Question: My company is engaged in the purchase of refined bulk oil from refineries which are then packaged into smaller quantity containers under a private label and sold to large wholesalers and retail chain stores. We successfully bid on and received a federal contract to supply our private labeled oil to the U.S. Army Base Exchanges in West Texas, New Mexico and Arizona. Will our company have to use E-Verify for our workforce?
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The E-Verify Federal Contractor Rule (FAR Case 2007- 013 Employment Eligibility Verification) requires all Federal contractors through express language inserted into their Federal contract to agree to use E-Verify to verify employment authorization of all persons they hire to work under the federal contract and their current employees who were hired after November 6, 1986 who perform work under the Federal contract within the United States.
As a general rule, an employer cannot use E-Verify to verify the employment authorization of existing employees. However, a Federal contractor can use E-Verify to verify their entire current workforce including current employees who will not be assigned to work under the Federal contract if the new Federal contractor notifies DHS of its intention to do so at the time of online enrollment into the E-Verify Program or when it updates its profile in the E-Verify system.
The obligation of Federal contractors to use E-Verify does not apply to certain types of prime contracts. Contracts for commercially available off the shelf items and related services ( COTS ), for less than the acquisition threshold of $100,000, for less than 120 days, or contracts for work performed outside the United States do not subject the Federal contractor to mandatory use of E-Verify. A COTS item is a commercial item that is sold in substantial quantities in the commercial marketplace and is offered to the government in the same form that is available in the commercial marketplace or has minor modifications.
Now, in response to the question above, the Federal contract should be examined to determine whether an E-Verify Clause exists. If so, the company will be required to use E-Verify for new hires and current existing employees assigned to work under the Federal contract. If it exists, the company may seek an administrative review of whether the E-Verify Clause should have been inserted into the Federal contract on the argument that the privately labeled and packaged oil products qualify as a COTS item. However even if the COTS exception applies, for new hires and current employees working in Arizona, the obligation to use E-Verify may arise not from the FAR E-Verify Federal Contractor Rule, but under Arizona’s state law which the United States Supreme Court recently upheld in Chamber of Commerce of the United States v. Whiting (Docket No. 09-115, May 26, 2011 ).
Question: I am concerned about the future of my portfolio and retirement accounts because of the wild swings on Wall Street. What advice would you give me about dealing with these feelings of uncertainly and anxiety?
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The current volatility in financial markets is reviving unwelcome feelings among many investors—feelings of anxiety, fear, and a sense of powerlessness. These are completely natural responses. Acting on those emotions can end up doing more harm than good.
The debt strains in the US and Europe, together with renewed worries of another recession, are leading stocks to fall since their April highs. As a result, stocks around the world, oil, and emerging markets are weakening as risk adverse investors are driven to the perceived safe havens of government bonds, gold, and Swiss francs.
It is reminiscent of the events of 2008 when the collapse of Lehman Brothers and the sub-prime mortgage crisis triggered a global market correction. This time, however, the focus of concern has turned from private-sector to public-sector balance sheets.
As to what happens next, no one knows for sure. That is the nature of risk. But here are a few points to understand the volatility and make it more bearable.
- Markets are unpredictable and do not always react the way the experts predict they will. The downgrade by S&P of the US government’s credit rating actually led to a strengthening in Treasury bonds.
- Quitting the stock market at a time like this is like running away from a sale. While stock prices have fallen recently, that’s another way of saying expected returns are higher. And while the media proclaims “investors are dumping stocks,” remember someone is buying them.
- Market recoveries can come just as quickly and just as violently to the upside as the prior correction. In March 2009—when market sentiment was at least this bad—the S&P 500 turned and put in seven consecutive months of gains totaling almost 80 percent.
- Seek wise financial advice and write an investment plan as it relates to your own unique financial well being that anticipates variables to minimize emotional reaction to fear and greed.
- Keep investment solutions simple and costs low. If you can’t explain your investment strategy, it is probably benefiting someone else.
The market volatility is worrisome, no doubt. Feeling out of control is completely understandable; however, through discipline and understanding how markets work, the benefits of owning a diversified portfolio of stocks should outweigh the fear of short term ups and downs. At some point, value will re-emerge, risk appetites will re-awaken, and for those who acknowledged their emotions without acting on them, relief will replace anxiety.
Question: Our company requires all employees to sign confidentiality agreements which prohibit employees from divulging confidential and proprietary business information. One of the examples of confidential information included in the agreement is “personnel information.” One of our managers tells me it is not legal to have that confidentiality requirement, is that correct?
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The National Labor Relations Act (NLRA), the federal law that generally governs union organizing and union representation, also creates rights for non-management employees to engage in certain “concerted activity” regardless of whether the employee works in a union or non-union workplace. As part of that statutory right, employees must be free to discuss with other workers and non-employees their wages, benefits and other terms and conditions of employment.
As a result, the National Labor Relations Board (NLRB), the agency that administers the NLRA, prohibits employers from having rules, policies or agreements for their non-management employees regarding confidentiality that encompasses “personnel” or “employee” information. While an employer is certainly free to have a confidentiality policy or agreement that covers such things as intellectual property, customer information and most other types of business information, a policy or agreement which explicitly or implicitly would indicate to employees that this confidentiality requirement extends to employee or personnel information generally is unlawful.
Therefore, if you have a policy or standard agreement addressing confidentiality, you will want to ensure that the document does not include language indicating or even suggesting that the confidentiality requirement covers information related to employee compensation, benefits, other terms or conditions of employment, or “employee” or “personnel” information generally.
In fact, in addition to avoiding the use of this type of language in a confidentiality policy or agreement, an employer may be well advised to include an explicit disclaimer to the effect that nothing in the document is intended to limit employees’ rights under the NLRA. Particularly with the NLRB currently taking a more aggressive approach to employee rights than in past years, employers should carefully assess whether they have any confidentiality requirement that runs afoul of these NLRA restrictions.
Question: I hear the federal DOL is auditing more Texas businesses and creating new costly programs that affect Texas employers. Is that true?
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Yes. The federal Department of Labor (“DOL”) has requested an additional $46 million to audit employers and uses tax dollars to establish programs and tools which critics claim are unnecessary, increase employer costs, and simply generate employee distrust of employers. The following are three examples.
