Pennsylvania Employment Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Lancaster, York, Harrisburg

So you finally did the right thing.   You converted your sole proprietorship to a single member Limited Liability Company so that you and your personal assets are protected from the liabilities of the business. Now you can sleep more soundly at night because your LLC is busy keeping your house, bed and pillow safe from evil creditors, right? If your LLC has employees, the Internal Revenue Service would say "not so fast - what about payroll taxes?"

Employers are generally obligated to withhold FICA and income taxes, the "payroll taxes", from an employee's wages and pass on those amounts to the federal government. Stiff penalties can result if those obligations are not met. Still, if your LLC is the employer, shouldn't those penalties apply to the LLC and not you personally? The IRS disagrees.

When you created your LLC, you were required to file a form with the IRS to obtain a tax identification number. To complete the form, you had to "check-the-box" to choose if the LLC will be taxed as a corporation, partnership or as a disregarded entity. Because you didn't want to be double-taxed on the business and personal level, you didn't choose to be taxed as a corporation, and because you are a single member LLC, you couldn't choose to be taxed as a partnership because there needs to be more than one partner. As a result, your single member LLC is categorized by the IRS as a disregarded entity for federal tax purposes.

This is where personal liability comes in. Through Notice 99-6, the IRS decided to hold owners of single member LLCs personally liable for payroll taxes. The rationale was that because single member LLCs are disregarded for federal tax purposes, they are ignored and the owner is the "employer" for federal tax purposes. While state law normally provides that LLC owners are not to be held personally responsible for their LLC's liabilities, the IRS trumps those laws with the Supremacy Clause of Article VI of the United States Constitution.

However, there is some light at the end of the tunnel, but it's a good-news/bad-news scenarios. The good news is that on August 16, 2007, the IRS finalized new regulations stating, among other things, that they will no longer ignore single members LLCs for employment tax purposes. As a result, owners of single member LLCs will not be treated as employers for federal tax purposes. The bad news comes in two parts. First, the new regulations only begin to apply to employment taxes effective for periods beginning on or after January 1, 2009, so relief is not immediate. Second, owners of single member LLCs are still personally liable for the "Responsible Person Penalty" under Section 6672 of the Internal Revenue Code.

The "Responsible Person Penalty", also known as "trust-fund recovery penalty" and the "100-percent penalty" generally penalizes anyone who willfully fails to collect and pay over employee income tax and the employee portion of FICA taxes. The specific penalty is equal to the amount of tax not withheld and paid over. The liability of the "responsible party" is independent of the LLC's liability, and owners of single member LLCs are generally treated as "responsible parties." 

As a result, if you own a single member LLC with employees, it is very important for you to verify that your payroll taxes are being handled properly. If not, you could be putting yourself at risk. 

• Print
• Comments
• Trackbacks

The Family and Medical Leave Act (FMLA) turns 15 this year and workers’ rights advocates, the Bush Administration and the Labor Department are weighing in on proposed changes to the law. According to an April 24 article in the Washington Post,

“...workers would have to tell their bosses in advance when they take nonemergency leave, instead of being able to wait until two days after they left. They would have to undergo "fitness-for-duty" evaluations if they took intermittent leave for medical reasons and wanted to return to physically demanding jobs. To prove that they had a "serious health condition," they would have to visit a health-care provider at least twice within a month of falling ill. What's more, employers would have the right to contact health-care providers who authorized leave.”

As I reviewed these proposals it occured to me that some of these changes may serve to blur the distinction between the FMLA and the Americans with Disabilities Act of 1990 (ADA). It is not uncommon for employees to bring claims under both the FMLA and ADA. Avoid getting tripped up in the similarities of FMLA and ADA by understanding the distinctions between the two laws.

FMLA	ADA
is enforced by the Department of Labor (DOL)	is enforced by the Equal Employment Opportunity Commission (EEOC)
applies to employers with 50 or more employees	applies to employers with 15 or more employees
eligible employees must have been employed for at least 12 months and worked 1,250 hours in the previous 12 months of employment	no eligibility restrictions
only requires an individual (or family member) to have a "serious health condition"	only covers individuals with a disability
there may be individual liability	no individual liability
no punitive or emotional damages can be awarded	punitive and emotional damages can be awarded

• Print
• Comments
• Trackbacks

The EEOC announced a $505,000 sexual harassment settlement with a McDonald’s Franchise on behalf of a class of young female employees, including teens. The EEOC contended that a male supervisor engaged in serious harassment including physical contact, sexual comments and offers of favoritism. In addition to the monetary award, the franchisee was required to provide letters of apology to the victims, conduct training on sexual discrimination for its franchise locations, and post nondiscrimination notices in its workplaces.

The EEOC has a national http://www.eeoc.gov/initiatives/youth/index.html initiative designed to educate young workers on their employment rights. There is a stand-alone website that has been featured on MTV.com highlighting discrimination protections.

Restaurant operators face difficult HR compliance issues based on several factors including the following:

• Workforce Demographics:  Diversity management is a challenge for the entire food service industry. EEOC workforce demographic information for the Accommodations & Food Service Industry reports a workplace composition for workers (operatives, laborers and service) that are 52% female and 47% minority. While managers for the same group are 68.8% male and 74% white. The prevalence of younger workers adds to the management challenge.
• Wages and Employee Turnover:     Lower wage earners make for job hoppers. Pennsylvania reports food service worker wages ranging from $15.05/hr for serving workers to between $7.37 and $7.70/hr for fast food cooks and counter attendants.
• Management Turnover:       The Restaurant Industry Blog by Kenneth Rexrode notes that turnover of managers and employees necessitate constant training and inhibit the development and continuity in a management staff.
• Dispersed Operations:          Some restaurant operations, particularly franchised operations have multiple locations and depend upon managers traveling between locations. This can make for spotty supervision and training.

Solving compliance problems may be a matter of adopting effective policies on EEO compliance, training managers and educating employees. The most frequent misstep I see is concentrating too much control in a site manager so that employees feel they have no avenue to direct concerns to higher levels.

• Print
• Comments
• Trackbacks

The EEOC’s Report of Discrimination Charge filings notes that Retaliation claims rose 18% to a record high, doubling since 1992. There were 26,663 retaliation based charges filed in 2007 up from 22,555 the previous year. The trend might be explained, in part, by employees filing both a discrimination charge and a retaliation claim; increased awareness by employees, or employers mishandling employee internal complaints of discrimination.

