Monthly Archives: January 2009

Ledbetter Fair Pay Act Is Now Law

Compensation, Discrimination

As predicted in this blog and by most employment law pundits, President Obama is expected today to sign bill favoring employees as his first piece of major legislation. The Lilly Ledbetter Fair Pay Act overturns a U.S. Supreme Court decision from 2007, which restricted the statute of limitations on Equal Pay Act claims.

Lilly Ledbetter worked for Goodyear Tire & Rubber Co for 19 years before she found out that she was the lowest paid supervisor there, even though she had more experience than some of her male counterparts. She sued for pay discrimination based on gender, and the jury agreed with her. But the case was appealed all the way to the Supreme Court, which decided that the 180-day statute of limitations for complaining about discrimination had run out when 19 years before, when the pay inequity first occurred, regardless of when she found out.

The new law, which will go into effect tomorrow, clarifies that each new paycheck is a discriminatory act that starts the 180-day clock running again if an employee is being paid less because of her gender, race, age, disability, or national origin. An employee can now claim discrimination on the basis of pay when he discovers the inequity and seek two years of back pay for the amount he should have been paid.

What can you do as an employer to prevent an Equal Pay Act suit? Senator Barbara Mikulski, who sponsored the bill, had a point: “If you don’t want to be sued, don’t discriminate,” she said.

The Equal Pay Act has been around since 1963, enacted even before Title VII of the Civil Rights Act of 1964 outlawed other types of discrimination. It has helped women go from earning $.62 for every dollar a man earned for the same job to earning $.80 for his dollar. But there is still obviously some subtle discrimination or women and men would both earn the same amount for performing the same job. Since the law has been around since most of us who are business owners and managers were in elementary school or even diapers, maybe it is time that we learned to comply with it.

How do you do that? Look at what every employee performing the same job is earning. For example, if you have five engineers working for you, pull out your payroll and figure out if you really could justify their salary discrepancies and the demographics. If Engineer Bill has 30 years experience and Engineer Tiffany has 10, that is a pretty convincing justification for Tiffany making less than Bill. But if they both have about 10 years of experience and he is still paid more, you may have some explaining to do. He may actually perform much better than Tiffany, but you better have lots of paper to back that theory up.

I know this evaluation will take some time ( probably a day) and will be a PITA (as my teenage son says). But as I always say, you can either spend a day now to prevent a suit, or spend weeks or months in investigations, discovery, depositions, mediations and trial with a disgruntled employee, her lawyer and me later.

Final Paychecks in Texas

Compensation, Forms and Policies

I get lots of questions about final paychecks in Texas, so I thought I would give you a quick review of the Texas Payday Law.

Your employees must receive their final paychecks on the sixth calendar day after they are laid off, discharged, fired or otherwise terminated involuntarily, or on the next regular payday if they voluntarily quit. So if you mail the final paychecks, you must mail them early enough that they are available to your former employees by the deadline.

Do you have to include pay for accrued but unused vacation and/or sick leave in the employee’s final paycheck? Not in Texas. The employer can have a written policy or a standard practice of not paying unused vacation, sick leave or paid time off, or paying them only for employees who leave in good standing (two weeks notice and no disciplinary problems), or paying them to everyone who leaves. Just be consistent and put your policy in writing with distribution to every employee and the Texas Workforce Commission will back you up if a complaint is made.

Can you “hold” an employee’s final paycheck past the sixth day or the next regular payday because he still hasn’t turned in his uniforms, his keys or other company property? In a word, “NO”. Texas law does not allow any holding of paychecks. As an employer, you have an obligation to pay every time, on time.

So what do you as an employer do to make sure that equipment, uniforms, or store inventory don’t disappear when the employee leaves your company? And what if the employee still owes you money for a salary advance?

