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Frequently Asked Questions: Employment Labor Law

March 05, 2008

General Labor Law

Q. What is Labor Law?

A. Employment Law or Labor Law concerns the legal relationship between employers and employees. Statutes regarding labor law are found at all levels of government, from federal to state, to city and county. Labor law determines the rights and obligations which arise out of an employment contract. The law governing the relationship between an employee and an employer begins when an offer for employment is made by an employer to an employee. Labor law regulates the entire relationship between employer and employee – the initial hiring process, job duties, wages, promotions, benefits, employment reviews and termination of the employment relationship. It also includes litigation on the basis of unfair labor practices and discrimination. According to the United States Department of Justice Bureau of Justice Statistics job bias lawsuits filed in U.S. District Courts soared from 6,936 in 1990 to 21,540 in 1998.

Q. What is the difference between independent contractor and employee?

A. This distinction is especially important with respect to how income earned by an employee or independent contractor is handled for tax purposes, in addition to whether laws governing the relationship between an employer and an employee will apply.

Employees’ paychecks are subject to the withholding of personal income tax (both federal and state). An employer has one-half of the Social Security tax and the Medicare tax deducted from the employee’s wages, and the employer contributes the other half. An employer makes contributions to the federal (and sometimes state) unemployment insurance system, various state employment systems (such as disability or education and training), and provides worker’s compensation for the employee in case of an accident which occurs during the course of employment. This “loading” for taxes and benefits can represent a cost to an employer of an additional 20% to 35% over and above an employee’s gross wages.

An independent contractor is in business for him/herself. The independent contractor makes quarterly federal and state personal income tax deposits (based on yearly estimates), pays the entire contribution to social security and Medicare taxes, and provides his/her own insurance and benefits. An independent contractor is not subject to wage and hour regulations and does not benefit from any unemployment insurance program.

There is no employer-employee relationship between an independent contractor and the person or entity that purchases his/her services. The independent contractor controls the means by which the work is performed, while the purchaser of the services retains control over the result of the work.

Q. When do I need agreements with employees, contractors, and service providers (sometimes called SLAs?)

A. With general employees, you want to have policies, but not employment agreements. Typically, you should only have employment agreements with employees who are very important to the company and/or have unusual benefits. Employment law is very state specific, so be sure to consult an attorney in your state about your particular situation.

The purpose of company policies is to give notice and to set uniform treatment and instruction for employees on performance and behavior at the workplace. Generally, it is a good idea to have employees sign the end of the policy statement or another document stating that they have received this information and that they agree to it. It is important to present the information in the initial hiring session to be sure that it is legally effective as binding on the employee.

The purpose of employment agreements is to ensure that both parties are legally bound to the employer-employee relationship which is contrary to the default legal scenario of employment being “at will” – or either party may terminate the relationship at any time. For that reason, these agreements are not to be taken lightly. These agreements often mean the employer can be liable for paying the employee the remaining salary of the term if the employer breaches the agreement in firing the employee. At the same time, if the employee wants to quit, she may not be able to without being sued for breach of the contract. These agreements also usually include clauses on title, salary, bonus, vacation, options, lengthy termination of the employee provisions and other sections. These sections are usually detailed, and restrictive to both parties in ways that either may find problematic later.

With a contractor or service provider company, you should always have an agreement. Without a written agreement, properly drafted under copyright law, you will not own the work product of the persons you hire. Additionally, you want to be sure that the services are clearly agreed upon, that the work product is warranted and that the contractor or service provider warrants that the work is original and will not infringe the rights of another party.

A service level agreement (“SLA”) is an agreement for services which sets forth specific levels of performance which must be reached.

Q. Is a business required to provide disability insurance coverage for its employees?

A. No. While it is common to provide “employee benefit” coverage for workers, the law generally does not require a business to do so. However, in the case of disability insurance which is a component of an employer-sponsored health plan, that situation is changing. Specifically, the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) which took effect January 1, 1998, and one of the main features of the Act, guarantees the continued availability of health insurance, regardless of medical condition, for those already with coverage through employment or otherwise. For this reason, and others relating to court cases and state laws, while there may be no initial obligation to offer health insurance, once health insurance is in place for an employed person it will generally remain available. This is especially so in employment situations governed by collective bargaining agreements.

Q. I use written employment contracts with some but not all of my employees. Any problems with that type of arrangement?

A. Written contracts may or may not be used to memorialize an employment relationship. An employer may have strong business reasons to offer written contracts to some, but not all, employees. This is within an employer’s discretion, provided that contractual rights are not given to some employees and denied to others for some unlawfully discriminatory reason (e.g., race, gender, national origin, and age).