The Administration has funded a program to provide employees, including those in Texas, with a toll free number to call about employment complaints to the DOL. As part of the program, the DOL will then direct those employees to the American Bar Association, which will in turn refer employees to a plaintiff’s attorney to help them with their case on a contingency fee basis. Opponents assert that:
- This is unnecessary. $386 million in tax dollars have already been requested for 2012 to fund the Equal Employment Opportunity Commission, which handles employee complaints and typically only finds roughly 4-5% to have merit. This is an increase of $18 million from 2011;
- the DOL’s assumption that employers inherently abuse their most valuable resource – their employees – could only be believed by those with no experience in business; and
- employers should have a tax funded hotline to assist when employees breach their obligations to the business.
The DOL has also used tax dollars to create and supply to employees a free application for their smartphones to help them track their own version of time worked and what their gross pay should be. The DOL has promised updates that will track tip income, commissions, bonuses, holiday pay, deductions and paid time off. It will also allow an employee to email the collected data from their phone to their favorite third-party, such as their plaintiff attorney.
The final example is the DOL plan to audit more employers. The Administration requested $46 million in the FY 2012 Budget so that the DOL can “redouble its efforts to combat worker misclassification.” This means the DOL will be knocking on more businesses’ doors and audit/investigate whether the business is paying independent contractors who are truly employees. According to its Budget Summary, the DOL has allocated the entire $46 million to investigate and penalize businesses it believes have misclassified employees as independent contractors.
Any Texas employer that is doing work “in interstate commerce” is subject to the federal wage and hour laws the DOL enforces. The best thing an employer can do is to make sure it is paying its employees correctly and not treating folks that work for the business and are controlled by the business as contractors when they are actually employees. And be glad we do business in Texas, which is more pro-business than the federal government.
Question: How will the Securities and Exchange Commission (“SEC”)’s proposed rules on the new whistleblower provisions in Section 922 of the Dodd-Frank Act, if approved, impact my company’s internal compliance program?
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Section 922 of the Dodd-Frank Act provides financial incentives to employees who provide “original information” to the SEC regarding potential violations of securities laws. As a result, the Dodd-Frank Act could undermine corporate efforts to impose and enforce a company’s compliance program. Faced with the prospect of enormous financial incentives, an employee may find the temptation to go directly to the SEC irresistible. Issues of privacy, confidentiality, and privilege may also be implicated.
It is important to note, however, that the SEC’s proposed rules provide some limitations and carve out some exceptions for who can take advantage of the Dodd-Frank Act’s Whistleblower Bounty Program. For example, the SEC proposes that, when determining whether the $1 million threshold has been satisfied, it will not include any amount that the whistleblower is ordered to pay or that is assessed against any entity attributable to “conduct that the whistleblower directed planned, or initiated.” In addition, lawyers who obtain information through communication that is subject to the attorney-client privilege or who obtain information (not just privileged information) through a client’s representation would be excluded from receiving an award pursuant to the Whistleblower Bounty Program. Also excluded are individuals who obtain information from or through an entity’s legal, compliance, audit, or similar function or process for identifying, reporting and addressing potential non-compliance with applicable law. Individuals who obtain information by a means that violates applicable federal or state criminal laws would also be excluded. Finally, any individual who obtains information from one of the above-mentioned categories would be excluded. Other than these types of exclusions, the Dodd-Frank Act does little to address the viability of internal compliance programs after the passage of the Dodd-Frank Act. It remains an open issue for the SEC to determine whether these whistleblower-ineligible categories of persons are protected by the anti-retaliation measures proposed for all reporting individuals.
These limitations and exclusions are an attempt on the part of the SEC to preserve a company’s internal compliance program; arguably, the proposed rules do little to encourage employees to report suspected compliance issues within the company.
Question: I heard there is a new law that requires employers to provide employees who are nursing mothers with breaks and a private location to express breast milk. I am a small business and do not have space for this. Is there an exception that might apply to me?
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The recently-enacted healthcare reform bill, the Patient Protection and Affordable Care Act, includes a requirement that employers provide “reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk.” Employers are also required to provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.” These requirements apply to “non-exempt” employees only, i.e., employees who are subject to the overtime pay requirements of the Fair Labor Standards Act.
Employers with fewer than 50 employees are not required to comply with these requirements if compliance would impose an undue hardship. Whether compliance would impose an undue hardship is determined by looking at the difficulty or expense of compliance for a specific employer in comparison to the size, financial resources, nature, and structure of the employer’s business.
For those employers who are required to comply, they must provide a reasonable amount of break time to express milk as frequently as needed by the nursing mother. Consequently, the duration and frequency of breaks will likely vary based on individual circumstances. Employers are generally not required to compensate employees for these breaks. However, if the employer already provides paid breaks, an employee who uses her break time to express milk must be compensated in the same way as other employees.
Providing a bathroom to express milk, even if private, is not a permissible location. The location must be functional as a space for expressing breast milk. A temporarily created or converted space is acceptable provided the space is shielded from view and free from any intrusion from co-workers or the public.
Question: Our Company has an exempt employee who exhausted her 12 weeks of leave under the Family and Medical Leave Act in 2010 caring for her son who was in an automobile accident. Our FMLA year is the calendar year. She now needs to take FMLA leave to attend physical therapy sessions with her son, sometimes once and twice a week. She will be gone several hours when she attends these sessions. Is she entitled to more FMLA leave? Can we convert her to hourly status so that we can better manage the time she will be off, i.e. require her to clock in and out when she attends the therapy sessions?
