• Anemployee, who was born male, claiming discrimination for expressing herself as female;
• A female employee claiming discrimination for not conforming to gender-based stereotypes (i.e., acting in a manner deemed to be too masculine).

Approximately half of the states in the U.S. do not have laws that prohibit sexual orientation or gender identity discrimination (including the state of Utah). As a result, this is an important development for employers in states without such legislation. This decision results in a major expansion of a protected class and serves as one more reason why employers should consider adding sexual orientation and gender identity to  their EEO policies if they haven’t done so already.

This article should not be construed as legal advice.

Some examples of the issues which can generate retaliation claims include:

• Discrimination and harassment complaints
• Family and medical leaves
• Workplace safety issues
• Wage and hour issues
• Union activities (concerted activities)

There are three basic elements to a retaliation claim:

1. The employee engages in a “protected activity”
under a particular law.

For example, under employment discrimination laws employees have the
right to make complaints of sex or race discrimination (or in regards to any of the other protected classes).  When employees make such complaints, they have engaged in a “protected activity.”  Protected activities usually come in the form of:

• Making a complaint
• Acting as a witness for someone making a complaint
• Opposing an unlawful practice
• Exercising a right

2. The employee suffers an “adverse employment
action.”

The next part of the claim is that the employee must “suffer a
harm.”  Typically, this comes in the form of a disciplinary action, demotion, termination or some other penalizing action that is fairly tangible or defined.  However, in 2006 the U.S. Supreme Court ruled that the employer’s action need only be “materially adverse” such that a “reasonable employee” (i.e., an average or “typical” employee) would be dissuaded from pursuing a claim.  The Supreme Court’s standard potentially opens the door for a broader interpretation of the term “adverse action.”

3. There is a “causal link” between the employee engaging in a protected activity and the adverse employment action.

Lastly, the existence of any link between the protected activity and the harm suffered by the employee is closely examined.  The following factors are often considered:

• The amount of time between the protected activity and the harm (the less time, the greater appearance of a possible link—this is referred to as “temporal proximity”);
• The employer’s explanation for why the adverse action occurred;
• Evidence (or a lack thereof) of a plausible non-retaliatory reason for the adverse action;
• Past practices in similar situations when a protected activity was not involved (consistency).

It is very important to rememberthat the employee’s complaint (the protected  activity) does not have to be valid in order for retaliation protections to apply.

Managing retaliation risks is probably one of the most difficult challenges employers face.  Retaliation claims are very high-risk because:

• Relationships  between the parties after a complaint has been made are usually strained.  The human tendancy to strike back is a common emotion!
• The risk of retalation can continue for a long period of time;
• Retaliation claims can be factually easier to prove than some other types of claims.

Here’s an important tip: if an employee approaches a manager and complains in some form that their legal rights have been violated, the situation needs to be carefully reviewed and monitored in order to minimize the risk of retaliation.

This article should not be construed as legal advice.

But hold on a minute, is it really ok to have someone work for free?  What about minimum wage requirements?  One very prevalent wage and hour “myth” is that unpaid internships are an easy to use exception to the law.  Nothing could be further from the truth.

The U.S. Department of Labor (DOL) applies the following six criteria when determining if a relationship qualifies for unpaid internship status when “for profit” employers are involved:

1. The internship, even though it includes actual operation of the
   facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Based upon the above, it is clear that the DOL has set a very high standard for unpaid internships—a standard that is rarely met in real life situations.  In particular, items #2 (the internship experience is for the benefit of the intern) and #4 (the employer derives no immediate advantage) exclude the vast majority of internship arrangements of which I am aware. Practically speaking, what this means is that the only thing the intern can really do is observe.  If the intern does any work, that can be viewed as the employer deriving a benefit from the relationship.

It is important for employers to remember that employees may not waive their rights under the law—so, even if interns initially agree to not being paid, they can change their mind later on and demand payment (and file a claim with the DOL if their demands are not met).  Further, if an employer is audited by the DOL for any reason, these relationships can be uncovered.  Because of the difficult economy, the DOL is increasing the level of scrutiny on unpaid internships (their view is that they take paying jobs out of the marketplace).

