Tag Archives: Federal Employment Law

2011 Budget Means More Enforcement Against Employers

Compensation, Discrimination, Training

I’ve been trying to get the word out to employers for the last several months that the executive branch of the federal government has employers who violate any of the federal employment laws in its sights (click here for an earlier blog post on enforcement efforts). Money for enforcement is pouring into federal agencies like OSHA, which enforces health and safety regulations, the Department of Labor, which enforces compensation requirements like the overtime and minimum wage laws, and the EEOC, which enforces the discrimination laws.

Within the 2011 fiscal year budget proposed by President Obama last week, there is money for the hiring of 358 more Department of Labor employees, including 177 investigators and other enforcement staff, bringing the total proposed DOL workforce to nearly 18,000.

OSHA will add 25 more employees to inspect workplaces for safety violations, meaning that 42250 businesses will be subject to these inspections in FY 2011. “Today’s budget affirms this administration’s strong commitment to vigorous enforcement,” U.S. Secretary of Labor Hilda Solis said. “We are sending a strong message throughout industry that we will not tolerate the endangerment of workers.”

The budget also supports a joint effort of the Treasury Department and the DOL to identify employers who hire “contract labor” in an effort to avoid payroll taxes and skirt the overtime and minimum wage laws. For years, employment lawyers like me have been trying to warn employers that “contract labor” is illegal and that there is a very difficult test for employers to prove that any worker is actually an independent contractor. Those employers who still misclassify employees as contract laborers could face increased possibilities of federal investigators reviewing their books, requiring repayment and charging the businesses large fines.

As an employer, it is your responsibility to assure that you are complying with all the federal laws that will be enforced even more stringently if the 2011 budget passes. You are taking a grave risk if you believe that you are in compliance just because your pay, safety or firing practices are the same as everyone else’s in your industry (who often are doing it wrong too), or if you believe you are proceeding correctly because “that is the way we have always done it,” or if you believe that your employees are not dissatisfied so you must be doing something right. Many of these laws are counter-intuitive, meaning you are probably doing them wrong even if you are using common sense! Don’t assume that you are operating within the bounds of federal employment law unless you have a legal opinion from an experienced employment attorney confirming that.

DOT Bans Truck Driver Texting While Driving

Personnel Policies

As a follow up to yesterday’s post on employer liability for employees who cause an automobile accident while using a cell phone, it is worth noting that the federal Department of Transportation just announced a prohibition of texting while driving for all interstate truck drivers, commercial bus drivers and van drivers who carry more than eight passengers. The law will be enforced with civil or criminal penalties, including fines up to $2750.

The Federal Motor Safety Administration’s research shows that drivers who send and receive text messages are distracted for 4.6 seconds out of every 6 seconds. So these drivers have their eyes off the road more than three-quarters of the time they are driving and texting.

The federal government has set an example for private employers not only by banning texting while driving for interstate truckers, but also for all federal employees. President Obama signed an executive order at the end of 2009 directing federal employees not to text while driving government-owned vehicles or while operating government-owned equipment. That is exactly the kind of written policy that all private employers should have.

Overtime for Cell Phone Use?

Compensation

As if you didn’t have enough to worry about as an employer this year (health care reform, COBRA subsidies, the broad amendments to the Americans with Disabilities Act, and, oh yes, the economy), here is one more thing to keep you up nights.

Have you issued a cell phone to some of your employees? Do you expect those employees to take calls on it while they are away from work? What about smartphones that access email? Are your employees checking their work email account at all hours of the day? If so, you may have overtime problems.

Your exempt white-collar employees can answer the phone or check emails at any time and their salaries will cover that time. But if you expect or allow non-exempt employees, such as sales associates, service technicians, and administrative assistants to answer their phones or check their work email after hours, you have to pay them for that time “worked”.