Q. Are employees entitled to view their files?

A. Unless the state has a statute (or case law) governing access to personnel files, an employer is not required to let an employee view his/her file. It is normally considered to be the employer’s property, even though the file is about the employee.

In order to avoid running afoul of the Americans with Disabilities Act, employers should keep medical records separate from other personnel records. This is to avoid supervisors’ unnecessarily seeing information about physical or mental problems which have no direct bearing on the employee’s ability to perform his/her job.

For public employees, the state may allow public access to certain information in the file. Many states exempt performance evaluations, disciplinary actions, and medical information from public access.

Q. Is there ever a time when an employer or prospective employer can distinguish between two employees or candidates based on sex, religion, age, etc.?

A. Yes, there certainly are cases where some of those are “bona fide occupational qualifications” for a job. For example, only men may qualify for male roles in a movie, and only men/boys of a certain age for the role of a teenage boy. It is acceptable for a kosher deli to require its butchers to be Jewish. However, race and color are never considered bona fide occupational qualifications.

Note that requiring candidates for a job to meet certain qualifications is clearly an acceptable practice. However, the qualifications demanded must be demanded of all applicants; for example, a prospective employer cannot ask one candidate how fast s/he types, and hire a candidate to whom he has not asked the question. In addition, the qualifications must actually be necessary for the person to fulfill the requirements of the job, and they cannot discriminate against a particular group of people based on race, color, gender, etc. For example, a company hiring construction workers, who must be able to lift and carry heavy objects can require candidates to be able to lift and carry objects of that weight, but cannot require the candidates to be men who can lift and carry heavy weight. Clearly the requirements of construction work would preclude someone confined to a wheelchair, but a secretarial position would not. If a job requires work on weekends, a prospective employer cannot ask a candidate if his/her religion or child care arrangements prohibit weekend work, but can ask if there is anything that would prohibit weekend work.

Q. Does flirting and bantering between co-workers constitute sexual harassment?

A. It is hard to state a hard-and-fast rule. When friendly and mild bantering or horseplay between the sexes cross the line and become too much and unwelcome is the type of thing courts exist to decide.

The fact that an employee participates in or tolerates or laughs off mild sexual innuendoes or lewd remarks (perhaps to fit in with the crowd) does not mean that the employee welcomed the conduct. Employees later can complain of sexual harassment even if they did join in if they did not invite the remarks. However, should matters get out of hand, even employees who encouraged or started the off-color remarks with coworkers may have cause to complain. It is a question of fact.

The same can be said of flirting. What can be flattering or complimentary to one person can be offensive, objectionable, and frightening to another. One person may regard flirting or mild horseplay as innocent fun, and it may not be viewed as objectionable at the time of the behavior, but someone else may see it as aggressive, insulting, and demeaning, or down the road it may be regarded as part of a pattern of a hostile environment.
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Q. Does the law regulate how employees are hired?

A. Yes. Both state and federal law regulate whether a person is offered employment or not, and the terms and conditions of the offer of employment. The laws mentioned above, as well as many others, determine what an employer may or may not do during the hiring process, including obtaining consumer reports.

Before beginning the hiring process, an employer should put together a set of requirements and standards for the job. An employer can use these requirements to compare applicants to decide who is to be given an offer of employment. The employer can match the skill, experience and background of each applicant with the requirements and standards set for the job position. This helps an employer eliminate discriminatory and prohibited practices from being used in reaching a hiring decision.

Q. I have heard the terms ‘at will’ employees and ‘for cause’ employees. What does this legal jargon mean?

A. At will means that you or your employer can terminate your job on a moment’s notice for any reason – good, bad, indifferent – or no reason at all. Unless the termination violates federal or state law, company policies, or an implied contract, there is very little that an at will employee can do to protest such action.

For cause employment means the opposite: the employer cannot discharge the employee without a legitimate reason -hence the term for cause. Examples of situations where your boss cannot fire you without a good reason:

your company’s employment policy requires for-cause justifications for firings

(1) you have a contract (either implied, oral or written) with the employer that contains such a provision

(2) you are a member of a labor union and protected by a collective bargaining agreement

(3) you are a government employee under the protection of civil service laws

(4) your state’s law prohibits at will terminations

(5) your termination would violate protective state or federal law (such as whistleblower’s protection, civil rights, age, or disability protections). (The term whistle-blowing refers, typically, to workplace safety violations of the employer for which a complaint is lodged by the employee to the employer or outside government agency. The employee is protected from retaliation by the employer.)

For cause employment is recognized either in (1) a written employment contract or, (2) in some states, your boss’s verbal statements, such as You’ll have a job here as long as your performance is satisfactory.

