory authority that throwing an “Over the Hill” birthday party can indicate age discrimination, compliments about a woman’s clothes can be twisted into a sexual harassment complaint and grumbling about an employee’s reluctance to work on a Sunday can be perceived as religious discrimination. The behavior required of supervisors nowadays often defies common sense and human nature, so training is the only sure-fire way to know that your supervisors will not say or do something that the company will come to regret after a termination.
  3. Regular performance evaluations that honestly identify an employee’s short-comings are essential to a “good” termination for poor performance. No one should be surprised that he is being fired because at least a couple of prior poor performance reviews should have preceded the termination.
  4. Don’t fire anyone unless for disciplinary violations such as absenteeism unless you have warned him in writing at least a couple of times that his behavior is unacceptable. Those written warnings should include a plan for improvement and a statement that if his actions do not improve, he will be “subject to disciplinary action, up to and including termination.”
  5. Call your employment lawyer before you fire the employee. Your attorney will probably want discuss the employee’s entire employment to identify all the possible red flags that this particular employee’s record could wave. (Click here for a checklist for termination red flags when a Texas employee is involved.) Be prepared to send your lawyer your policy manual, the supervisory training records and the employee’s file for review. The lawyer may want also to talk to the employee’s direct supervisors to gauge any exposure there before advising you as to the wisdom of a job termination.
  6. Write a termination memo to give to the employee. It should briefly set out the policy violations that resulted in the employee’s job termination. This memo may be repeatedly scrutinized by the employee, her lawyers, the Texas Workforce Commission, the Equal Employment Opportunity Commission and even a jury, so it must be worded carefully. However, don’t skip this step out of fear. The memo will prevent the “he said, she said” exaggerations if litigation does ensue and keep everybody focused on the nondiscriminatory reasons that the firing occurred.
  7. Terminate the employee when you are calm and well-rested and you have another trusted manager available to be a witness. Make the meeting brief. Just hand the employee the termination memo and ask if she has any questions. Stand firm on your decision and don’t argue with the employee. Assure the employee that she can return to gather her belongings at a mutually agreeable time (don’t just give her ten minutes to pack up her belongings and then march her out under armed guard). Let her leave with some dignity and wish her well.

What Can You Say About a Former Employee?

So you fired an employee because you smelled alcohol on his breath right before he jumped into the cab of a company delivery truck. You let your assistant go because she was late for work at least two days per week and was recalcitrant when confronted.  You found your salesman so abrasive and arrogant that you couldn’t stand him and just eliminated his job one day.

If you are a Texas employer, what do you say about these and other former employees when their prospective employer calls for a reference? If you have attended any human resources management seminars in the last 10 years, you have been told to “say nothing”. Give out the dates of employment and salary, but no specifics on the employee is the frequent advice of employment lawyers.

I understand. I often say that too when I realize that explaining the nuances of giving out references takes too long and will probably be misinterpreted by my audience. But for this blog I am going to try to take off your straitjacket and tell you as a Texas employer how to give out informative references in a way that will give you a good chance of avoiding legal trouble: Continue reading What Can You Say About a Former Employee?