Long before the employee is terminated, you must get his written permission to make deductions from his final paycheck for items that can be lawfully withheld, such as uniforms, salary advance repayment, personal charges on company accounts, damaged or lost equipment, etc. If you have a wage deduction authorization agreement signed by the employee ahead of time, you may withhold the items enumerated in the agreement from that final paycheck. The Texas Workforce Commission has even drafted a form for you to use, which you can access by clicking here.

If you don’t have a written authorization or if the final paycheck won’t cover all of the amounts owed to you by the employee, you cannot hold his paycheck hostage until you receive repayment. You must send him his final paycheck on time and then turn around and sue him in small claims court to get the amounts owed to you repaid.

If you pay an employee bonuses or commissions, you must have a written agreement with the employee outlining how those bonuses or commissions will be paid if they are collected and due after the employee leaves your employment. A simple written agreement regarding commissions can help you avoid fighting a Payday Law claim with the Texas Workforce Commission which will ensue if your terminated salesperson disagrees with your interpretation of how much he is owed in commissions after he leaves your company.

Firing without Fear

Termination, , , , ,

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.

Bush’s Employment Law Legacy

Compensation, Discrimination, Documentation

Since this is the last day of President George W. Bush’s presidency, I thought it appropriate to look back and see what employment laws have been passed while he has been in office. While generally considered lax on enforcement of employment laws (except with regard to employing illegal immigrants), there have been several sweeping changes that affected the employee/employer relationship in the last eight years.

The Americans with Disabilities Act was amended drastically in 2008. I have written extensively about the amendments on this blog, which you can read by clicking here. Surprisingly for an administration that was considered pro-business, these amendments that Bush signed were very favorable to employees and could mean a substantial increase in the number of lawsuits against companies for alleged disability discrimination.

The Family and Medical Leave Act was also amended to expand the act to cover military families, not only when a servicemember is wounded and needs care, but also to allow family members to take 12 weeks off whenever a servicemember is called up. In addition to this law, signed by Pres. Bush in January 2008, his Department of Labor finalized substantial changes to the regulations affecting the FMLA. Most of the changes were applauded by businesses for making the complicated FMLA easier to administer.

Pres. Bush signed legislation requiring Incremental increases to the minimum wage, which increased to $5.85 in the summer of 2007, $6.55 in July 2008, and will be finalized at $7.25 on July 24, 2009. Traditionally, businesses have protested minimum wage increases, saying that the economic impact on small businesses is too great to be passed on and negatively drags down profits. I have seen no study linking the current economic crisis to the minimum wage increases that began in the summer of 2007, but the timing of the increases and the economy going into the toilet is worth considering. Continue reading Bush’s Employment Law Legacy →

Brief Updates

Attendence, Compensation, Discrimination, Hiring,

The Department of Labor has released new notification forms to be used with Family and Medical Leave. If you have more than 50 employees (names on the payroll, whether full or part time), you should have an FMLA policy in your handbook and the FMLA poster on your employee bulletin board. Once an employee has requested any absence from work that might qualify as family or medical leave, then it is up to the employer to notify the employee of the employee’s eligibility for federally mandated family and medical leave, to ask for medical certification of the condition necessitating the leave and to make a final determination of eligibility. Also the employer must provide leave to military families under certain circumstances. The necessary forms to use for all of these determinations are available on the Department of Labor’s website, which you can access by clicking here.

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The wage discrimination laws that I discussed in my January 6 blog post were unsurprisingly passed by the U. S. House of Representatives last week. If they clear the Senate, you can be assured that President Obama will promptly sign them. As I stated in that post, you can get ready for this law by deleting any policy still in your employee manual that prohibits employees from discussing their salaries. You can also review the salaries of any employees performing the same jobs and make sure that you have a rock-solid (meaning something in writing from the time the salary was determined) explanation relating to tenure or extra educational or licensing qualifications to explain why a male employee is making more than a female employee.