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First, because your Company follows the calendar year under FMLA, the employee is entitled to begin anew in 2011 with her FMLA entitlement. Thus, the time she takes off in 2011 to attend her son’s therapy sessions should be counted towards her 12-week allotment. Your second question deals with how to keep track of the hours she will be off. Under the FMLA, an employer is allowed to deduct from an exempt employee’s salary any hours taken as intermittent or reduced FMLA leave within a workweek, without affecting the employee’s exempt status. Accordingly, FMLA is an exception to the general rule that you cannot deduct from an exempt employee’s salary for hours not worked. When tracking the amount of time off on intermittent or reduced leave, an employer must use the shortest increment (not greater than one hour) the employer uses for other forms of leave and cannot reduce an employee’s FMLA leave entitlement by more than the amount of leave actually taken. Thus, if you track incremental leave in hour-long periods, you can do so with respect to this employee. You also can have that employee record (even through a time record) the time she leaves and returns for purposes of tracking the time off. Finally, although it may be easier to track her hours by changing her to hourly and paying only for hours clocked in, doing so might lead to a retaliation claim under FMLA and also can have other ramifications under the Fair Labor Standards Act. Thus, that option should not be pursued.
Question: Our company has an employee who has just returned to work after having a baby and has notified us that she is still nursing. Are we required to provide a lactation space for her?
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The Patient Protection and Affordable Care Act ("PPACA") was signed into law on March 23, 2010. Section 4207 of the PPACA amends Section 7 of the FLSA by requiring employers to provide nursing mothers with reasonable lactation breaks. This amendment to the FLSA requires employers to make the following available: (1) reasonable breaks for employees to express breast milk each time the employee has a need; and (2) a private location in which to take the breaks.
The break requirements of Section 4207 do not apply to all employers. Employers with less than 50 employees are exempt from these requirements if this would impose an undue hardship. Undue hardship is determined by weighing the expense of providing breaks against the size and financial resources of the employer.
Nursing mothers have the right to these breaks for one (1) year after the child’s birth. Section 4207 does not quantify what is a reasonable length of time for a nursing mother break, nor does it quantify how many breaks can be taken in a day. It does, however, explicitly state that employers are not required to compensate employees for the breaks if they are taken during work time.
Employers need to identify places in the work site that can be used to take lactation breaks. While the statute does not require employers to provide a separate room for its employees, the location must be "shielded from view" and "free from intrusion." While the statute does not define an appropriate "private place," it does forbid the designation of a bathroom as the requisite private place.
There are still some unanswered questions as to how long and how often breaks can be taken, so employers should be cautious about compliance. Additionally, Section 4207 does not preempt state law that provides greater protection to nursing mothers. While Texas does not require employers to provide nursing mothers with lactation breaks, it does allow a business to use the “mother friendly” designation if the business develops a breast feeding work site policy. The Texas "mother friendly" application is available on the following link: "https://www.dshs.state.tx.us/wichd/lactate/mfwapp.shtm.
Because Texas employers must comply with the requirements of Section 4207, Texas employers should consider the requirements to qualify as a "mother friendly" business. Additionally, because of the lack of guidance as to what is considered a "reasonable" break time and a “private place,” employers should consult with counsel in complying with the requirements of Section 4207.
Question: We have an employee who was recently injured on the job and is now out on workers’ compensation leave. Can we require him to use Family and Medical Leave Act leave (FMLA) during this time?
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Yes. While there is no legal requirement for companies to have such a policy, it is perfectly acceptable to have one. If your company wants to require FMLA use, your policy should inform employees when they miss work for a workers’ compensation injury that they will be using FMLA time as well and the policy has to be applied consistently. Assuming your company has at least 50 employees and is otherwise covered by the FMLA, you should have an FMLA packet that is given to employees anytime there is a potential FMLA-covered serious health condition that requires an employee to miss work. The packet should include the medical forms to be filled out by the physician and should inform the employee of the starting and ending dates of the FMLA leave. An FMLA-qualified employee is entitled to 12 weeks of leave in a 12-month period. It is entirely possible that the employee will exhaust all of the FMLA leave and still be out on workers’ compensation leave. There can also be cases in which an employee may come back to work on a part-time basis and may be entitled to take intermittent FMLA leave. Intermittent leave can be complicated to track and requires diligent recordkeeping. It is also possible to structure your FMLA policy in such a way that employees are required to use vacation and sick days while on FMLA. If these vacation and sick days are typically with pay, then they would be paid when taken under the FMLA, although FMLA leave itself is not required to be a paid leave. It should be noted that both the Texas workers’ compensation laws and the FMLA have prohibitions on retaliation. Additionally, employers should be aware that there may be Americans with Disabilities Act (ADA) implications for an employee on workers’ compensation leave.
Question: Our company has a problem with employees losing company cell phones. Can we have a policy that an employee who loses or damages company property will have to pay the cost?
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There are major legal concerns with this kind of policy.
First, under Texas law, a deduction can only be made from an employee’s wages or salary with the specific written authorization of the employee.
Also, in the case of “nonexempt” employees under the Fair Labor Standards Act (FLSA), the employer would have to ensure that no deduction would effectively deny the employee the minimum wage or required overtime premium for any workweek.
Finally, and very significantly, the policy could not be applied to salaried, exempt employees under the FLSA at all. In fact, the employer would have to ensure that it had no such policy that could even be read as being applicable to exempt employees.
The FLSA includes an exemption from the minimum wage and overtime provisions for an individual employed in a “bona fide executive, administrative or professional capacity” as defined in the FLSA. To qualify as exempt, the employee must satisfy certain tests regarding the nature of their duties, the amount of their salary, and whether the individual is paid on a “salary basis.”
For an employee to be regarded as paid on a “salary basis” that individual must be paid a predetermined amount not subject to reduction because of “variations in the quality or quantity of the work performed.” The worker must receive his or her full salary for any week in which the individual performs any work subject to certain narrow exceptions provided for by regulations.
The U.S. Department of Labor (DOL) has directed in opinion letters that “deductions from the salaries of otherwise exempt employees for the loss, damage or destruction of the employer’s funds or property due to the employees’ failure to properly carry out their managerial duties . . . would defeat the exemption because the salaries would not be ‘guaranteed’ or paid ‘free and clear’” as required by the DOL regulations.
The fact that the employee signs an agreement allowing the deduction does not solve the problem. Further, even if the money is not deducted from a paycheck, but rather the employee pays the amount over to the employer, the salary basis rule is still violated. Violating the salary basis rule can result in one or more employees losing their exempt status which may subject the employer to very substantial overtime liability.
Employers should carefully examine their policies to ensure that they do not have any provisions that call for, or may even permit, an improper deduction. The mere existence of such a policy can threaten the exempt status of employees.