Plaintiffs’ employment lawyers are salivating over the class action possibilities that off-the-clock smartphone use present. The Fair Labor Standards Act, which regulates overtime and minimum wage, allows employees when suing for overtime violations to collect double damages and attorneys fees. Multiply even occasional after-hours smartphone use by thousands of nonexempt employees and you can see the appeal to plaintiffs’ lawyers of these kinds of suits.

What can you as an employer do to avoid facing such a suit yourself?

  1. Have a very clear idea of which of your employees meet the FLSA exemptions and which ones don’t.
  2. Don’t issue phones to or expect after-hours attention from your non-exempt employees.
  3. Have an off-the-clock policy that explains that if nonexempt employees do consult their work email or take work-related calls after hours, that they must report that time to the timekeeping system so they can be paid for that time.
  4. Explain what types of calls and issues are emergency issues that can be handled after hours. Limit in writing the employees’ need to take any other type of call or email while not on the job.
  5. If you want your nonexempt employees to be reachable after work, then expect to pay overtime for that privilege and don’t make your employees reluctant to report that time worked.

COBRA Subsidies Extended

Benefits

If you have fired or laid off an employee since September 2008, you know about the group health insurance continuance provisions related to COBRA that allow an employee to only pay 35% of the premiums due, while the federal government subsidizes the rest of the premium. That subsidy was supposed to expire at the end of 2009, so that employees laid off after that date would not receive the subsidy. In addition, the subsidy was only supposed to cover the first 9 months after the employee lost his job.

On December 21, 2009, President Obama signed a COBRA subsidy extension that extends the expiration date to February 28, 2010. What that means is that if you involuntarily terminate the employment of one of your workers in the next two months, that employee will also be eligible for the COBRA subsidy.

Even more important, the new legislation extends the subsidy for 15 months rather than just 9 months after the employee loses his job. And yes it is retroactive, meaning that any employee who has used up the 9 months is eligible to receive 6 more months of subsidies and a refund of overpayments.

By February 19, you have to send out written notices of this opportunity to any employee who was involuntarily terminated on or after October 31, 2009. You also have to send notices to anyone who stopped paying COBRA premiums after 9 months or anyone who overpaid by continuing their premiums after the 9 month subsidy expired. So it is best to go back and review the COBRA files for any employee involuntarily terminated since September 30, 2008.

Your group health insurance agent should be able to help you with the required notice language and information on who has been receiving COBRA continuation coverage and for how long. Just don’t ignore this issue. You only have 60 days to get your paperwork in order and start paying subsidies to be reimbursed by the federal government through your payroll taxes.

Feds Increase Enforcement Against Employers

Discrimination

The Bush administration made significant changes in the laws affecting employers, most significantly to the Americans with Disabilities Act, which now treats almost every employee as disabled and provides enormous protection from discrimination to employees. I’ve written before about the laws that were changed during the Bush years and what employers should do to protect themselves from missteps. (Click here for that article).

The Obama administration has not yet passed as many significant pieces of legislation in the area of employment law, other than the Lilly Ledbetter Fair Pay Act. However, the new president has put a much greater emphasis on enforcing the laws that are already on the books. Employers can no longer expect an understanding and cooperative investigator when the Department of Labor, the EEOC, the immigration service or another federal agency comes to call on your business.

President Obama’s executive branch, which is charged with enforcement of the existing employment laws, is pouring money and personnel into enforcing laws that protect employees. For example, the administration’s budget for the Department of Labor included a $104.5 billion increase, some of which the Secretary of Labor explained would be used to hire 500 additional full-time enforcement personnel in the areas of worker safety and wage and hour investigations. In Amarillo, that means that the number of investigators has doubled from one to two local field officers auditing your pay practices for overtime and minimum wage violations.

After Congress appropriated an extra $15 million to the Equal Employment Opportunity Commission in March 2009, the EEOC began actively filing many more cases against employers. In September 2009 alone, the EEOC filed 90 cases, with 22% of those filed against Texas employers. These 90 cases in one month should be compared to the 325 cases that the Bush administration’s EEOC filed in all of fiscal year 2008. The EEOC did not back off in October 2009, continuing to file multiple suits in Texas and nationwide against employers accused of sexual harassment, disability discrimination, age discrimination and other violations of federal employment law.