* * *

The Texas Legislature started its biennial circus last week in Austin. Once the drama of the Texas Speaker’s race subsided, it was time to look at the proposed legislation that could affect employers. Some of the ones I will be watching include a bill to require all employers to pay an employee her regular wages while she serves on jury duty, lots of bills penalizing employers who don’t carry worker’s compensation insurance, and family leave bills to allow parents time off to attend school activities involving their children. If any of these or other employment-related bills pass during this legislative session, I’ll keep you posted.

* * *

Somehow, the last tidbit on giving time off to parents for school activities reminded me of this joke about an employer’s reply to an employee’s request for time off:

“So you want a day off? Let’s take a look at what you are asking for!

There are 365 days this year.

There are 52 weeks per year in which you already have 2 days off per week, leaving 261 days available for work.

Since you spend 16 hours each day away from work, you have used up 170 days, leaving only 91 days available.

You spend 30 minutes each day on coffee break. That accounts for 23 days each year, leaving only 68 days available.

With a one hour lunch period each day, you have used up another 46 days, leaving only 22 days available for work.

You normally spend 2 days per year on sick leave. This leaves you only 20 days available for work.

We are off for 5 holidays per year, so your available working time is down to 15 days.

We generously give you 14 days vacation per year which leaves only one day available for work and I’ll be damned if you’re going to take that day off!”

Understanding Changes in Disability Discrimination Law

Discrimination, Hiring, Training

2009 is going to be remembered as the year that the Americans with Disabilities Act (“ADA”) became the full employment act for employees’ lawyers. That’s because dramatic changes to the ADA went into effect on January 1, 2009. No longer can an employer assume that the ADA is an concern only if an applicant shows up in a wheelchair or with a seeing eye dog. The ADA now will significantly affect every workplace (except those small businesses with less than 15 employees) and employers need to be educated and ready to respond appropriately.

Briefly, the ADA protects mentally or physically impaired individuals who are qualified to perform a job from discrimination because of their disability. Sounds good, and it is. But for employers, the devil is in the details. The ADA Amendments Act (“ADAAA”) passed last year by the 110th Congress expanded the definition of disability in a way that I believe makes virtually every Baby Boomer a potential plaintiff in a disability discrimination lawsuit. Why? Because most of us born between 1946 and 1964 are starting to feel some of the aches and pains of middle age and that is about all that is required to claim a disability under the ADA. In addition to the 70 million Baby Boomers in the workforce, there are many younger workers who are also physically or mentally disabled.

You are disabled under the ADAAA if you have an impairment that substantially limits one or more major life activities.  “Major life activities” now include walking, seeing, hearing, and breathing, as you would expect, but also sleeping, bending, learning, reading, concentrating, thinking, communicating and working. The term also includes the operation of any major bodily function, such as respiratory and circulatory, as you would expect, but also, reproductive, digestive, and immune system.

If an employee is disabled or even regarded as disabled because of past problems (such as drug addiction that is now under control), you as an employer must provide reasonable accommodation of that employee’s disability if necessary to allow the employee to perform the essential functions of his/her job. Some employment lawyers believe that the “regarded as” component could mean that any employee who ever had a serious medical condition will always be regarded as disabled and protected by the ADA, even if the disease is now in remission.

You can expect to deal with the ADA when an infertile female employee wants to take time off as an accommodation so that she can receive fertility treatments. An employee who needs a 25-inch computer monitor because his poor vision makes it hard for him to read even with his eyeglasses may now need to be accommodated. An employee who is bi-polar may be able to request moving away from an annoying coworker if she says the coworker is a depression trigger. The fact that the employee could take mitigating measures to fix or control the problem, such as taking her medications to prevent depressive episodes, can no longer be considered to determine whether the employee is actually disabled.

What can you as an employer do to keep your company out of legal hot water with the ADA? Continue reading Understanding Changes in Disability Discrimination Law →

Lessons from NASCAR’s Discrimination Suit

Discrimination, Management

Six years ago, I had never watched a NASCAR race and would have laughed if you had suggested I ever would. Aaahhh, what love will do to an otherwise rational person! Enter Rohn Butterfield into my life, and I can now tell you that there are 36 races in a season, the Daytona 500 (the start of the season) will be run in February, Jimmy Johnson has won the last three Chases for the Sprint Cup (boo!) and back-flipping Carl Edwards is “my boy”. Okay, I’m apparently an over-educated redneck.