Also, bear in mind, that some states have state laws restricting these types of deductions as well.
Question: Are private agreements to arbitrate employment-related disputes still enforceable in Texas?
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Generally yes; but as always, stay tuned to future national legislation. Arbitration agreements are enforceable under Texas Law if they satisfy general principles of contract law. The agreement must be prospective, have valid consideration (mutual promises to arbitrate by the employer and employee are generally adequate) and does not have terms that would otherwise restrict rights and remedies available by law or regulation, such as the right to file a charge of discrimination with the Equal Employment Opportunity Commission and/or the Texas Workforce Commission. Waiver of a right to trial by jury has been held to be valid by Texas courts.
However, there is legislation pending in Congress that could ban mandatory arbitration of employment disputes. And recently, embedded in the Fiscal Year 2010 Department of Defense Appropriations Act (the "Act"), is a measure that prohibits federal contractors receiving Defense Department funds for contracts in excess of $1,000,000 from requiring their employers or independent contractors to arbitrate certain employment and related claims. Covered contractors must also certify that their subcontractors agree to these same restrictions, which apply to contracts awarded after February 17, 2010. The language of the Act and its scope raise many questions that have yet to be addressed and resolved.
All employers who have arbitration agreements should take note of this development. Whether it is a precursor to the passage of the proposed Arbitration Fairness Act (S. 931/H.R. 1020), which would prohibit mandatory arbitration agreements, or the end of Congressional efforts to limit employment arbitration remains to be seen. What is clear is that Congress is taking a critical look at mandatory arbitration agreements in the employment context.
Question: We discovered that an employee our company hired recently has been on deferred adjudication. We confronted the employee because he answered 'no' to the question on our employment application about whether he had been convicted of a crime. He said because he finished his probation successfully, the conviction was erased, so he was truthful on the application. Is that correct, and can we terminate his employment anyway?
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Deferred adjudication is available under Texas law for most misdemeanors and even some felonies. Where the court permits it, the defendant pleads guilty or no contest and is placed on a form of supervision or probation which imposes conditions or requirements on the defendant. If the defendant successfully completes the period of supervision, the charges are 'dismissed' and the court never adjudicates the guilt of the defendant. However, unless the defendant obtains an order of non-disclosure, which is the closest thing to 'erasing' the matter, the plea will show up on a criminal background check.
Employers who wish to learn about any deferred adjudication and avoid other potential problems should ask on the application about more than 'convictions.' An example of a permissible inquiry would be 'Have you ever been convicted of or served deferred adjudication or probation for a misdemeanor (other than minor traffic tickets) or felony, or are you now under court supervision or awaiting trial or sentencing for any crime? If yes, provide details.'
The inquiry should be tempered with the following: 'Note: Conviction will not automatically bar employment.' Why? The Equal Employment Opportunity Commission (EEOC) is of the view that because some minorities have a higher conviction rate than the average, employers must examine each conviction in relation to the job which the applicant seeks, considering such factors as the length of time since the conviction, the age at which the crime was committed, and the applicants overall work record.
Even though in this instance the employee truthfully answered that he had not been convicted, if he was hired on an at will basis, nothing prevents the employer from evaluating the nature of the crime for which he completed deferred adjudication in relation to the job he holds. His performance in the job since being hired should be considered along with the other criteria EEOC recommends for analysis. Note that this answer may not hold in other states, some of which not only permit employees to refuse to disclose deferred adjudication, but also prohibit employers from considering it.
Question: My company is a defense contractor and I was recently told that we cannot continue to use mandatory arbitration agreements with our employees. Is this true?
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Yes, depending on the size of your Department of Defense contract relationship. On December 19, 2009, President Obama signed into law the Fiscal Year 2010 Department of Defense Appropriations Act (the “Act”). Embedded in this $636 billion spending measure is a provision that prohibits federal contractors receiving Defense Department funds for contracts in excess of $1,000,000 from requiring their employees to arbitrate certain listed claims, including claims under Title VII of the Civil Rights Act of 1964. Contractors are also required to certify that their subcontractors follow these restrictions.
The restrictions apply to contracts awarded after February 17, 2010, and prohibit covered contractors and subcontractors from requiring employees to arbitrate a number of specific claims. The covered claims include any claim arising under Title VII, or any tort claim “related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” Contractors may still require employees to arbitrate certain other claims that fall outside of the Act’s prohibition. For employees with existing agreements, the Act prohibits covered defense contractors and subcontractors from enforcing the provisions of existing arbitration agreements as to any of the above listed claims.
Finally, some exceptions to these new restrictions do exist. The arbitration-prohibition provisions do not apply to agreements that cannot be enforced in this country. Also, the Secretary of Defense may waive these restrictions on a case-by-case basis if the Secretary or the Deputy Secretary personally determines that the waiver is necessary to avoid harm to the national security interests of the United States, and that the term of the contract or subcontract is no longer than necessary to avoid such harm.
The Author acknowledges the contribution of Ilyse W. Schuman, in Littler’s Washington, D.C. office and Henry D. Lederman in Littler’s Walnut Creek office to this article.
Question: Can an employer in Texas adopt a mandatory direct deposit policy for payment of all wages to employees?
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There is not a well-defined answer as to whether or not the Texas Labor Code permits employers to utilize mandatory direct deposit; however, it is likely permissible pursuant to certain conditions. In 2003, Texas law was amended to add a direct deposit provision to Section 61.017 of the Texas Payday Law. The language provides that an employer may elect to pay wages by direct deposit to employees who maintain suitable bank accounts, as long as the employer gives at least 60 days' advance written notice of the adoption of the direct deposit wage payment system and obtains from the employees whatever information is required by their banks to commence such deposits.
Pursuant to this language, if an employer has an employee that already has an existing bank account, it appears to be acceptable under Texas law to require the employee to accept his or her wages by direct deposit. However, there is some ambiguity regarding this provision because the language states that an employer "may elect to pay wages" by direct deposit, but does not expressly provide that the employer can make direct deposit a condition of employment. Furthermore, while the law states that the employer can elect to use direct deposit for employees with existing bank accounts, it is silent as to whether an employer can require an employee who does not maintain a bank account to open one.