Claims of retaliation take a very predictable path like the one recounted in a recent EEOC lawsuit. Vanguard Group settled a suit filed by the EEOC for a racial retaliation claim for a payment of $500,000.    The suit was based upon an employee’s complaint to management that he was being treated less favorably and discriminated against based on his race. Thereafter, the EEOC contended that the employee began to experience acts of retaliation, including unfavorable changes in his work conditions and assignments, from the managers he accused of race discrimination. The EEOC alleged that this pattern of retaliation resulted in the employee’s termination. The following may help HR Generalist avoid mishandling internal complaints.

1. What is Unlawful Retaliation?

An employer may not fire, demote, harass or otherwise "retaliate" against an individual for filing a charge of discrimination, participating in a discrimination proceeding, or otherwise opposing discrimination. The same laws that prohibit discrimination based on race, color, sex, religion, national origin, age, and disability, as well as wage differences between men and women performing substantially equal work, also prohibit retaliation against individuals who oppose unlawful discrimination or participate in an employment discrimination proceeding. Retaliation occurs when an employer, employment agency, or labor organization takes an adverse action against a covered individual because he or she engaged in a protected activity.

2. What is “Adverse Action” by an Employer?

An adverse action is an action taken to try to keep someone from opposing a discriminatory practice, or from participating in an employment discrimination proceeding. According to the EEOC, examples of adverse actions include:

• Employment actions such as termination, refusal to hire, and denial of promotion;
• Other actions affecting employment such as threats, unjustified negative evaluations, unjustified negative references, or increased surveillance; and
• Any other action such as an assault or unfounded civil or criminal charge that is likely to deter reasonable people from pursuing their rights.

On the other hand, the EEOC states that adverse actions do not include petty slights and annoyances, such as stray negative comments in an otherwise positive or neutral evaluation, "snubbing" a colleague, or negative comments that are justified by an employee's poor work performance or history.

3. What is “Protected Activity” by an Employee?

Protected activity includes either opposing a practice reasonably believed to be unlawful discrimination or participating in a discrimination procedure. 

Opposition is informing an employer that you believe that he/she is engaging in prohibited discrimination. Opposition is protected from retaliation as long as it is based on a reasonable, good-faith belief that the complained of practice violates anti-discrimination law; and the manner of the opposition is reasonable.  The EEOC cited examples of protected opposition to include:

• Complaining to anyone about alleged discrimination against oneself or others;
• Threatening to file a charge of discrimination;
• Picketing in opposition to discrimination; or
• Refusing to obey an order reasonably believed to be discriminatory.

According to the EEOC, examples of activities that are NOT protected opposition include:

• Actions that interfere with job performance so as to render the employee ineffective; or
• Unlawful activities such as acts or threats of violence. 

Participation means taking part in an employment discrimination proceeding. Participation is a protected activity even if the proceeding involved claims that ultimately were found to be invalid. Examples of participation include:

• Filing a charge of employment discrimination;
• Cooperating with an internal investigation of alleged discriminatory practices; or
• Serving as a witness in an EEO investigation or litigation.
• A protected activity can also include requesting a reasonable accommodation based on religion or disability.

4. Promptly Investigate Comments and Complaints Concerning Discrimination

Some HR action should be taken on all communications from employees that could later be “characterized” as either opposition or participation. At a minimum, get the facts underlying a comment about “unfairness” or “discrimination”. Obviously, you can spend your entire workday chasing down spurious remarks. You can circumvent a lot of problems merely by developing a practice of asking “what do you mean when you say it’s discriminatory?” Not taking complaints or comments seriously can be costly.

5. Monitor Supervisors for Adverse Actions following an Employee Complaint

I would wager that most acts of “retaliation” go unnoticed on HR’s radar screen because no one is actively monitoring the situation. If someone has complained about discrimination by a supervisor, HR should follow up informally with the employee to make sure that there is no real or perceived retaliation. 

* Not meant to be exhaustive.

• Print
• Comments (3)
• Trackbacks (1)

We have all witnessed dangerous driving maneuvers by individuals talking on cell phones. What if this driver is one of your employees? What if the employee causes an accident while conducting company business on a cell phone?

Employers may be liable for accidents where an employee’s job-related cell phone use contributed to the accident. Whether the cell phone use is within the scope of employment depends upon many factors including such things as the employee’s job duties, who provided the phone, when the accident occurred, whether it was a business call, and whether the employee was complying with the employer’s policy on cell phone use.

Don Heyrich at the Washington Labor, Employment & Employee Benefits Law Blog notes a $5.2 million settlement by an employer whose employee caused a serious traffic accident while talking on her company-supplied cell phone. Details of the case appearing in a newspaper account describe a very typical scenario for employees who multi-task while driving. There is no mention as to whether the employer had a policy prohibiting or limiting employee cell phone use while driving, so the impact of such a policy on the employer’s liability is unclear.

• Company’s can try to manage their liability by adopting a policy on cell phone use and then enforcing it. A policy should consider the following:
• Directing employees to comply with all applicable state and local laws governing cell phone use. Banning cell phone use while driving.
• Requiring employees to use hands-free devices while driving.
• Providing company cell phones with hands free features.
• Prohibiting the use of text message and e-mail features while driving.
• Requiring employees to pull over to take phone calls.
• Instructing employees to avoid or to terminate phone calls involving stressful or emotional conversations.
• Limiting the scope of job descriptions for some positions exclude using cell phones while driving.
• Prohibiting cell phone use in adverse weather or difficult traffic conditions.
• Restricting driver cell phone use to brief conversations.
• Emphasizing safety while taking phone calls on the road.

• Print
• Comments (1)
• Trackbacks

The United State Supreme Court ruled that ERISA allows individual claims by plan participants for breach of fiduciary duty that result in losses to an individual account rather than only to the entire plan. In LaRue v. DeWolff, Boberg, & Assoc., Inc., an employee brought an ERISA claim against his employer who was the plan administrator of a 401k plan. The employee claimed $150,000 in losses to his 401k account caused by his the failure to make the changes the employee directed in the investments held in his account. The employee claimed that the failure to make the changes was a breach of fiduciary duty under ERISA. The Court noted the change in the retirement plan landscape from defined benefit plans to defined contribution plans necessitates the recovery of fiduciary breaches in a participant’s individual account. The Court did not decide whether the employer breached its fiduciary duty.