While watching 43 cars go round and round a two-mile track for three hours can get boring at times (even if they are going 200 miles per hour), one of the things that keeps me interested is the fascinating business side of NASCAR. The NASCAR sanctioning body that puts on and officiates the races is privately owned by the France family, yet there are more corporate sponsorship dollars flowing into NASCAR than any other sport (hence the cars and drivers covered in decals). If you ever go to a race, you will marvel that the track is completely ringed by semis filled with NASCAR and driver merchandise.  NASCAR has 75 million fans who purchase over $3 billion in licensed products annually.

So NASCAR is big business. And like any business, it is subject to employee lawsuits. NASCAR just settled the latest claim for a confidential amount with no admission of any liability. The suit alleged that Mauricia Grant, who worked as a technical inspector certifying cars in the Nationwide Series, was subject to racial discrimination and sexual harassment.

NASCAR claimed in its response to the suit that it had a zero tolerance policy against discrimination and harassment in the workplace, that Grant had received and acknowledged that policy, that NASCAR had provided mandatory training annually on these subjects, a training that Grant had attended, and that NASCAR’s policy required Grant to immediately report any violations of its policies but she had failed to do so. In addition, NASCAR claimed that it conducted its own investigation when Grant’s allegations became known and had fired two officials accused of exposing themselves to Grant.

Grant said she was fired for reporting her complaint, which, if true, would be illegal retaliation. NASCAR, however, said Grant was fired for an altercation with a track security guard who asked to see her credentials. Ultimately, because the case was settled confidentially, we won’t know what really happened. But there are still lessons here that any business owner should learn from NASCAR’s experience. Ask yourself these questions to determine if you are protected should similar allegations be made against your company: Continue reading Lessons from NASCAR’s Discrimination Suit →

Wal-Mart’s Costly Wage and Hour Mistakes

Compensation

The big news recently in the employment law arena is that Wal-Mart Stores, Inc. has agreed to settle 63 wage and hour lawsuits in 43 states. The settlement of these class actions will cost Wal-Mart somewhere between $352 million and $640 million!

What the heck did Wal-Mart do wrong that could cost them a half billion dollars? The thousands of class action plaintiffs allege that Wal-Mart managers pressured employees not to record all their time actually worked or to work through hours that were recorded as unpaid meal and rest breaks. Employees who actually recorded the overtime hours they worked were allegedly disciplined and humiliated. For example, one store manager allegedly posted the names of employees recording overtime next to the time clock to remind others that overtime was against company policy.

For its part, Wal-Mart says that these are old allegations and not indicative of how Wal-Mart does business today. Unfortunately, it is the way many employers in the Panhandle still do business. Here are a few points to remember to avoid wage and hour liability in your business: Continue reading Wal-Mart’s Costly Wage and Hour Mistakes →

Congress Set to Consider Employment Laws

Compensation

It’s January after an election year, and things are going to start moving fast in the world of employment law. The 111th Congress of the United States convened this morning and by the end of this week two laws may have passed that drastically affect employers.

An entry on this blog dated December 1, 2008, predicted that a new Democratic administration and Congress would try to pass the Ledbetter Fair Pay Act and amendments to the Equal Pay Act. As expected, the U.S. House of Representatives is scheduled to vote on these laws in this first week. If you don’t like the proposed changes, you better contact your congressman quickly.

The Ledbetter Fair Pay Act, if passed, will override the U.S. Supreme Court’s decision in 2007 in Ledbetter v. Goodyear Tire & Rubber Co. The change will affect the statute of limitations on pay discrimination claims to allow employees to sue over discriminatory pay based on each successive paycheck in which the discriminatory pay is received. So if you decided to pay a woman less than a man for the same job in 1983, and that inequity still exists despite 25 years of raises and bonuses, you could still be liable as an employer for discrimination based on each new paycheck that she receives.