Furthermore, there are federal laws that impact the legality of mandatory direct deposit. For example, the Department of Labor makes it clear that an employer cannot force an employee to accept direct deposit where related bank fees will effectively take the employee's wages below minimum wage. This is more likely to be a concern in the context of employees whose rate of pay is close to minimum wage. Moreover, the Equal Employment Opportunity Commission has explained that mandatory direct deposit could have a disparate impact on minorities. In addition, pursuant to Federal Deposit Insurance Corporation regulations, an employer cannot require employees to maintain bank accounts at a specific financial institution.
Accordingly, while it appears there is nothing in Texas law that prohibits employers from adopting mandatory direct deposit policies as long as they adhere to the standards in Section 61.017 of the Texas Payday Law, employers should consider the circumstances carefully before adopting such policies.
Question: One of my employees was out sick for several days but did not call in to tell me he could not come to work due to medical reasons. After returning to work, the employee claimed he did not have to follow the company's policy to request leave because his absence was covered by the FMLA. Is it unlawful to require employees to comply with the company's usual notice and procedural requirements for requesting leave, including contacting a specific individual to request leave?
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An employee may be required to comply with the employer's usual notice and procedural requirements for requesting leave, including contacting a specific individual to request leave.
On November 17, 2008, the Department of Labor published new final FMLA regulations which became effective on January 16, 2009. The 2009 regulations made a number of substantive changes to the original FMLA regulations issued in 1995. In particular, the new regulations state that "[a]n employer may require an employee to comply with the employer's usual and customary notice and procedural requirements for requesting leave, absent unusual circumstances." 29 C.F.R. §825.302(d); see also 29 C.F.R. §825.303(c). This includes requirements in "an employer's policy to contact a specific individual." Id. "Where an employee does not comply with the employer's usual notice and procedural requirements, and no unusual circumstances justify the failure to comply, FMLA-protection leave may be delayed or denied." Id.
It should be noted that prior to the new regulations, a number of employers believed that Wage and Hour Opinion Letter FMLA-101 prevented them from applying internal call-in policies, or disciplining employees under no call/no show policies, so long as the employees provided notice within two business days of returning to work to state that the leave was FMLA-qualifying. Wage and Hour Opinion Letter FMLA-101 was based on an interpretation of the 1995 FMLA regulations and has been superseded by the new regulations and opinion letter FMLA 2009-1-A.
Employers seeking to enforce their usual procedures for requesting leave should ensure employees are aware of such procedures by including them in the company's employee handbook and/or by distributing them to all employees. Employers should also ensure these procedures are consistently enforced and applied in a non-discriminatory manner.
This Q&A addressed one of many significant changes in the FMLA. The expanded FMLA is already in effect. If your company has not done so already, please become familiar with the new regulations and ensure compliance.
Question: One of our employees is married to a career military officer, who is being deployed overseas for the first time. We are covered by the Family and Medical Leave Act and the employee is an eligible employee under the Act. Our employee has asked to take time off to attend various briefings related to her husband's deployment. Are we required to give the employee time off for these types of activities?
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In 2008, the Family and Medical Leave Act (FMLA) was amended to provide an additional type of family leave for qualifying exigencies that arise when an employee's spouse, child or parent ("covered servicemember") is called to active duty. The regulations defining qualifying exigency were issued in early 2009 and allow for leave in a variety of situations arising from a covered servicemember's call to active duty. For example, an eligible employee can take leave to handle childcare or school issues for a child of a covered servicemember that arise when the call to duty necessitates a change in childcare or school enrollment. An eligible employee also can take leave to handle financial or legal arrangements for the covered servicemember, to attend counseling sessions related to the call to duty, to attend arrival ceremonies upon the return of the deployed servicemember, to spend up to five days of rest and recuperation leave with the servicemember, and to attend military-sponsored ceremonies, programs or events, including family support/assistance programs, related to the call to duty. Additionally, the employer and employee can agree that other events related to the call to duty constitute an exigency for which leave can be taken. Initially, these types of leave were limited to situations where the covered servicemember was a member of the National Guard, Reserves, or a retired member of the Regular Armed Forces. However, the National Defense Authorization Act for FY 2010 revoked this limitation, so that qualify exigency leaves are available when the covered servicemember is a member of the Regular Armed Forces who is deployed to a foreign country. Accordingly, your employee, assuming she has FMLA leave available to her, is entitled to take time off, without penalty, to attend military briefings (and other qualified events) related to her husband's deployment.
Question: I operate a small business, and overhead costs and obligations are frustrating me. I keep hearing these advertisements telling me about companies that will take over all my human resources and payroll responsibilities. Is this a good idea?
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The last several years have seen an explosion in what are now known as "professional employer organizations" or "PEOs". They may also be referred to as "employee leasing" or "staff leasing" companies. These are companies that specialize in management of human resources, employee benefits, payroll and workers' compensation, as well as other strategic services such as recruiting, risk/safety management, and training and development. There are various ways in which this PEO relationship can exist, from limited counsel and resource-providing to the outright hiring and leasing back of your employees so as to take over virtually all employee responsibility.
The latter version has become quite popular, and for many companies has become a smart, cost-effective way to run their business, leaving time-consuming and specialized tasks to a professional HR organization. Working through a PEO may also allow the client company to offer a better overall package of benefits, and thus attract more skilled employees by tapping into the larger benefits pool afforded by a PEO. The PEO model is therefore often attractive to small and mid-sized businesses.
From an employment lawyer's perspective, however, it is important to note that using a PEO does not necessarily absolve your company from potential liability for illegal discrimination. Indeed, whether you technically employ your employees or simply "lease" them from a PEO, the extent of your actual day-to-day control over them is what counts when determining your responsibility for illegal discrimination in hiring, firing, discipline, promotion, compensation, etc. More often than not, both your company and the PEO you are using will be exposed to liability in such a lawsuit.
So while using a PEO may offer many valuable advantages, depending upon your situation, do not assume that having your workers employed through a PEO will automatically prevent them from suing you. Continue to be smart and careful with your workplace practices whether you use a PEO or not.
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What is the "Franken Amendment" and how does this new law impact employers?