The effect of allowing breach of fiduciary duty claims by individual participants is yet unknown. John Phillips at The Word on Employment Law observes that “Many are predicting that the Court’s ruling will result in a slew of meritless litigation from employees whose 401(k) plans aren’t doing as well in a shaky economy.” Some additional observations about ERISA plan administration may help evaluate this premise:

• Defined Contribution Plans typically identify the employer as the Plan Administrator but very few employers actually administer their plans.
• The Employer acting as Plan Administrator will contract out investment and other day-to- day “administrative” activities to other providers such as banks, mutual funds, consultants, etc.
• These other providers may or may not be “fiduciaries” within the meaning of ERISA. So ERISA-type claims by participants may not lie against them.
• An ERISA fiduciary breaches its duty if it fails to discharge his duties with respect to a plan with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
• An employer may limit its fiduciary liability by selecting competent expert advisors and then monitoring their performance. The Boston ERISA & Insurance Litigation Blog’s post on The Benefits of Relying On Investment Managers is a great summary of this concept. The DOL also has tips for selecting and monitoring service providers including consultants and auditors.
• If other providers fail to perform there responsibilities their liability may be limited to contractual damages and subject to limitations of contractual indemnity. Employers should carefully review contacts with providers that limit liability of a provider with terms like “gross negligence.”
• The result may be that the employer faces the ERISA claims alone and is left with contract claims against the providers for resulting damages.
• ERISA provides for attorney’s fees for successful employee claims.

The answer may be that LaRue opens another avenue for lawsuits against employers, but an employer that carefully selects and monitors its relationships with pension plan providers will be in a better place to defend claims that it breached its fiduciary duty.

• Print
• Comments
• Trackbacks (1)

I consulted the on line Encarta Encyclopedia for the origins of Valentine’s Day and found the following description:

The holiday probably derives from the ancient Roman feast of Lupercalis (February 15), also called the Lupercalia. In an annual rite of fertility, eligible young men and women would be paired as couples through a town lottery. Briefly clad or naked men would then run through the town carrying the skins of newly sacrificed goats dipped in blood. The women of the town would present themselves to be gently slapped by the strips and marked by the blood to improve their chances of conceiving in the coming year.

In one sense, the holiday’s evolution to cards and candy has been well received, at least by the goat population. I don’t think Lupercalis is celebrated at the EEOC. Nonetheless, workplace romance gone bad accounts for a significant number of sexual harassment claims as noted on my prior post Fishing off the Company Dock: A Legal Perspective. Similar advice and anecdotal observations appear at the Ohio Employer’s Law Blog’s post on When office romances go bad and the Washington Labor, Employment & Employee Benefits Law Blog’s post on Romance in the Workplace & “Love Contracts”.

So what are the legal ins and outs of office romance and how can a business employ prophylactic measures to protect itself. Here is a list of things I can recommend:

Implement a Strong Policy Against Sexual and other Harassment

The EEOC has issued extensive guidance on sexual harassment policies and there ability to reduce an employer's liability for harassment.   One of the most critical components of such a policy is an effective complaint procedure to redress claims of harassment.

Develop a Policy on Office Romance without calling it "Fraternization"

It doesn't take a NASA scientist to realize organizations may need a policy addressing workplace romance (or maybe it does). According to Office Politics, thirty-five percent of companies have no formal workplace romance policy. Develop a policy, but avoid overly broad definitions and in particular the word "fraternize' which was the court's primary objection in the in Guardsmark case.

Train Supervisors

Supervisory training on sexual harassment can demonstrate a company's good faith attempts to comply with the law. Such training should explain the types of conduct that violate the employer's anti-harassment policy; the seriousness of the policy; the responsibilities of supervisors and managers when they learn of alleged harassment; and the prohibition against retaliation.

Proactively Evaluate and Confront Situations

Most employers are content to sit passively and watch "As the World Turns". Many will not act unless it "becomes a disruption". Consider some proactive steps. If the romance is between co-workers, make sure they understand that it cannot impact productivity. If it is between a supervisor and subordinate, evaluate whether there should be changes in the reporting structure. Don't automatically transfer or reassign the female in the relationship or you will risk a discrimination claim.

• Print
• Comments
• Trackbacks

Employment Practices Liability Insurance (EPLI) may be a relative bargain in the continued “soft” insurance market and employers should consider adding or increasing insurance coverage to protect against employment claims. EPLI insurance is somewhat quirky and the following are some considerations when evaluating policies:

1. Coverage:  EPLI policies typically cover claims of wrongful discharge, workplace harassment and discrimination. Many offer a more comprehensive list of covered acts, including negligent hiring/supervision/evaluations, invasion of privacy, defamation and intentional infliction of emotional distress.  Coverage typically applies to claims made by full time employees so as to exclude those by part-timers, temporary, seasonal and independent contractors.  In comparing policies, look for one that has the most expansive coverage. 
2. Exclusions.  EPLI policies exclude many claims based on the statute that creates the legal right or the activity that gives rise to the claim. Exclusions apply to the Fair Labor Standards Acts; the National Labor Relations Act; the Worker Adjustment and Retraining Notification Act (WARN); the Consolidated Omnibus Budget Reconciliation Act (COBRA); the Employee Retirement Income Security Act (ERISA); the Occupational Safety and Health Act (OSHA); the costs associated with providing "reasonable accommodation" under the Americans with Disabilities Act (ADA); as well as  claims arising out of downsizing, layoffs, workforce restructurings, plant closures or strikes. Punitive damages are always excluded. Carefully evaluate the excluded claims in light of your business practices. In the case of multi-state operations, be aware that some state laws create substantial employment rights that must also be evaluated under the policy language.
3. Policy Limits and Deductibles: Policy limits and deductibles usually apply on a per claim and aggregate basis. For example, coverage may be limited to $250,000 for each separate claim with an overall aggregate cap of $1 million for all claims. Employers must formulate their insurance goals in setting the appropriate deductibles and limits. Some employers view EPLI insurance as catastrophic coverage and are willing to accept a high deductible that allows them to handle smaller claims themselves.  However, other employers are looking for more blanket coverage.
4. Defense Costs, Selection of Counsel and Settlement: Defense costs are usually included within the EPLI policy’s limits, which has good and bad points. Many times, the legal expense is the largest cost to an employer in dealing with merit less claims. However, including defense costs means that every dollar an employer spends defending a claim reduces the amount available for settlement or to pay a judgment.  Since the existence of insurance coverage must be disclosed as part of discovery in most law suits, a plaintiff’s attorney will factor insurance coverage into his or her case evaluation. The defense cost feature may influence plaintiffs’ counsel to try to settle early, rather than force an employer to incur litigation costs that will only erode the insurance dollars available for potential settlement.  Employment claims often have significant employee relations ramifications making settlement a particularly important issue. Insurers view employment claims the same as any other insurance matter by evaluating only the potential for liability and the amount of damages. The employer and insurer may be at odds over settling a case. EPLI policies address this stalemate by either giving the insurer the right to settle without the employer’s approval or, more frequently, giving  an employer control over settlement, but adding a “hammer clause”. These clauses are designed to limit the insurer’s potential exposure if the policyholder passes up an opportunity to settle a claim recommended by the insurer.  Hammer clauses provide that if there is an offer to settle a claim that the policyholder refuses accept, then the insurer will not be liable for a subsequent settlement or judgment in excess of a rejected settlement amount.  
5. Policy Types and Insurance Company Notification: EPLI policies are typically written on a “claims  made” basis meaning that the claim must be incurred during the coverage period and reported to the insurer during an extended reporting period. Since employment actions may take years to turn into a claims, an employer may be left with no coverage if the policy is dropped or tail coverage isn’t purchased.  Untimely notice to an insurance carrier can void coverage for and employment claim.