If the Paycheck Fairness Act, which amends the Equal Pay Act of 1963, is passed, it will require you to pay the same amount to any employee in your company if the job requires comparable functions, skills, effort and responsibility in the same working conditions. The problem that I foresee is that you may pay workers in other areas of the country differently because of different costs of living and different market factors. This would become illegal. This law could also bring into question whether your payment of different employees for the same job is really based on tenure and experience or discrimination.

The law also would make it illegal for employers to discipline or fire workers who publicly reveal their salaries. The National Labor Relations Act already frowns on employer policies that prohibit employees from discussing their salaries because such a policy is perceived to have a chilling effect on the formation of unions. The Paycheck Fairness Act will provide the final nail in the coffin for these types of salary discussion prohibitions.

Finally the Paycheck Fairness Act would lift the caps currently in place on compensatory and punitive damages under pay discrimination laws. This could create a powerful incentive for plaintiff’s employment lawyers to accept and file more employment discrimination cases.

The end result is that as an employer, your company will be more vulnerable than ever to discrimination lawsuits. That makes your preventative efforts all the more important. Delete any policy that prohibits your employees from discussing their salaries. Then get the rest of your employment policies and procedures, especially your pay practices, reviewed now if you want to avoid costly litigation against your company.

Smoking as a Hiring Disqualification

Discrimination, Hiring,

The latest employment controversy in Amarillo is Baptist St. Anthony hospital’s new policy of refusing to hire new employees whose pre-employment drug test shows the presence of nicotine. BSA is straightforward about its refusal to hire any new smokers for its non-smoking campus, in part because its sole mission is healthcare. Click here to read the original story from the Amarillo Globe-News. From the number of comments this story has generated on the Globe-News website, the KVII website and the letters to the editor it appears that many people have strong opinions on this subject, many believing that BSA’s policy is discriminatory.

The advantages of the policy for BSA are obvious: adherence to its mission of promoting health, improved morale of persons bothered by the smell of smoke, less absenteeism and eventually decreased health insurance premiums and claims. While the policy may also shrink the pool of qualified job applicants, I would bet that in the current economic crisis BSA is not too concerned about that problem.

But can BSA legally enforce this policy? In the Globe-News story, I was quoted as saying that there is no federal or state discrimination law that is violated by BSA’s new policy. I stand by that quote. Jeff Blackburn, another local attorney who tends to take the employee’s side of things, apparently disagrees with me and says that it is a violation of a person’s civil rights to deny a smoker employment. Click here for his comments on KVII TV’s website. I don’t know of any Texas or federal law that supports Jeff’s argument, so Jeff and I will just have to agree to disagree on this point. It might be different if smoking were like race or age, a protected characteristic that you can’t change and which should not put you at an employment disadvantage. However, smoking is a choice, and one of the consequences of that choice now will be that you cannot be hired at BSA.

Other states handle this issue differently.

According to the National Workrights Institute, 30 states and the District of Columbia currently have some form of smokers’ rights laws on the books. These so-called “lifestyle antidiscrimination” laws protect employees and applicants from discipline or other adverse employment actions either specifically because they smoke or generally because the persons use a lawful product, such as tobacco, outside of work.

Legal Trends: Smelling Smoke, HR Magazine (December 2006).

Since there is no lifestyle antidiscrimination law on the books in Texas and since Texas courts generally uphold the “at will” employment rights of businesses to fire someone for good reason, bad reason or no reason at all, I think Texas courts would support BSA on this one. Texas employers, in my opinion, are free to screen for nicotine just like any other drug at the pre-employment stage and free to refuse to hire anyone who fails that drug test.

I am interested in your opinion on this matter, so feel free to click the word “comment” below and tell me what you think.