Other agencies are also beefing up their enforcement efforts. As far as worker safety is concerned, OSHA is conducting comprehensive safety inspections for nearly 4000 high-hazard worksites, including nursing homes, animal processing facilities and manufacturing plants. The Department of Justice is hiring more than 50 new civil rights attorneys to prosecute violations of criminal civil rights statutes.

Finally, U.S. Immigration and Customs Enforcement (ICE) announced on July 1 that it issued notices of inspection to 652 businesses nationwide, beginning the involuntary inspection and auditing of those companies’ hiring records. The purpose was to determine whether the businesses are complying with the immigration laws, particularly the requirement that companies have an I-9 employment eligibility form completed on each employee and that the documentation used by the employee reasonably appears genuine. ICE recently announced that this effort revealed that 16% of the I-9s reviewed were suspect, which could lead to civil penalties.

On November 19, another 1000 businesses were notified that they would be audited by ICE. These businesses were selected because they had a connection to public safety and national security.

How should you react as an employer to all of these upgraded enforcement efforts by the federal government? You must pay special attention to all of your employment practices to eliminate any liability. This attention should be focused on your pay practices (to avoid overtime and minimum wage violations), your hiring practices (particularly accurate completion of the I-9 forms), your supervisory practices (to eliminate illegal discrimination of any kind), your medical and leave policies (to prevent FMLA and ADA claims), and most importantly, your firing practices, because more than half of all federal employment law claims occur because of or after the employee is terminated.

Taos Hotel Owner Provides Lessons in What Not To Do

Discrimination

The Associated Press published a story on October 26, 2009, that confirmed that racism is still alive and well in the United States and there is still a need for the workplace discrimination laws.

It seems that Larry Whitten bought a dilapidated hotel in Taos, New Mexico and quickly discriminated against his employees and enraged the town of Taos. So here is an object lesson in what not to do as an employer:

  • Whitten, described as a Texan who last lived in Abilene, met with his new employees and says they were hostile. So he banned the speaking of Spanish in his presence because he was paranoid that they might start talking about him and he wouldn’t be able to understand what they were saying. So he enforced a type of English-only workplace rule, which is often one of the first red flags of discrimination that the Equal Employment Opportunity Commission looks for when investigating racial discrimination in the workplace.
  • Then Whitten told some employees with “Hispanic-sounding” first names that they would have to Anglicize their names while at work. So “Marcos” would have to be “Mark” to satisfy Whitten’s deluded belief that hotel guests would otherwise find their names difficult to understand or pronounce. Whitten’s defense? “It has nothing to do with racism. I’m not doing it for any reason other than the satisfaction of my guests, because people calling from all over America don’t know the Spanish accents or the Spanish culture or Spanish anything,” Whitten said. I don’t know what century Whitten is living in, but according to the United States Census Bureau, Hispanics are projected to make up 15.5% of the nation’s population by next year’s census. Spanish names, language and culture are certainly not unfamiliar to Americans. In New Mexico, Hispanics make up more than 40% of the population and in Taos, Hispanics are the majority. Just doing a little people-watching while Whitten was visiting Taos should have clued Whitten into the fact that a little more racial sensitivity was going to be required in his new workplace.
  • One of Whitten’s fired employees, Martin Gutierrez, summed up the racial insult from the employees’ perspective: “I don’t have to change my name and language or heritage. I’m professional the way I am.” That’s the point that Whitten obviously missed somewhere in his 63 years. He wasn’t judging his employees on their professionalism, their performance or their customer service abilities. He was making employment decisions based solely on his stereotypical beliefs about race. It is classic racial discrimination to assume you know something about an individual’s merits, motivations or abilities when all you really know about that employee is the color of his skin or the sound of his accent.
  • Whitten fell into a trap by believing that providing what he perceived his customers wanted would be a good excuse for his racist decisions. However, the ignorance or racism of your customers, if it even existis, cannot prevent an employer’s liability for violating the discrimination laws in the workplace. If Whitten’s hotel guests had preferred only good-looking female employees or only energetic, young employees under 40, would he have violated the gender and age discrimination laws also? Maybe he would have, but if you are an employer, don’t follow his example.