The compliant approach is to pay the intern at least minimum wage for
every hour worked.  Further information on this topic can be found on the
DOL’s website: http://www.dol.gov/whd/regs/compliance/whdfs71.pdf

This article should not be construed as legal advice.

First of all, it is important to understand that employee status is clearly the preferred status under the law—any worker can be treated as an employee, and the vast majority of workers should be.  The public policy reasons for this preference are pretty obvious, and include important things like the payment of employment-related taxes, and coverage for workers under workers compensation and unemployment insurance programs. For a worker to be classified as an IC, the business has the obligation to prove that the worker actually qualifies as an IC.

One problem, however, is that there isn’t a “one-size-fits-all” easy-to-apply test to determine which workers qualify as ICs.  Different enforcement agencies (e.g., IRS, U.S. Dept. of Labor, etc.) use different tests to determine which workers qualify, and these tests involve applying a fairly lengthy set of factors to each situation.  Despite the ambiguities, it is usually not too difficult to make an accurate assessment, especially when one remembers that IC status is by far the exception, rather than the rule, when it comes to classifying individual workers.

The following is a list of questions that can be useful to informally determine whether a worker meets IC requirements.  This list is by no means exhaustive—nor should an answer to one question be determinative (it usually involves weighing and balancing various factors)—but answering these questions can be a quick way to get a general sense for whether you’re dealing with an employee or an IC:

• Is the worker doing the type of work typically performed by an employee? Consider this question both from the angle of the company itself and the industry the company is in (what is typical for the industry?)  A “yes” answer is indicative of employment status.
• Is the relationship ongoing or short-term/occasional? An ongoing relationship is indicative of an employment relationship, while short-term/occasional may be indicative of IC status.  One caution: the existence of a short-term relationship, in and of itself, is not enough to qualify a worker for IC status (other factors must be present).
• Is the work being performed central to the business of the company or more tangential in nature? More central is indicative of an employment relationship, while more tangential may be indicative of IC status (e.g., a plumber who comes in to fix a leaky pipe is clearly doing work that is tangential to the products created by a software company).  While there can be legitimate exceptions, ICs typically don’t perform the work or services that a company is in the business of providing.  Rather, ICs tend to service or consult the company in general.
• Does the company exercise “employer-like control” over the worker?  Is the company setting work hours, managing performance like they would with an employee, and otherwise dealing with the worker in an employer-like fashion? These are all indications of an employment relationship.
• Does the worker perform similar services for other business? Does the worker have his/her own business entity?  Does the worker
  provide his/her own tools and liability insurance? “Yes” answers to these questions can be indicative of an IC relationship.  To the contrary, if the worker is working “full-time” hours for just one business (especially for a longer/indefinite period of time), that is indicative of employment status.
• Does the worker receive employment-like benefits? (e.g., paid leave, health insurance) A “yes” on this question is a pretty strong indication of employment status.

Keep in mind that it’s not what you call it, it’s what it is. While
having a formal IC agreement in place with the worker is helpful, ultimately, it’s not about labels, it’s about substance.  Employees cannot legally waive their rights to employment status if the nature of relationship does not meet IC requirements.

As mentioned in the previous month’s posting, it is time for employers to “get real” when thinking about classifying workers as ICs.  While IC classifications can be legitimate, too many employers have gotten casual in this area when it is simply not worth the risk.  Ultimately, any business that wants to classify individual workers as ICs should have such arrangements carefully reviewed by legal counsel.

This article should not be construed as legal advice.

The U.S. Department of Labor (DOL) recently indicated that it intends to issue proposed “right to know” regulations under the Fair Labor Standards Act that would require employers to: 1) prepare a written classification analysis describing why a worker qualifies as an IC, and 2) provide a copy of that written analysis to each worker at the time the relationship begins.  It is anticipated that the DOL would view a failure to comply with these requirements as an automatic rejection of the worker’s IC status (i.e., the DOL will treat the worker as an employee).

If these regulations are finalized, it will have the effect of educating workers about their rights (I find that many employees are just as confused about IC requirements as employers are).   Thus, the chance that workers will challenge their IC status will significantly increase. Further, as previously mentioned, businesses who fail to comply with these documentation requirements may lose the ability to claim the workers are ICs. This is a big game changer.