Q. What does “vesting” mean?

A. The term “vesting” refers to whether or not the money that has been set aside for you in a retirement plan is yours to keep if your employment is terminated. The plan summary should explain about the plan’s vesting schedule. In general, money you contribute to the plan (for example, through a 401(k) plan) is vested immediately. If you leave employment you will be able to receive your money back, or “roll” it into an IRA or, perhaps into your new employer’s 401(k) plan. Money contributed by your employer will become “vested” after you have worked for your employer for a specified period of time. Some plans provide for no vesting until after a set period of time (generally 5 years — known as “shelf vesting”), after which you will be 100% vested. Other plans provide for partial vesting on a graduated basis (for example, 20% vested after 2 years, 40% vested after 3 years, etc.).

Q. Can a former employer giving negative job references to prospective employers be sued for libel?

A. Generally, statements made by a former employer to inquiries from a prospective employer can be made without fear of being sued later. However, that protection is lost if there are any suggestions, inferences, innuendos, etc. that would lead a prospective employer to believe something misleading or untruthful about the employee. The difficulty is proving that the statements were inaccurate and wrong. Further, many human resources departments give only neutral references, such as the date the employee started, the date he/she left, and salary information.

Q. Information on an employment application is critical. Why?

A. The employment application is a part of the employment relationship. It may be an important document in an employment-related lawsuit. What is stated in an employment application could serve as a basis for a wrongful discharge claim, or it could give the employer a good defense for a wrongful discharge claim. Employment applications have also been the focal point of discrimination lawsuits against employers. Therefore, applications should also be periodically reviewed to make sure that the questions asked are proper and to make sure that the application protects the employer.

The EEOC has suggested that an employer consider the following three questions in deciding whether to include a particular question on an employment application or a job interview:

• Does this question tend to have a disproportionate effect in screening out minorities or females?

• Is this information necessary to judge this individual’s competence for performance of this particular job?

• Are there alternative non-discriminatory ways to secure necessary information?

Q. Am I legally entitled to use search software to obtain background history on employees for prescreening to check for criminal history, workman’s comp history, etc, and after hire?

A. You had better read and follow Federal Guidelines and those of your State where you work (to find out the law, contact the state Department of Labor and Employment). If you’re caught using software that garners you information above and beyond what you may legally acquire, you and the company will be looking at a lawsuit.

Q. Must an employer verify the citizenship or right to work of employees?

A. Yes, the Immigration and Nationality Act of 1990 requires employers to ask employees to present certain original documents to establish their identity and employment eligibility within 3 business days of the date their employment begins, and to verify on INS Form I-9 that they are eligible to be employed in the U.S. (If the person is being hired for 3 or fewer days this must be done immediately when starting work.)

Employers are responsible for examining the acceptable original documents. (The only exception is a certified copy of a birth certificate.) However an employer may not ask for more documents than is reasonable as that sometimes is a pretext for illegal discrimination.

Q. Can a foreigner work for a U.S. employer while here on a B-1 business visitor visa?

A. No. The prominent feature of this category is that the alien cannot engage in gainful employment in the United States. Key here is whether the alien will be paid a salary from a U.S. company or otherwise engages in activity here that results in payment to the foreigner of a fee for services rendered here. Gray areas on this issue may become a problem for some business visitors in the B-1 category. It is best to consult directly with an immigration attorney to ensure that one remains in lawful status and does not violate federal immigration laws.

Q. Can an employer establish different probationary periods for new employees?

A. An employer is free to establish a probationary period for new employees, during which an employee may be terminated with or without any reason. While different probationary periods may be established for different employees, or different categories of employees, this may make the employer vulnerable to a claim of discrimination. Therefore, an employer should be prepared to justify any differences in the probationary period.
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Q. Can an employer fire a worker that refuses to work on his scheduled day off?

A. Most people are employees at will and have no employment contracts or union contracts that protect them. That means that a boss can fire them at will for any legal reason (that carves out such things such as race, color, creed, etc.) or no reason at all. If there is an employment contract, or a union, that’s different.

Most bosses aren’t stupid enough to do random firings as it can be horrible for morale. Also, most large companies have rules that their local managers are told to comply with, that are designed to prevent arbitrary firings as senior managements know that it is bad for business long term. But insubordination is always one ground that is open. A boss has to look after the needs of the business first. If there is a real need for the employee to be there on what was a scheduled day off, and there is no real hardship or very strong reason why he couldn’t shift your schedule once in a while (like the employee is getting married on the day the boss wants him to work, or attending an out of town event with non-refundable plane tickets) , but the employee is inflexible, there is no legal reason preventing the termination of the employee.