* Not intended to be Exhaustive.

• Print
• Comments (1)
• Trackbacks (2)

What motivates a terminated employee to sue his or her employer is a complex issue. In my experience, the manner in which an employee is “fired” is at least as likely to lead to a lawsuit as the “reason” given for his or her termination. Many lawyers spend all their time on justifying the reasons for why an employee is being let go which are important because they form the basis for the legal defense. However, I believe that not getting sued at all is better for my clients than having a great defense.

I advocate planning both the “How” and the “Why” of an employee termination.  Managing the manner of termination reduces the risk of lawsuits and incidents of workplace violence. The following are ten suggestions I have on handling a workplace termination:

• Treat the employee with dignity and respect. Don’t get personal in the termination meeting.
• Avoid humiliation. Don’t make the employee do the walk of shame or leave your business under circumstances that lead others to think he or she stole from you or committed some other serious misconduct. I have several cases where the employee’s major motivation for suing is being lead to an exit escorted by a security guard while carrying a cardboard box containing personal items. Allow the employee to come back later to collect personal affects or clean out an office or locker.
• Select an appropriate time and location. Avoid times and locations that are highly visible to other employees. Many employers select the end of the business day at the end of the work week, but this may be the wrong time for employees who may need access to support services like the EAP.
• Consider giving a reason. When asked in a deposition why an employee sued, the most common answer I hear is that “I was never given a reason for being fired.” There may be legal circumstances for avoiding an explanation, but they are rare. Formulate a reason and articulate it to the employee. Reserve some latitude to supplement the reason, but at least have some explanation. Once given, don’t debate its merits, but listen to the employee’s response. You might hear something that makes you reconsider your decision, like “this all started when I refused to sleep with my supervisor”.
• Plan your communication. Consider scripting what you will say and formulate responses to typical questions, like “Can I resign.” Don’t text message termination or layoff decisions unless there is just no other way to communicate. Consider a follow up letter that gives your reasons and preserves your right to supplement it with additional reasons. Don’t blame the decision on others like the “home office” or “management”.
• Agree on a Reference, if possible. If the employee knows what the company will say in response to a reference request, then he or she can address it in an interview or on an application. If the reference is inconsistent then the employee won’t get a new job and will be more likely to sue the company.
• Offer Assistance like the EAP or Outplacement. Consider resources that may help an employee with emotional problems or assist them in a job search.
• Protect your employees and business assets. Plan the termination to protect your employees from violence in the workplace and your business assets from sabotage or damage, but don’t overreact. Armed guards and lock changing may not be necessary. Retrieving keys, credit cards, passwords and canceling computer access are.
• Communicate with remaining employees. Plan some formal communication with other employees and individuals outside the company. This is difficult and uncomfortable, but necessary.
• Control the rumor mill. Don’t allow gossip to incorrectly communicate any information.

Let’s face it, it’s a bad situation. But it is one that can be made worse through poor communication. Respect and empathy go a long way. Take for example the infamous Cheers episode entitled the Executive’s Executioner in which Norm becomes his employer’s designated terminator because he is so empathetic. Since no YouTube clip is available, the following is the dialog between Norm and his boss:

[Mr. Hecht, Norm's boss, confronts him in Cheers' restroom]
Mr. Hecht: We want you to be our corporate killer.
Norm: The guy who fires people?
Mr. Hecht: That's right. You see, we decided that terminating employees puts too much stress on our executives. We think you'll be perfect.
Norm: Why me?
Mr. Hecht: Because studies have shown that, uh, it's particularly humiliating when you're fired by somebody who's clearly and markedly superior to yourself. And, uh, that just wouldn't be the case with you, Norman. See, uh, you're just an ordinary Joe. As a matter of fact, we, uh, we checked out your homelife. You have absolutely nothing anyone could possibly envy or resent.
Norm: I'm honored, sir. But I, this, this sounds like a horrible job, frankly.
Mr. Hecht: It's a 300% raise and if you don't take it you're fired.
Norm: Sir, I will have you know that I cannot be bought... and I cannot be threatened; but you put the two together and I'm your man.

• Print
• Comments (2)
• Trackbacks (2)

The Manpower Employment Blawg post on $319 Million Fine for FedEx? highlights the enormous downside of misclassifying workers. There are many motivations to classify a worker as an independent contractor rather than an employee including payroll tax savings, benefit plan and insurance savings, increased workforce flexibility and headcount management to name a few. The test for worker classification isn’t crystal clear but there are some common errors. The first two points involve classification mistakes that are entirely avoidable and easily discovered by the IRS:

1. Same Job but Different Classification.  If your employees are working next to your independent contractors, doing the same or similar jobs, you have a problem with classification. The problem becomes worse when the job being performed is an integral part of your business. I see this problem frequently in some industries such as  transportation, trade services  like telecommunications and HVAC, and construction.

2. Retire or Fire Employee and then Rehire as Independent Contractor. Sometimes its attractive for both the employee and the employer to allow someone to “retire” and then be hired back as an independent contractor. The employee starts collecting a pension, social security and still has some income from the old job. There are many problems with this situation and it is easily discovered by the IRS since the worker will likely receive both a Form W-2 and Form 1099 from the same company in the same tax year.

3. Misclassification has Benefits Plan and Insurance Issues.  A worker incorrectly characterized as an independent contractor may have been eligible to participate in your health, retirement and other benefit programs available to employees. In addition, the worker should have been covered under your worker’s compensation policy. Finally, there may be back wages for unpaid overtime, vacation and other benefits. On the other hand, incorrectly treating an independent contractor as an employee (although rare) has the opposite impact. The worker may have been provided medical and retirement benefits to which he or she was not entitled resulting in a violation of the terms of the plan.