So where are we in the process of this potentially changing game?  It is expected that the DOL will issue its proposed “right to know” regulations any day now.  There will be a period for the public to comment on the regulations, the DOL will then consider the comments and release final regulations listing an effective date for these changes to be put in place.  It is difficult to say exactly when this change will be made effective (and it is possible for the process to be derailed), but this is clearly a high-priority issue for the DOL and other government agencies.

One of the reasons why it is such a priority issue—in addition to protecting employee rights—is that it is ultimately a revenue issue (federal and state governments are attempting to collect employment-related taxes that they desperately need).  In tough economic times, it is not surprising that IC relationships are being scrutinized.

A few general points to remember about IC classifications:

• “Employee status” is the default/preferred classification.  The burden is on the business to prove the worker qualifies as an IC, or the worker is deemed to be an employee.
• Workers may not waive their rights to employee status if they don’t actually qualify as ICs (so, even if the worker prefers to be an IC, it doesn’t really make a difference).
• While the IRS and DOL use different tests to determine IC status, both tests focus on whether the business is exercising employer-like control over the worker, versus the worker truly functioning independently.  There is a degree of subjectivity to these tests, so a conservative approach is warranted.
• Serious liability can result when businesses misclassify workers as ICs, including: 1) assessments for unpaid employment-related taxes, 2) assessments for wage and hour violations (e.g., unpaid overtime pay), and 3) claims by workers for employee benefits they were wrongfully denied (e.g., health insurance, stock options, bonuses, etc.)

So, with serious changes in the wind, it is time for businesses to scrutinize their IC relationships and get their houses in order.  Next month we’ll discuss in greater detail what it takes for workers to qualify as ICs.

This article should not be construed as legal advice.

1. It is easy for employees to file complaints. The US Dept. of Labor (DOL) accepts complaints from employees.  There is no filing fee.  The employee does not have to have an attorney.
2. The DOL likes to do company-wide audits, not just investigate individual complaints. If one employee complains to the DOL about the non-payment of overtime, the DOL won’t limit their investigation just to that employee.  Small violations multiplied by lots of employees can mean big fees and penalties for employers.
3. The DOL goes back two years to assess penalties (sometimes three). When an employer is out of compliance with wage and hours laws, in a sense it is carrying two year’s worth of liability on its books.  Again, small violations repeated over and over during a two year period of time can really add up.
4. Employees cannot waive their rights to the protection of the law. You probably know of employees who beg their employer to be treated as exempt.  They’ll say, “I don’t care if I don’t meet exemption requirements! It’s ok with me!” The employee’s consent is irrelevant to the DOL.  If employees change their minds, or if the employer is audited for another reason (see #2 above), the DOL will charge the employer for the unpaid overtime.
5. Wage and hour laws are “black & white”. When an employer is out of compliance with the FLSA, there are very few, if any, viable defenses for an employer to make.  Some employers think that their “legitimate business reasons” will persuade the DOL that they should be treated as an exception,.. but it won’t work!
6. To be lawfully treated as exempt, the employee must meet exemption requirements. There are two types of exemptions: 1) white collar (executive, administrative, professional and outside sales); and 2) industry-specific exemptions.  If employees do not fit into one of these exemptions—which are narrowly construed—they cannot be treated as exempt.
7. The DOL is ramping up enforcement. The DOL is very aware of the wide-spread problems with compliance and is ramping up enforcement efforts.  These efforts include hiring hundreds of new investigators, partnering with the American Bar Association to create an attorney referral system for employees, and interpreting the FLSA more narrowly against employers.

What should employers do? They should audit their wage and hour practices on a regular basis to ensure full compliance.  Non-compliance is just not worth the risk!

This article should not be construed as legal advice.

Don’t promise confidentially. Employees will often start out the complaint with a request(or even a demand) that the manager keep the matter confidential.  However, because employer liability is often triggered by the employee’s complaint, this request simply cannot be granted.  A good response can include a statement such as, “as a manager of the company, I simply cannot promise confidentiality—be assured, however, that the matter will be handled as discreetly as possible.”

Remind the employee about your non-retaliation policy.  This will help to reduce employee stress.  A statement like the following can be effective: “the company has a policy that strictly prohibits retaliating against employees who make complaints of arassment.  I will monitor this situation very closely—as will our HR department—any concerns should be reported immediately.”