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The Franken Amendment is a provision included in the Department of Defense Appropriations Act for 2010. Specifically, that federal statutory provision, which was sponsored by Senator Al Franken of Minnesota, requires any defense contractor that receives a contract awarded under the Defense Appropriations Act on or after February 17, 2010, to refrain from entering into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under (i) Title VII of the Civil Rights Act of 1964 or (ii) any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment or negligent hiring, supervision or retention. Further, the provision prohibits an employer with a covered contract from taking any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates the employee or independent contractor to resolve any of the identified types of claims through arbitration.
Although many employers might assume the Franken Amendment is not a concern for them because they do not have a contract of over $1 million with the Department of Defense, this new law also provides that, beginning 180 days after December 19, 2009, defense contractors will be required to certify that their subcontractors with subcontracts of over $1 million on a defense project will also comply with these restrictions on arbitration agreements with employees and independent contractors.
Notably, while originally this legislation was characterized as just prohibiting employers from requiring employees making sexual assault allegations from arbitrating claims, the law appears to have much broader scope than that and extends to any (i) discrimination claim under Title VII and (ii) tort claims related not only to alleged sexual assault, but also to sexual harassment.
All employers should be concerned by the Franken Amendment because it demonstrates the widespread support in Congress for restrictions on workplace arbitration. There are bills currently pending in Congress would broadly prohibit mandatory arbitration in the employment setting.
For the time being, those employers with significant defense-related contracts or subcontracts should evaluate whether they are covered by the Franken Amendment restrictions and, if so, modify any arbitration programs they may have to comply with these restrictions.
Question:
When are you required to investigate an employee's complaint and what should be placed in writing?
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While an employer is not always technically required to investigate an employee's complaint, there are many instances in which an employer is well advised to conduct an investigation. Furthermore, federal and state law impose a duty to promptly investigate allegations of sexual harassment and based on the results, take prompt remedial action to stop the harassment.
From a business perspective, investigations can be an integral part of policy enforcement and can assist in maintaining a professional environment. From a legal perspective, a prompt investigation and subsequent actions can provide an employer a solid affirmative defense in the later defense of an employee lawsuit. In other words, the exercise of reasonable care to prevent and protect harassing behavior requires a workplace investigation if the employer wants to rely on this affirmative defense created by the U.S. Supreme Court.
There are a variety of employee complaints that may warrant investigation. Examples include, but are not limited to, the following:
- Harassment
- Discrimination
- Violence or threats of violence
- Possession or use of drugs
- Theft
- Falsification of documents
To be effective, an employer's investigation should be prompt, thorough and impartial. Additionally, an action should be taken in response to the investigation. Finally, try to maintain confidentiality throughout the investigation.
It is important to document all aspects of the investigation including interviews with employees. It is difficult to defend the thoroughness of an investigation, if there is no documentation. Be factual in your notes and do not express opinions or editorialize. Always remember that it is likely that the investigation notes will be discoverable and admissible in court.
Finally, remember that any retaliatory actions toward the complaining party violate the law. The U.S. Supreme Court recently held that Title VII's anti-retaliation provision protects an employee who cooperates with an employer's internal investigation of sexual harassment. Crawford v. Metro. Government of Nashville & Davidson County, 129 S.Ct. 846 (2009). Accordingly, employers must proceed with caution with respect to adverse actions against employees involved in an investigation.
Courts are increasingly requiring more from employer investigations. Accordingly, it is important to take prompt and remedial action in response to an employee complaint.
Question: What is the "Franken Amendment" and how does this new law impact employers?
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The Franken Amendment is a provision included in the Department of Defense Appropriations Act for 2010. Specifically, that federal statutory provision, which was sponsored by Senator Al Franken of Minnesota, requires any defense contractor that receives a contract awarded under the Defense Appropriations Act on or after February 17, 2010, to refrain from entering into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under (i) Title VII of the Civil Rights Act of 1964 or (ii) any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment or negligent hiring, supervision or retention. Further, the provision prohibits an employer with a covered contract from taking any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates the employee or independent contractor to resolve any of the identified types of claims through arbitration.
Although many employers might assume the Franken Amendment is not a concern for them because they do not have a contract of over $1 million with the Department of Defense, this new law also provides that, beginning 180 days after December 19, 2009, defense contractors will be required to certify that their subcontractors with subcontracts of over $1 million on a defense project will also comply with these restrictions on arbitration agreements with employees and independent contractors.
Notably, while originally this legislation was characterized as just prohibiting employers from requiring employees making sexual assault allegations from arbitrating claims, the law appears to have much broader scope than that and extends to any (i) discrimination claim under Title VII and (ii) tort claims related not only to alleged sexual assault, but also to sexual harassment.
All employers should be concerned by the Franken Amendment because it demonstrates the widespread support in Congress for restrictions on workplace arbitration. There are bills currently pending in Congress that would broadly prohibit mandatory arbitration in the employment setting.
For the time being, those employers with significant defense-related contracts or subcontracts should evaluate whether they are covered by the Franken Amendment restrictions and, if so, modify any arbitration programs that may have to comply with these restrictions.
Question: Is an employee's electronic signature sufficient to establish that the employee received an employment policy?
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An electronic signature by an employee acknowledging receipt of a policy should be sufficient to demonstrate the employee's receipt and acknowledgment of the policy. There is no legal impediment under federal or Texas law for an employer to require an electronic signature to demonstrate receipt and acknowledgement of electronically delivered policies. However, it is recommended that employers provide employees with the option of acknowledging receipt of the policy in writing for employees who are unable to access the policy by computer or who require a reasonable accommodation under the Americans with Disabilities Act.
It should be noted that Texas has adopted a Uniform Electronic Transactions Act, which, like its federal counterpart, provides that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form. See Tex. Bus. & Comm. C. § 43.007 and 15 U.S.C. § 7001. Although these statutes do not specifically address the employment relationship, they provide additional support for instituting electronic signatures of policies.
Moreover, the HIPAA regulations provide guidance as to what is considered taking "reasonable measures" to ensure that an electronic system results in actual receipt of transmitted documents, including: (i) using return-receipt electronic mail features or notice of undelivered mail, and (ii) conducting periodic reviews or surveys to confirm receipt of transmitted information.