Relativity in the Workplace

Discrimination, Management,

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.

Keep An Employee Disciplinary Log

Discrimination,

In the May 2009 San Antonio appeals case of Cantu v. Frito-Lay, Inc., the employer beat a discrimination charge by a former employee because the company kept good records of the kinds of disciplinary action applied to employee misconduct and the reasons such actions were taken.

I often advise employers to keep a running log of each time the company issues a written warning, a suspension or a termination so that it is clear whether employees are being treated equally for similar misbehaviors. The Cantu case provides a good example of the importance of that information.

Kirk Cantu worked as a route salesman for Frito-Lay. He stocked bags of chips in HEB grocery stores. He was seen by a store employee tampering with the “sell by” dates on bags of chips that were later found to be stale. He was banned from servicing any HEB stores at the insistence of HEB, which led to his termination from Frito-Lay.

Cantu sued for gender discrimination, comparing his situation to that of Sandra Casso, a route salesman for Frito-Lay who serviced one HEB store. Casso was related to the store manager and told the store personnel that the manager was pregnant. The store manager asked that Casso be reassigned to another store, but did not want Casso reprimanded. Frito-Lay allowed Casso to bid on another route rather than terminating her employment.

Cantu claimed that he was treated differently than a similarly-situated female who had also been barred from servicing an HEB account, and therefore argued that he had been discriminated against on the basis of his age and gender (Cantu was 53 and Casso was under 40).

The Texas Supreme Court has previously ruled that to be a “similarly-situated” employee for comparison purposes in discrimination cases, the circumstances must be comparable in all material respects, including similar standards, supervisors and conduct. Therefore, the court said that not only does it have to examine the ultimate disciplinary action (both barred from servicing an account, yet one was fired while the other one wasn’t) but also the underlying circumstances.

In other words, to prove discrimination because of disparate disciplinary measures, the plaintiff has to prove that the misconduct he engaged in was nearly identical to that engaged in by a female that the company retained. Cantu was unable to demonstrate that Casso’s misconduct was nearly as serious as his, and therefore he was unable to demonstrate discrimination.

How does an employer assure that it can successfully defend such cases? By making and keeping very good records of the reasons that each employee was fired (or not fired) for misconduct and then showing the court that the employer has been consistent in applying disciplinary measures across all ages, races, genders, etc.

That requires a good log that each manager can access and review before deciding what disciplinary measures to take in an individual situation. If the log were to show that three people before were fired for lying on an application, then the manager would know that lying on an application is a firing offense.

However if the log showed that only the employees who lied about relevant past employment (by claiming experience they didn’t really have) had been fired, while those who lied about schooling (by claiming they had a high school diploma when they only had a GED) had not, the manager will have direction about which offenses are considered serious firing offenses and which are not as serious.

You can’t rely on all of your managers to know of or remember what disciplinary action was taken with each employee, or even the circumstances surrounding the misconduct. But it is easy enough to create a running log that each of them can access and add to as part of the normal disciplinary process. This simple step could assure a win if the company battles a claim of discrimination.

Popular Culture in the Workplace May Be Inappropriate

Discrimination, Management

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?

Minimum Wage Increase Reminder

Compensation

This is just a reminder to all employers that the minimum wage rate will increase next week. Any time worked by your employees after 12:01 a.m. on July 24, 2009 must be paid at a minimum rate of $7.25 per hour.

This is the last increase from a federal law which began raising the minimum wage in $.70 increments from $5.15 per hour, which was the minimum rate prior to July 24, 2007.

If you have any belief that your employees are not entitled to minimum wage, or any questions about applying minimum wage laws, call an employment lawyer immediately. The consequences of failing to pay minimum wage properly can be very costly for a business.