Be empathetic, but remain neutral. Complications can arise (including a greater chance of legal action) if the manager appears unwilling to listen to the employee’s concerns, or appears to be skeptical about the allegations.  Listen carefully and respectfully to what the employee has to say.  Focus on understanding the allegations, not on whether they are true or false.  Resist the temptation to start “cross-examining” the employee at this stage of the process.  On the other hand, be careful not to cross the line into becoming the employee’s advocate—you really don’t know what has actually happened at this point.

Get the facts. I’ve had more than one client over the years call me in a panic because an employee made a complaint of “sexual harassment”, only to call me back the next day saying, “false alarm–we asked a few more questions and discovered that it really isn’t a harassment complaint.”  Employees will often use “alarm-ringing” terms such as “sexual harassment” and “hostile work environment” without fully understanding what those terms mean.  When an employee uses a term like “sexual harassment”, ask him or her to describe the actual behavior that is causing the problem.  You may have to ask several times to get enough detail.  While the inquiry doesn’t have to be exhaustive at this point, getting enough information will allow you to get a sense for the nature and seriousness of the allegations (and help you to know whether or not you need to get help).

Don’t send the employee out to confront the accused. While most employers want to empower employees to resolve disputes on their own, sexual harassment situations typically require a different approach.  Unless the employee truly wants to talk to the accused—and the allegations are quite mild in nature—I usually do not encourage such confrontations once a complaint is made.  Furthermore, an employer may not require an employee to first confront the accused before conducting an investigation.

Discuss next steps. Thank the employee for bringing his or her
concern to your attention.  Inform the employee that you will immediately discuss the matter with the HR department (or other appropriate personnel).  Be careful to not create the perception that the employee has control or oversight over the investigative process, or over the outcome of the investigation.  Do, however, maintain appropriate contact with the employee during the investigative process to ensure that the employee knows that the matter is being handled, and that no retaliation is occurring.

This article should not be construed as legal advice.

In many jurisdictions (including Utah) employers are generally able to set the terms of their paid leave policies.  The applicable state agency will then hold employers to their established practices and/or policies.  The following is a checklist of questions to consider when auditing your company’s paid leave policies:

Who is eligible? Your policy should clearly indicate which types of employees are eligible and which are not (e.g., “only full-time regular employees are eligible; part-time and temporary employees are not eligible.”)

How and when is it earned? Is the leave accrued (e.g., earned per pay period) or granted (e.g., given to the employee at the start of the year)?  Your policy should clearly spell this out.

How much leave can employees earn? Be careful to avoid any ambiguities on this issue (and in my experience, this is often where ambiguities exist).  Descriptions should be precise and clear.

Is there a “benefit year” and is it clearly explained? Many policies use some type of benefit year (often the calendar year or based upon date of hire).  Is this issue clearly explained along with other related issues? For example: do employees have the option to carry over a certain amount from year-to-year or cash-out unused leave at the end of the year? (Both of these options are at the employer’s discretion.)  If there isn’t a benefit year, is there a cap on accrual amounts?

Are the permissible reasons for use and the leave request process clearly explained? While a list of permissible reasons may not be necessary for a combined “paid time off” program, it is important to give some parameters for vacation and sick leave policies.  The process for requesting leave (and preserving the employer’s ability to deny or delay leave requests) should also be clearly laid out.

Are the “little but important details” clarified? Such details include: 1) when do new hires become eligible and how much leave do they receive during their first year?; 2) what is the smallest increment of time for which leave may or must be used?; 3) what is your policy regarding exempt employees having to use paid leave for partial day absences? (FYI, you can make them use paid leave, but you can’t dock their pay for partial-day absences); and 4) how do employees report use of leave?

Is your policy regarding “cashing out” unused leave at termination clear? This is the “biggie” when it comes to wage claims.  Your policy must be crystal
clear on this topic.  As mentioned above, in many jurisdictions (including Utah) employers have the right to set the policy on this issue (everything from zero, partial and full cash-outs are allowed), but the applicable state agency will hold you to your policy.

Two quick tests to use as part of your audit of your paid leave policies:

The stranger test: give your policy to a person who does not work for the
company and ask him or her to read it. Then, ask the person to explain it back to you.  This will quickly show you if your policy is easy to understand.