4. State Law Classification Test may Differ from Federal Law. As I have previously commented, state laws may differ from federal laws in classifying workers. Some states, like Pennsylvania, use a test that requires independent contractors to be free from control or direction over the performance of the services involved and be customarily engaged in an independent trade, occupation, profession or business. 

5. Misclassification Fixes. The IRS provides for tax relief for misclassified workers if the employer can demonstrate a “reasonable basis” for treating a worker as an independent contractor rather than an employee. Reasonable Basis can be demonstrating as follows:
   • Reliance on court decisions or IRS rulings;
   • Prior IRS audit where similar workers were not reclassified
   • Treatment of workers as independent contractors by a significant industry segment;
   • Reliance on professional advice of a lawyer or accountant who knows the facts about your business.

Retirement Plan Blog post on What to do when an independent contractor is really an employee describing the pension plan self-correction procedures with the IRS.

* Not intended to be exhaustive.

• Print
• Comments
• Trackbacks

In my previous post, I explained how a court can seize on one remark by a supervisor to infer a discriminatory motive for an employment decision. I have also commented that even a single remark, if sufficiently sever, can create a hostile work environment for the purposes of a harassment claim. What does this do to communication in the workplace? Perhaps The Boss on Dilbert could concoct a policy requiring legal pre-approval of workplace remarks. For the rest of us, we are better served by managing the situation after it occurs.

How an employer responds to an inappropriate remark can make all the difference in managing the legal fallout. I believe the ingredients of a response are (1) a succinct acknowledgement of the inappropriateness (but not necessarily the illegality) of the remark; (2) an apology from the company and the maker of the remark; (3) a reaffirmation that such conduct is not acceptable in the employer’s workplace; and (4) some appropriate remedial or disciplinary action.

Take for example, the Golf Channel’s suspension of anchor Kelly Tilghman for two weeks for saying that young players who wanted to challenge Tiger Woods should “lynch him in a back alley.” The Golf Channel’s Editor’s Note is a roadmap for handling the situation:

Editor's Note: The GOLF CHANNEL released the following statement on Jan. 9th:
 
The GOLF CHANNEL regrets the poorly chosen remarks made by Kelly Tilghman on a recent broadcast and, again, extends our apologies to anyone who was offended.
 
There is simply no place on our network for offensive language like this.
 
While we believe that Kelly's choice of words were inadvertent and that she did not intend them in an offensive manner, the words were hurtful and grossly inappropriate.
 
Consequently, we have decided to suspend Kelly for two weeks, effective immediately.

Ms. Tilghman was completely contrite about her misstep, but some employees are not. Nonetheless, the employer must take action and oft times wade into difficult situations. Such an example is reported by Ann Belser in her Pittsburgh Post-Gazette article Ex-employee of Mellon loses religious bias suit.

The bank was sued for religious discrimination after it disciplined an employee for his offensive reply to e-mail sent by fellow employees inviting him to a luncheon hosted by Mellon’s gay, lesbian, bisexual and transgender employee group. His note stated that he did not want to be lumped in with other groups including those that “have this sickness called gay or lesbian.”

After a complaint to HR, the employee was told that his reply was offensive and that he was required to treat his co-workers with respect. He replied, “The true friend of gays and lesbians is the one who points them to help.” For this, the employee was disciplined. He then filed a religious discrimination claim based upon his Orthodox Jewish religious beliefs. The court dismissed the case, finding that the employee was disciplined because his actions were offensive, not because of his religion.

• Print
• Comments
• Trackbacks

Ford Motor Co., along with two related companies and a national union, will pay $1.6 million and provide other remedial relief to a class of nearly 700 African Americans to settle a major race discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC had charged in the litigation that a written test used by Ford and the UAW, Visteon and Automotive Components Holdings (ACH) to determine the eligibility of hourly employees for a skilled trades apprenticeship program had a disproportionately negative impact on African Americans.

The EEOC in its Press Release  touts two of its initiatives. First, the E-RACE Initiative (Eradicating Racism And Colorism from Employment), a national outreach, education, and enforcement campaign to raise public awareness about new and emerging race and color issues in the 21st century workplace. Further information about the E-RACE Initiative is available on the EEOC’s web site. Second, the EEOC issued a new Employment Testing Fact Sheet which cites the Ford case.   The Fact Sheet is not particularly illuminating from a legal or policy standpoint, but it does highlight the agency’s interest in employer testing practices.

There are general legal restrictions on the use of employment testing (whether pre or post employment) in addition to the general prohibitions on discrimination found in Title VII and the Pennsylvania Human Relations Act. The Uniform Guidelines on Employee Section Procedures prohibit the use of a test or selection process that has an adverse impact on individuals in a protected class unless the test has criterion-related, content and construction validation studies. The validation studies must consist of empirical data demonstrating that the test is (1) predictive of performance of important elements of job performance; (2) contains content which tests important aspects of performance on the job; and (3) consists of procedures that assess identifiable characteristics that have been determined to be important to job performance.

We have previously blogged on the subject of Pre-employment testing at Employment Screening and Background Checks - Part III.

• Print
• Comments
• Trackbacks

As to our previous post on taking seriously complaints of racial harassment, thanks to Jon Hyman at the Ohio Employer’s Law Blog who posted the EEOC’s press release and commented on the case. The press release details the types of harassment as follows:

The EEOC charged that Daniels [the employee] was the target of persistent verbal abuse by coworkers and a supervisor whose racial slurs and offensive language included calling him the “N-word” and saying “we should do to blacks what Hitler did to the Jews” and “if the South had won then this would be a better country.”  Daniels was also subjected to multiple physical threats, such as lynching and other death threats after he reported the harassment.

Commentators have observed that the settlement amount paid [$2.5 million] “seems excessive for someone who was subjected to words, no matter how offensive they might be”. I know what they are driving at because, in many contexts, the law expects people to have a thick skin as it relates to the free expression of ideas (no matter how offensive).   However, unlawful harassment  arises from conduct that is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive.

The severity and the pervasiveness are the focus of the legal analysis. This is a very fact sensitive inquiry. For example, the New Jersey Supreme Court has held that some racial slurs are so historically offensive that their use in the workplace, even once, can lead to liability for an employer who doesn’t respond appropriately. A single utterance of an epithet can create a hostile work environment if it is view as “severe” and it is aimed at the individual rather than a generalized comment. I believe the weight of court authority would probably evaluate both the severity and the pervasiveness of the racial comments and that one comment might not be sufficient to create a hostile work environment. Certainly the use of racial slurs by a decision maker is evidence of discriminatory motive in adverse employment decisions as noted by the Supreme Court in Ash v. Tyson Foods.