Finally, challenges have been raised by employees in cases involving electronic distribution of arbitration agreements. Based on these challenges, employers should consider taking measures to ensure that an electronic signature can be attributable to the employee. Some suggested measures include: (i) providing employees with clear written and/or verbal notice of the electronic distribution of the policy; (ii) ensuring that employees utilize unique passwords to access the employer's computer system; (iii) tracking the date and time an employee opens the e-mail containing the policy; and (iv) providing a box for employees to check confirming that they have received the policy. See Kerr v. Dillard Store Services, Inc. 105 F.E.P. cases 1298 (2009); Campbell v. General Dynamics Government Systems, 407 F 3d. 546 (1st Cir. 2005).
Question: I am worried about all of the recent media coverage on H1N1 giving my employees another excuse to stay home. Can I require employees who have symptoms to still report to work?
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The media coverage on H1N1 influenza has indeed been widespread, and many employers are confused about whether to dust off emergency response plans or to maintain business as usual. Despite this confusion, however, governmental agencies have weighed in on an employer’s obligations and best practices as they relate to influenza in the workplace.
For example, the Occupational Safety and Health Administration (OSHA) has restated recently with regard to H1N1 that an employer has a general duty to provide a workplace free of recognized hazards. With this obligation, an employer has a duty to take steps to protect his workforce from the spread of H1N1. For example, OSHA recommends that employers require employees to use appropriate hygiene and engage in social distancing. OSHA also strongly recommends that employers incentivize employees to stay home from work if they exhibit influenza-like symptoms. Examples of employee incentives include a culture of encouraging ill employees to stay home, relaxed leave and leave documentation policies, and compensation for time off.
Moreover, despite the potential for disability discrimination allegations, the Equal Employment Opportunity Commission (EEOC), in guidance released in early October (http://www.eeoc.gov/facts/pandemic_flu.html), encouraged employers to send employees home who report influenza-like symptoms. This encouragement is consistent with the Centers for Disease Control and Prevention’s recommendation that employers should send ill employees home. The EEOC reminds employers that sending an employee home because he or she reports influenza-like symptoms does not violate the Americans with Disabilities Act (even if the employee’s condition meets the definition of a disability) because the employee likely poses a direct threat to the safety of other employees in the workplace.
Question:
I'm afraid my employees are Facebooking and Tweeting when they should be working. What can I do, and are there any legal risks or issues I should be concerned about?
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Social networking websites like Facebook, Twitter, and MySpace are an unavoidable aspect of American social life. Without proper safeguards, they can also be a huge burden on businesses. Time spent by employees on such social networking sites can create a huge drain on productivity and divert valuable network bandwidth and computer resources.
Employees' use of social networking sites in the workplace raises a number of potential legal risks for employers. For example, an employee's posting of improper comments about his or her coworkers on such sites could give rise to state or federal law claims of discrimination, harassment, or retaliation, as well as defamation, intentional infliction of emotional distress, and other state law torts. An employee's sharing of his employer's non-publicly available financial or strategic information among Facebook friends or Twitter followers could give rise to liability for violation of insider trading laws, just as his unauthorized sharing or misuse of his employer's (or its customers') business information and intellectual property could result in lawsuits ranging from trademark or copyright infringement to trade secret misappropriation.
A few simple steps can help lessen these risks. Many companies are adopting, and requiring their employees to sign and acknowledge, "social networking policies" that restrict the time and manner in which employees can access such sites, remind employees of their responsibility to comply with other company rules and policies (including anti-discrimination/anti-harassment, confidential information, and privacy policies) when using social networking sites or personal blogs, and reaffirm the company's expectations regarding non-work related use of company time and property. Others are utilizing internet "speed bumps" which remind employees that when they are visiting web sites they must comply with company's policies. Whether your business adopts such measures, or opts for the more extreme (and more risky from a legal perspective) measure of imposing a complete ban on such websites, it is very important to make sure that those limitations are applied equally to all employees. A private employer's failure to ensure such equality can itself result in possible liability under labor and civil rights laws. Notwithstanding such policies, managers and human resources professionals may also incur liability by using improper or deceptive means in an attempt to monitor employees' private accounts on social networking sites.
One final note: The spread of social networking sites like LinkedIn and Yammer, which are specifically aimed at businesses and employees, is a growing trend. Although such sites may yield benefits to workers and companies, it is important that employees using such sites be reminded of their general duty to follow all applicable laws and company policies.
Question:
I'm the new HR manager for a business with 30 employees. The owner told me there is no policy handbook, and that individual policy memos have worked fine for her. How important is it for my company to have a policy manual?
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Policies and procedures are generally up to the employer to define and enforce. The employment at will doctrine in Texas gives employers the right to set policies and change them at will depending upon the needs of the business. The only exceptions are so well-established that most employers do not even consider them to be policy areas, i.e., certain practices involving pay, discrimination, safety, and benefits that are regulated under specific statutes. Policies can be oral or written or both, but ideally, all important policies should be in writing. The best policies in the world will do no good at all if the employees are unaware of them. In Texas, policies are generally not regarded as binding employment contracts.
Along with required standards, communicate your company's goals and culture in your policies. Assemble all previous policies and procedures, whether written or unwritten, and determine what will be continued or changed in the new policies. Get input from employees and managers. Have key company personnel review the draft, incorporate any needed changes, and have the final version reviewed by an employment law attorney. Have each employee sign a form acknowledging receipt. After giving all employees copies, train supervisory personnel in how to use the handbook.
Although employers have the right to change policies at will, always try to give advance notice. Try to anticipate potential problems and think of alternatives when amending policies. If a policy change alters an employee's work relationship so adversely that a reasonable employee would quit under the circumstances, your company could risk losing an unemployment claim. Ill-advised or badly-timed policy changes could also present your company with drops in employee morale and productivity.
Above all, try to follow your own policies, especially with respect to disciplinary matters. Even-handed enforcement of fair policies helps show that a discharged employee either knew or should have known that a particular problem could lead to discharge, helps indicate that the employee was not singled out for discriminatory treatment, and can also help dispel the notion that an employee was somehow wrongfully discharged.