Q. What are some common “causes” for being fired?

A. A manager can terminate an employee without any reason at any time if they are “at-will” employees, which the vast majority of workers are (see Question 4). An employer’s right to fire an employee is limited if they are “for cause” employees. Among the most common reasons for firing are the following:

(1) failure to follow the boss’s directions and supervision;

(2) an attendance problem;

(3) poor quality of work;

(4) incompetence;

(5) insubordination; and

(6) substance abuse (although some states require assistance with alcohol and drug abuse prior to termination since it is deemed to be an illness).

Q. Is it mandatory to notify government workers in advance of firing them?

A. No, unless:

• there is a written or oral or implied employment agreement that requires advance notice of employment termination;

• union or government employment requires that advance notice be provided prior to employment termination

• there is a mass layoff (reduction of at least 33% of the workforce of 150 employees or more, or at least 500 employees in a workforce of any size) which requires 60 days notice to employees, unions and government officials

• there is a specific state law governing notice of termination.

Q. Is a business required to provide medical, life and similar insurance coverages for its employees?

A. While it is common to provide these types of “employee benefit” coverage for workers, the law generally does not require a business to do so. Most businesses provide these and similar benefits to attract and retain good employees and as an additional form of compensation. However, businesses that employ unionized workers must provide whatever benefits are required by the terms of their union contracts, and it also may be necessary to provide certain types of employee benefits as a condition of doing business with or for certain governmental entities or agencies. Many states have decided to adopt laws requiring employers that are of a certain size to provide health insurance. Check with your state’s insurance or labor department to see if your state has adopted such a law.
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Overtime Pay

Q. Can a company insist that its non-exempt employees take paid time off rather than cash for working overtime?

A. Generally (and surprisingly), ‘comp time’ (compensatory time off given instead of overtime pay) is ILLEGAL under federal law. Under federal law, if employees work more than 40 hours in a work week, they must be PAID for overtime at time-and-a-half. This applies to all non-exempt employees in all states. Employers may give time off during the same week they work extra hours (e.g., work 10 on Monday, work only 6 on Tuesday), but as soon as they cross the ‘more than 40 hours in a week’ threshold, they’re entitled to overtime pay. Comp time is permitted within a single pay period (e.g., they might be able to take time off next week if they work overtime this week), but if it’s not in the same week, the comp time must be given at time-and-a-half (e.g., 1.5 hours of time off for every hour of overtime worked).
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Sexual Harassment

Q. What constitutes sexual harassment in the workplace?

A. Sexual harassment is unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that is:

(a) used as a basis for employment decisions, or

(b) has the purpose or effect of creating an intimidating, hostile or offensive work environment.

Sexual harassment can occur in a variety of workplace situations:

(1) The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.

(2) The harasser can be the victim’s supervisor, the employer’s agent, a supervisor, a co-worker, or a non-employee.

(3) The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.

(4) The harasser’s conduct must be unwelcome.

Victims of sexual harassment should maintain records of all incidents including, date, time, place, names of offenders and witnesses. Victims should tell offenders to stop the sexual harassment. If the conduct continues, the employer should be notified, perhaps using the employer’s complaint mechanism or grievance system.

A victim of sexual harassment may file a claim with the Equal Employment Opportunity Commission (and appropriate state agency where sexual harassment is prohibited under state law). When investigating allegations of sexual harassment, the EEOC looks at the whole records: the circumstances, such as the nature of the sexual advances, and the context in which the alleged incidents occurred. A determination on the allegations is made from the facts on a case-by-case basis.

In general, an employer is held strictly liable for the conduct of all supervisory employees who grant or without benefits on the basis of compliance with unwelcome sexual advances. However, an employer who enforces its sexual harassment policy to prevent a hostile or offensive work environment is not liable to the victim unless the employer is aware of the situation and took no action.

Q. Does “flirting” constitute sexual harassment?

A. It is hard to state a hard-and-fast rule. When friendly and mild bantering or horseplay between the sexes cross the line and become too much and unwelcome is the type of thing courts exist to decide.

The fact that an employee participates in or tolerates or laughs off mild sexual innuendoes or lewd remarks (perhaps to fit in with the crowd) does not mean that the employee welcomed the conduct. Employees later can complain of sexual harassment even if they did join in if they did not invite the remarks. However, should matters get out of hand, even employees who encouraged or started the off-color remarks with coworkers may have cause to complain. It is a question of fact.