Why did Lockheed pay $2.5 million to settle this case? The words were severe, the words were threats directed at an employee, and the company didn’t take appropriate remedial action.

• Print
• Comments (1)
• Trackbacks

The EEOC issued final regulations that create a specific exemption from the Age discrimination laws (ADEA) allowing employers to coordinate (meaning alter, reduce or eliminate) health benefits for retirees who become eligible for Medicare. The EEOC regulations describe the exemption as follows:

Some employee benefit plans provide health benefits for retired participants that are altered, reduced or eliminated when the participant is eligible for Medicare health benefits or for health benefits under a comparable State health benefit plan, whether or not the participant actually enrolls in the other benefit program. Pursuant to the authority contained in section 9 of the Act and in accordance with the procedures provided therein and in Sec. 1625.30(b) of this part, it is hereby found necessary and proper in the public interest to exempt from all prohibitions of the Act such coordination of retiree health benefits with Medicare or a comparable State health benefit plan.

According to the NY Times, 10 million retirees rely on employer-sponsored health plans as their primary source of coverage or as a supplement to Medicare. With the rising cost of healthcare, many employers were considering the elimination of retiree benefits. The motivation for employers to eliminate retiree health coverage was greatly increased following a ruling by the Third Circuit Court of Appeals in 2000. In its decision in Erie County Retirees Association v. County of Erie, the Court held that the ADEA required that health benefits offered to Medicare-eligible retirees must be the same, or have the same cost to the employer, as benefits offered to employees under age 65. The ruling prohibited an employer from taking into account Medicare coverage in providing health benefits to retirees. Employers scrambled to justify plan designs that almost universally coordinated with Medicare.

In 2004, the EEOC issued proposed regulations that created an exemption in response to the Erie County decision. The American Association of Retired Persons (AARP) filed suit and won an injunction barring the EEOC from implementing the exemption. On appeal, the same Third Circuit Court of Appeals that decided Erie County ruled that the EEOC had properly issued the exemption under its authority in the ADEA. AARP has sought an appeal to the US Supreme Court.

The EEOC exemption gives employers an important cost control option in designing retiree health benefit programs. Barring an unexpected ruling by the U.S. Supreme Court, the uncertainty created in this area should subside.

• Print
• Comments
• Trackbacks

Most of the Human Resources world looks to federal law when it considering the classification of a worker as an employee or an independent contractor. The IRS and most federal employment statutes use a common law rules which analyze the degree of control and the degree of dependence in the relationship between the business and the worker. The IRS recommends using Form SS-8 for this determination; however, the usefulness of this process is marginal.

To make matters more difficult, state laws also impact worker classification using sometimes differing legal standards. The post –gazette NOW Business reports that FedEx Grounds was fined $190,000 by the Massachusetts Attorney General for misclassifying 13 drivers as independent contractors. The Massachusetts test for an independent contractor differs focusing on three factors: the degree of control; work outside the usual course of business of the company; and the person engaging in a business that is customarily conducted as an independent trade or profession.

Pennsylvania has similar test for independent contractors which requires that the individual be free from control or direction over the performance of the services involved and be customarily engaged in an independent trade, occupation, profession or business. The impact of misclassification frequently appears in unemployment and workers’ compensation cases, but also had important tax and other compliance issues.

The state law employment classification issue may well be fertile ground for multistate litigation and class actions. Employers face real difficulties in complying with 50 states laws on employment classification along with a nebulous federal standard. Likewise, I don’t see how a worker could be classified as an employee for state law purposes and an independent contractor under federal law.

• Print
• Comments
• Trackbacks

The EEOC receives over 75,000 discrimination charges annually each of which requires a response by an employer.   How companies respond to charges varies greatly. In the legal community there are two schools of thought on the scope of EEOC responses. The first approach follows a minimalist path under the rationale that anything sent to the EEOC is “free discovery” or commits to a defense before all the facts are fully developed. The second approach provides a more detailed response with the goal of getting rid of the claim more quickly. The approach chosen will depend on an evaluation of the claim and the employer’s defenses. The following should be assessed in determining how your company will respond to an EEOC charge or state commission claim:

1.      Time Limitations for Charges and Lawsuits: It can take years for a charge to turn into a lawsuit. During this time, potential back pay is mounting, witnesses are disappearing, and memories are fading. EEOC discrimination charges must be filed within 300 days of the discriminatory action (or 180 days in states do not have discrimination statutes and investigatory agencies). Lawsuits must be filed by the employee within 90 days after the EEOC issues a right to sue letter. It is impossible for me to interpret the EEOC’s data on charge resolutions, but my experience is that the EEOC does not decide many cases and charges remain dormant for long periods of time when the parties don’t move them forward. The delay can work to the advantage of an employer if the employee (or his or her attorney) loses interest in the charge. When the EEOC ultimately closes the case and issues a right to sue letter, the employee may never act on it by filing a lawsuit. In Pennsylvania, the PHRC has a similar track record. Likewise, an employee must file a lawsuit within 2 years of the PHRC’s closing of the complaint.

2.      Shaping the Defense: An investigation of the charge should lead to formulation of a strategy for responding to the EEOC. At that point your defense is limited by your prior response. Inadequately investigated charges and poorly written position letters can severely hamper an employer’s defense. I have seen situations in which “home made” responses gave away or limited important legal defenses.

Information sent to the EEOC may be disclosed to the employee in the course of the investigation and the entire file may be subpoenaed once a lawsuit is filed. The minimalist approach might be appropriate if the facts are bad and you are looking for a quick settlement. A detailed response may be right if you want to convince the EEOC or the employee’s attorney that the case has no merit. I personally don’t like to “lie in the weeds” and hope the employee will go away.

3.      Using Affidavits to Preserve Evidence: Creating an institutional memory of the facts underlying your defense to an EEOC charge is worth considering. People come and go with amazing frequency. So, tracking them down (years later) and hoping they will remember the events with great detail is a risk. If a witness’s recollection is important to your defense, have them sign an affidavit.  Affidavits also keep witnesses from changing their stories as their allegiances change.