The look-at-it-from-every-angle test: Make a list of every conceivable
situation that could come up (e.g., employees starting and quitting at various
times of the year, etc.) and run those situations through your policy to make
sure your policy is solid from every angle.

Happy auditing!

This article should not be construed as legal advice.

1. It doesn’t take much for an employee to qualify as disabled under the ADA. Recent changes to the ADA makes it quite easy for employees to qualify as disabled under the ADA and thus be eligible for an accommodation.  Many conditions lasting more than a few months that have a fairly modest impact on the employee’s ability to perform basic life functions would qualify.  When
making disability determinations, the employee should be viewed without the
benefit of any assistive devices or medical treatment (including medication)—the question becomes “how sick would the employee be without their medicine or assistive device?”  Conditions in remission or which are episodic should be viewed as if they were in an active state.  It is common for an employer to be dealing with a disabled employee under the ADA and not realize it.  TIP: teach you managers that the threshold for disability status is quite low and that they should bring any potential disability issues to the company’s attention ASAP!

2. While it is the employee’s obligation to request the accommodation… watch out for vague requests! The employee does not have to say any
“magic words” or even reference the ADA. According to the EEOC, a request for an accommodation consists of: 1) a need for an adjustment or change at work, 2) due to a qualifying health condition.  TIP: If an employee has disclosed a medical condition to the employer, it is permissible for the employer to respectfully ask if an accommodation is needed (especially if the employee appears to be seeking assistance in some way)—employers, however, should not question employees about possible medical
problems if the employee has not disclosed the existence of a medical
condition.

3. Requests for accommodations should be taken very seriously! An employer’s duty to provide accommodation is significant. A delayed response to a request for accommodation is viewed by the EEOC as a failure to accommodate. Further, many ADA claims are created by managers failing to appropriately respond to the employee’s initial request.  TIP: teach
your managers to respond promptly and professionally when an employee makes a request for an accommodation.  When a manager appears to be unwilling to help—or appears resentful about having to try and accommodate the employee—the potential for an ADA claim increases significantly.

4. When ADA issues arise, get help immediately. The ADA is one of the most complicated laws employers have to deal with and employee rights under the ADA are significant.  When ADA issues arise, get help immediately
from a qualified source to in order to successfully navigate the ADA maze.

This article should not be construed as legal advice.

Question: What if the employee refuses to sign the warning letter?

Answer: First of all, check to see if the warning letter includes a
disclaimer statement along with the signature block.  It can be very intimidating for an employee to sign a warning letter and a statement like the following can help ease the employee’s fears: “Signing this document confirms that you have received it andunderstand its contents.  Your signature
does not necessarily mean that you agree with all of the statements made in the document.”

Otherwise, if the employee refuses to sign the warning letter, two managers should witness the refusal and then sign and date the letter under the statement “employee refused to sign”.  The employee should then be respectfully informed that the letter is in force regardless of his or her refusal to sign.  It is also important to examine the reasons behind the employee’s refusal to sign. It may be necessary to have a respectful dialogue with the employee to confirm that he or she is willing to meet company expectations in the future.

Question: What if the employee wants to provide a written rebuttal to the
letter?

Answer: Knock yourself out!  If the employee wants to write a rebuttal, don’t fight with them about it. The written rebuttal can be stapled to the warning letter and kept in the personnel file.  The employee should be informed that the warning letter is in force regardless of his or her written rebuttal.  The rebuttal should also be examined for any useful insights, claims from the employee that the company has violated the law (e.g., claims of discrimination, etc.), and any statements that would cause the
employer to reasonably question the employee’s ongoing employment status (e.g.,threats of violence).

Question: How long should the warning letter remain in the employee’s file?

Answer:Some employees mistakenly believe that there is “some law out there” that requires employers to remove a warning letter after one year.  This is incorrect.  The employer has the right—and generally should—keep the warning letter in the employee’s personnel file indefinitely.  The warning letter is an important record about the history of the employment relationship. There are many reasons why the employer may have to produce the letter later on (including for legal proceedings that do not involve the employee directly) or otherwise review the employee’s employment history.  Of course, the warning letter becomes less important as time passes and the
employee meets company expectations, but the warning letter should stay in the file.

This article should not be construed as legal advice.