The same can be said of flirting. What can be flattering or complimentary to one person can be offensive, objectionable, and frightening to another. One person may regard flirting or mild horseplay as innocent fun, and it may not be viewed as objectionable at the time of the behavior, but someone else may see it as aggressive, insulting, and demeaning, or down the road it may be regarded as part of a pattern of a hostile environment.

Q. Does the federal law cover “same-sex” harassment?

A. Absolutely. A case decided by the US Supreme Court on March 4, 1998 involved a male employee working on an off-shore oil rig, who claimed he was the victim of sexual harassment from other male workers. The Supreme Court unanimously held same sex sexual harassment is prohibited under the Federal law, and it does not matter if the same sex harasser was or was not a homosexual.

Harassing conduct need not be motivated by sexual desire. Courts may find an inference of discrimination on the basis of sex if, for example, a female victim is harassed in sex-specific and derogatory terms by another woman, or a male by another male. If it is clear that the harasser is motivated by the sex of the person they are harassing.
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Workers’ Compensation

Q. What happens if an employee is injured on the job?

A. After injury or illness occurs, it is the employees responsibility to complete a claim form and to submit it to either the employer or the state workers’ compensation agency/board. Normally, an employer will have the claim forms available. The employer will submit the claim to the insurance company. The employer is given an opportunity to respond to the claim. If he does not contest the claim, payment of medical bills and wages will be made by the insurance company. A hearing can be scheduled if the employer contests the claim to determine whether, or how much, compensation is owed to the employee.

Q. What is workers’ compensation?

A. Each state has its own worker’s compensation laws to handle claims from employees who are injured on the job. These laws are strict liability – fault and negligence by the employer need not be established in order to collect benefits. However, the injury or illness has to be incurred in the course of employment in order for the workers’ compensation system to provide benefits to the injured worker. Since workers’ compensation law imposes strict liability on employers, it is the exclusive remedy for an employee’s injuries or illnesses arising out of the course of employment.

Workers’ compensation insurance is typically required by the state for every employee – although state law may provide for specific exemptions for officers/owners, small companies (those with three/four/five or fewer employees), domestic workers, farm hands, and independent contractors.

Q. What benefits are typically available under workers’ compensation?

A. There are three major components to workers’ compensation:

(1) Medical Expense – the cost for hospitals, doctors, medical treatment, etc.

(2) Disability Pay – either temporary while you are getting back to normal, or permanent if you will never fully recover. The amount varies, but can be as high as one-half to two-thirds of your normal pay.

(3) Vocational Rehabilitation – if your injury renders you unable to perform the usual duties of your occupation, you may need re-training so that you can enter into a new trade or business. Also, you may need physical therapy to get your normal strength back.

Since workers’ compensation imposes strict liability without inquiry into fault, an employer could be penalized where its conduct was egregious – violation of federal or state safety standards, failure to correct known defects or other conduct – situations where there is a need to punish and deter such conduct in the future.

Q. What kinds of injuries or illnesses might be compensated by workers’ compensation?

A. Injuries or illnesses are typically covered only when they “arise out of and in the course of employment.” There needs to be a nexus between the accident that caused the injury/illness and the scope of your employment duties. Examples of compensable injuries are those caused by lifting heavy equipment, slipping on a wet or oily surface, defective machinery, or fires or explosions. Many state workers’ compensation programs preclude coverage for injuries which occur while employees are not acting within the scope of their employment – such as playing football with friends on a day off. But closer examination of the situation should be made – if an employee was injured while playing football at a company sponsored picnic, there may be coverage.

Illnesses which “arise out of and in the course of employment” can be covered under the workers’ compensation system where the working conditions present unusual or extraordinary risks of contracting an illness – such as coal miners being able to recover for black lung disease or computer workers for carpal tunnel syndrome. Careful inquiry into the hazards arising out of the scope of employment can determine whether the illness is one that is common to everyday life as opposed to risks of illness that are present in a particular employment situation.

Q. Can a wife recover for loss of services in workers’ compensation?

A. No. The benefits are paid to the worker for the worker’s loss. Additionally, there are no punitive damage awards available under workers’ compensation programs. Benefits in workers’ compensation are limited and supposedly expeditiously paid. The legal defenses available in a civil action such as comparative negligence and assumption of the risk are not available to the employer in workers’ compensation.

Q. Can an employer or co-employee be sued for careless and reckless behavior that caused an employee to incur a severe injury?

A. No. The employer is granted immunity from negligence claims by its employers. The employee can recover wage loss and medical benefits even if the worker himself carelessly or recklessly causes his own injury and disability. It is a-give-and-take situation designed to ensure that as few people as possible are without any means to provide for themselves and their families, even the careless.
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Poll: How do you feel about crying at work?

Poll: How do you feel about crying at work?