4.      Record Retention: Once a charge is filed, a company has an obligation to preserve tangible and electronic records that relate to the employee’s claims. The scope of records may include e-mails, personnel file and other records for the employee and comparable employees. Inadvertent destruction of records even pursuant to a policy can have grave consequences to an employer’s defense including court sanctions, prohibitions on presenting a defense, and jury instruction allowing an adverse inference to be drawn from the absence of the record. The jury may be allowed to presume that a missing or destroyed record would have favored the employee.

5.      Trial Use of EEOC Determinations: Many employers are surprised to learn that an EEOC’s finding of probable cause may be admitted as evidence in a discrimination trial and considered by a jury. As noted by Michael Fox at Jottings by an Employer’s Lawyer, some courts recognize the imperfection of allowing jury consideration of EEOC determinations. Nonetheless, it is powerful evidence when a government agency believes that an employer engaged in discrimination, making it all the more important to carefully tailor your response.

* Not meant to be exhaustive.

• Print
• Comments
• Trackbacks

Many employers traditionally provide year end bonuses and holiday gifts for their employees. Bonuses may be included in a nonexempt employee’s regular rate depending upon the manner in which the bonus is calculated and the company’s prior communication. Inclusion in the regular rate impacts overtime calculations and payments.

Bonuses paid to nonexempt employees are included in the determination of the employees’ regular rate under section 778.208 unless the bonus falls into one of several exceptions. The bonuses are allocated to the pay period and added to other wages paid to nonexempt employees and then divided by the hours worked for the same period to determine the new regular rate under the methodology described in section 778.209. For bonuses earned over more than one work week, the bonus must be allocated to pay periods to which the bonus applies and the regular rate recalculated. If overtime was worked during this period, the overtime rate must be revised to be time and a half the recalculated regular rate that includes the bonus payment. This is a nightmare.

Department of Labor regulations provide for several exclusions. Among these excludable bonus payments are discretionary bonuses, gifts and payments in the nature of gifts on special occasions, contributions by the employer to certain welfare plans and payments made by the employer pursuant to certain profit-sharing, thrift and savings plans. These exemptions are discussed in Section 778.211 Discretionary Bonuses, Section 778.212 Gifts and Holiday Bonuses, Section 778.213 Qualified Profit Sharing and Savings Plans, and Section  778.214 Other Qualified Plans.  Bonuses which do not qualify for exclusion from the regular rate as one of these types must be totaled in with other earnings to determine the regular rate on which overtime pay must be based.

Typically any bonus announced in advance and tied to work performance, hours or other productivity will not qualify for an exemption.  There three ways to manage the recalculation problem, other than utilizing qualified plans:

1. Holiday Bonuses: The Holiday Gift and Bonus exemption under section 778.212 allows for the exclusion from calculation of an employees “regular rate” of pay “sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occasions, as a reward for service, the amounts of which are not measured by or dependent upon hours worked, production, or efficiency…”   The following sets forth some of the parameters of the exclusion:

If the bonus paid at Christmas or on other special occasion is a gift or in the nature of a gift, it may be excluded from the regular rate under section 7(e)(1) even though it is paid with regularity so that the employees are led to expect it and even though the amounts paid to different employees or groups of employees vary with the amount of the salary or regular hourly rate of such employees or according to their length of service with the firm so long as the amounts are not measured  by or directly dependent upon hours worked, production, or efficiency. A Christmas bonus paid (not pursuant to contract) in the amount of two weeks' salary to all employees and an equal additional amount for each 5 years of service with the firm, for example, would be excludable from the regular rate under this category.

2. Discretionary Bonuses: This is an area of DOL audit scrutiny and should not be used on a regular or aggressive basis. Truly discretionary bonuses are not included in the regular rate of pay under section 778.211, if both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract, agreement, or promise causing the employee to expect such payments regularly. The following sets forth some of the parameters of the exclusion:

For example, any bonus which is promised to employees upon hiring or which is the result of collective bargaining would not be excluded from the regular rate under this provision of the Act. Bonuses which are announced to employees to induce them to work more steadily or more rapidly or more efficiently or to remain with the firm are regarded as part of the regular rate of pay. Attendance bonuses, individual or group production bonuses, bonuses for quality and accuracy of work, bonuses contingent upon the employee's continuing in employment until the time the payment is to be made and the like are in this category. They must be included in the regular rate of pay.

3. Percentage Total Earnings Bonus: Bonuses based on a percentage of the nonexempt employee’s total earnings under section 778.210 do not result in a recalculation of the regular rate because overtime is already been accounted for in the calculation.   Under this method, the bonus is described as a percentage of the nonexempt employee’s total (W-2) earnings, thereby including both regular and overtime payments and obviating the need for recalculation of the regular rate.

• Print
• Comments
• Trackbacks

There is only one war story I ever tell because I don’t talk about my client’s problems with anyone no matter how humorous they might be.   The Connecticut Employment Law Blog and  Ohio Employer’s Law Blog have postings on an employer’s liability for the “mere presence” of pornography in the workplace. All I can say is sometimes the most obvious things are overlooked.

About ten years ago, I  was asked by corporate counsel to conduct sexual harassment training at a series of distribution centers. At one remote location space was tight so the plant manager had set up rows of chairs in the receiving department. What had escaped his notice was on the wall of the receiving department behind the podium from which I was to make my presentation was a collage of every Playboy Centerfold for the preceding 20 years. The pin up shrine went from floor to ceiling and encompassed an area about 40’ X 40’.  I thought I was on candid camera.

My first reaction (well maybe my second) was to cancel the training, but it was obvious that this company was in dire need of it.  In any event, I also realized that I had hit the mother lode of future business in defending  this company from discrimination claims.  I decided to orient the chairs in the other direction and go on with the training. Admittedly, I downplayed some training materials on the problems with sexually explicit materials in the workplace.

The training went surprisingly well, with no mention of the “wall”.  Perhaps it had been there so long, no one even notice it anymore, but you can bet it would have been the centerpiece of any sexual harassment claim.  After the training was over, I read the plant manager the riot act.

The next time I was in that plant, no mention was made of the shrine but it was gone.  In its place was one of those signs detailing the number of days since the last lost time accident.   I wasn't sure I had gotten my point across to this company until I drove out of the parking lot.  It was then that I saw the three guys from the  receiving department  standing in an open garage bay giving me the finger. I thought again about the mother lode of future business.

• Print
• Comments (4)
• Trackbacks (1)

The CEO of the American Red Cross resigned after disclosure of a relationship with an employee.  The Red Cross Board of Governors stated that his resignation was requested for using “poor judgment” that “diminished his ability to lead the organization in the future”.   It amazes me that this type of leadership gaff can be repeated across so many organizations.

Strictly speaking, “sexual favoritism” is not unlawful sex discrimination so long as the relationship is consensual and does not discriminate against other men and women in the workplace. The EEOC’s Guidance on Employer Liability for Sexual Favoritism which was last updated in 1999 states as follows:

It is the Commission's position that Title VII does not prohibit isolated instances of preferential treatment based upon consensual romantic relationships. An isolated instance of favoritism toward a "paramour" (or a spouse, or a friend) may be unfair, but it does not discriminate against women or men in violation of Title VII, since both are disadvantaged for reasons other than their genders.

Strictly speaking, sexual favoritism by a high level executive is an employee relations problem and an unacceptable legal risk. Organizations cannot rely on the relationship remaining consensual and hazard the legal and public relations consequences.

Nonetheless, office romance is more prevalent than I ever appreciated until I researched a prior post on Fishing off the Company Dock: A Legal Perspective. Here are some of the proactive steps an employer can take to anticipate and manage the situation:

Implement a Strong Policy against Sexual and other Harassment

The EEOC has issued extensive guidance on sexual harassment policies and there ability to reduce an employer's liability for harassment.   One of the most critical components of such a policy is an effective complaint procedure to redress claims of harassment. Obviously, the avenue for making a complaint cannot be exclusively with a supervisor.

Develop a Policy on Office Romance without calling it "Fraternization"

According to Office Politics, thirty-five percent of companies have no formal workplace romance policy. Develop a policy, but avoid overly broad definitions and in particular the word "fraternize' which was the court's primary objection in the in Guardsmark case.

Train Supervisors

Supervisory training on sexual harassment can demonstrate a company's good faith attempts to comply with the law. Such training should explain the types of conduct that violate the employer's anti-harassment policy; the seriousness of the policy; the responsibilities of supervisors and managers when they learn of alleged harassment; and the prohibition against retaliation.

Proactively Evaluate and Confront Situations

Most employers are content to sit passively and tolerate the employee relations fall out of an office romance. Many will not act unless it "becomes a disruption". Consider some proactive steps. If the romance is between co-workers, make sure they understand that it cannot impact productivity. If it is between a supervisor and subordinate, evaluate whether there should be changes in the reporting structure. Don't automatically transfer or reassign the female in the relationship or you will risk a discrimination claim. 

• Print
• Comments (1)
• Trackbacks

A state court judge ordered Wal-Mart to pay over $36.5 million in attorneys’ fees to the plaintiffs’ lawyers who represented the 186,000 present and former Pennsylvania employees in a class action lawsuit filed in state court. The total hit to Wal-Mart was $187.8 million which breaks down as follows:

• $78.8 million in a jury verdict for off the clock work by employees.
• $62.3 million in liquidated damages under PWPCL.
• $10.2 million in interest.
• $36.5 in attorney’s fees and costs to the Plaintiff’s lawyers.
• $?? in Wal-Mart legal fees to its own legal counsel.

The employee class members were ordered to pay their lawyers $12.7 million in fees out of the damage award of $141.1 million plus $10.2 in interest. The average employee award for the 186,000 class members appears to be $745.16 (less taxes and withholding). 

Michael Donovan of Donovan Searles, LLC was the lead plaintiffs counsel. As reported by the Philadelphia Inquirer, “Donovan's firm will not get the entire $49.2 million. He and his firm were assisted by other attorneys across the nation who share discovery strategies and expertise in these large and data-intensive cases. All together, 26 attorneys and 17 paralegals worked five years on the plaintiffs' case.” 

In awarding the fees, Judge Mark I Bernstein noted that “Plaintiffs' success has delivered a message to employees and employers across the commonwealth, which proclaims that work without pay is not tolerated in Pennsylvania." Appeals to the award are pending.

• Print
• Comments
• Trackbacks

The Ohio Employment Law Blog has a couple of posts that highlight court decisions involving the employers’ sexual harassment policies and practices. The posts put bring home the “real life” implications of an employer’s actions.

In EEOC v. V&J Foods, the court considered the language of an employer’s sexual harassment policy and found it to be “unreasonable” thereby invalidating the employer’s defense to a hostile environment sexual harassment claim. The case makes several good points about sexual harassment policies. The policy must be reasonable in light of the employment circumstances which means cookie cutter policies may not be enough. The policy must be tailored to the employer’s business. The court noted several problems:

• A policy is not effective for those employees who do not speak English unless it is translated into a language that can be understood.
• A policy must be tailored to the educational level of the average employee such as part timers, high school students, etc.
• There must be more than one individual or class of individuals with whom a complaint may be filed so that a victim’s sole remedy doesn’t begin with the alleged harasser.
• For a toll free hot line reporting mechanism to be effective, it should be answered by trained personnel who identify themselves as part of the human resource department.   

I have review hundreds of these policies in employee handbooks.  I almost always find some important deficiencies that need to be addressed.   Here are the typical problems I see:

• Lack of dual avenues for filing complaints including one outside the chain of command.
• Requirements that the complaint be in writing in order to be investigated.
• Failure to advise complainants and witnesses that they will be protected from retaliation.
• Assurance about confidentiality of the allegations, to the extent possible, while conducting an effective investigation.

The EEOC has scant guidance on the content of sexual harassment polices; however, there is one controversial position taken by the EEOC with regard to informing employees of their legal rights to file a complaint:

It also is important for an employer's anti-harassment policy and complaint procedure to contain information about the time frames for filing charges of unlawful harassment with the EEOC or state fair employment practice agencies and to explain that the deadline runs from the last date of unlawful harassment, not from the date that the complaint to the employer is resolved.

In Engle v. Rapid City School District, the Court reviewed an employer’s response to a complaint of sexual harassment, specifically, the adequacy of the remedial action. This post lists factors to consider upon receipt of a complaint.

I have previously posted on sexual harassment issues as follows:

High Profile Sexual Harassment: Outsiders must Investigate

Sexual Harassment Complaints require Prompt and Carefully Planned HR Actions

• Print
• Comments (1)
• Trackbacks

Yesterday’s $11.6 million jury verdict in the Isiah Thomas/New York Knicks sexual harassment case is generating tremendous blog commentary. Here’s what some are saying about the Knicks’ lawsuit and its “Wake-Up Call” potential:

Kris Dunn at HR Capitalist has a post on Fire, Suspend or Play On?... Isiah Thomas Trial Verdict.... Since the start of the trial, Kris has been soliciting opinions on how the Knicks should address Mr. Thomas’ employment. Now that the verdict is in, it is easier to address his employment and many