Question: We are looking at ways to improve our company's viability in these tough economic times, and there just seems no way to do that without small-scale layoffs. Some of the most vulnerable employees have been here a long time, and we are concerned about liability, even though we feel we have a strong business case for downsizing. Is there anything we can do to protect ourselves? We are looking at ways to improve our company's viability in these tough economic times, and there just seems no way to do that without small-scale layoffs. Some of the most vulnerable employees have been here a long time, and we are concerned about liability, even though we feel we have a strong business case for downsizing. Is there anything we can do to protect ourselves?
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Many employers, even small ones, are concerned about the increasing number of discrimination and employment lawsuits. Age discrimination filings last year increased 28.7%, and overall discrimination claims (age, gender, race, national origin, disability, etc.) during the same period were up 15%, according to the U. S. Equal Employment Opportunity Commission. So this is a serious question and, with the biggest driver of claims activity being unemployment, it's not likely to go away in the near future. Your best defense is employment practices liability (EPL) insurance, though a recent survey released by the Chubb Group of Insurance Companiesindicates that a whopping 63% of companies do not have it. The three main reasons given by employers for declining this coverage are (1) the perception that their particular risk is low, (2) the assumption that they are covered under other policies, and (3) affordability. Risk is greater now than ever with increased attention being given to discrimination laws, widening employer liability and making it easier for employees to file claims. Employment practices are not generally covered by workers' compensation, liability and umbrella policies, though many employers believe they are. And perhaps the biggest reason to consider EPL insurance is that you can't afford not to. The average total cost of an EPL-related claim is $63,114. When a jury is involved, costs skyrocket to an average of $200,000. The good news is that EPL insurance comes with several options, and consultation with an experienced broker can help any company make smart, affordable choices. One way to limit the cost is by choosing lower limits of protection, though at least $100,000 in limits is often recommended. Another way to is to consider whether you need EPL as a standalone product, or if you would benefit from combining it in a package with other coverages, such as directors and officers liability, fiduciary liability, crime, fidelity and other employer risks. Perhaps the best way of limiting your exposure to employment practices claims is to prevent them with proactive, up-to-date human resource policies and loss prevention strategies, another advantage of seeking advice from a risk management professional. In today's political and economic climate, better safe than sorry.
Question: Our company has more than 50 employees. I know that the new FMLA regulations became effective this year. Do we need to do anything now to comply?
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The new FMLA regulations went into effect January 16, 2009. While the effect of these regulations is far beyond the scope of this article, there are several steps your company should take now, if you haven't already, to comply with the new regulations. 1.Revise your current FMLA policy in your employee handbook. You need to ensure that the policy contained in your handbook is consistent with the new FMLA regulations, including the new types of FMLA military family leave. At a minimum, all of the information that is contained in the FMLA poster entitled "Notice to Employees of Rights Under the FMLA" should be included. 2.Post the new FMLA poster. The new regulations require employers to post this "Notice to Employees of Rights Under the FMLA" in a location where it can be easily seen by employees and applicants for employment. 3.Train supervisors and human resource personnel to be aware of new regulations. 4.Begin using the new FMLA forms. a.The Notice of Eligibility and Rights and Responsibilities form This notice must be given to employees within five (5) business days of an employee's request for leave for an FMLA qualifying reason. b.The Certification form The Certification form should be provided to the employee, along with the Notice of Eligibility and Rights and Responsibilities form, within five (5) business days of an employee's request for leave for an FMLA qualifying reason. Employees must be given at least fifteen (15) days to return a completed certification. c.The Designation form The Designation Notice notifies the employee whether the leave is FMLA qualifying or non-FMLA qualifying, whether the employee will be required to substitute paid leave, and whether a fitness for duty certification will be required to return from leave. An employer must provide a Designation Notice to an employee requesting leave within five (5) business days after the employer's determination of whether the leave qualifies as FMLA leave. 5.. Improve and document communications with employees about leave-related issues. Finally, the new forms referenced above, are available on the Department of Labor website at www.wagehour.dol.gov.
Question: What is the current law on partial-day absences for exempt employees? Can an employer make an exempt employee use vacation time for hours taken off in a day for personal reasons? How about partial days for sick leave?
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An employee that is not exempt from the overtime provisions under the Fair Labor Standards Act ("FLSA") is typically paid based on the quantity of work performed. Thus, an employer generally does not have to compensate an employee for time that an employee is away from the workplace not performing work. However, when an employee is paid on a salary basis and is exempt (e.g., executive, administrative or professional) from the overtime provisions of the FLSA, an improper deduction can jeopardize the exempt status of all employees in that job class. The most common appropriate full-day deductions from an employee's salary include: €¢One or more full days for personal reasons other than sickness or accident €¢One or more full days for absences because of sickness or disability, if the employer has a plan, policy or practice providing compensation for loss of salary due to sickness or disability. €¢One or more full days for unpaid suspensions imposed in good faith for infractions of written workplace conduct rules applicable to all employees. Appropriate partial-day deductions include: €¢A set off of salary payments in a particular week with compensation paid for military duty or jury duty during that same week. €¢A deduction made as penalty imposed in good faith for violation of safety rules (of major significance). €¢A deduction made for any hours taken as qualified unpaid FMLA leave. Moreover, the Department of Labor has long held that an employer may deduct time from leave banks (such as vacation or sick leave) without regard to the rules set forth above, so long as an employer receives his guaranteed salary for that particular week. However, once an employee exhausts his leave bank—or even has a negative balance—the employer may not deduct from the salary unless it meets one of the tests set forth above.
Question: Our company is trying to reduce its payroll costs, and would like to require employees to take a forced vacation or sabbatical. Are there any legal problems with requiring employees to take unpaid time off?
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Generally speaking, it is legal in Texas for employers to require employees to take a forced vacation or unpaid sabbatical. From a business perspective, this may be a better alternative than more drastic measures such as layoffs, in terms of preserving employee morale and having enough employees when business picks up again. However, there are a number of legal implications employers should consider when implementing these measures. First, employers should make sure a forced vacation/sabbatical does not violate the terms of any employment agreement. Or if an employer has union employees, the employer should confirm the vacation/sabbatical does not run afoul of any union collective bargaining agreement. Second, employers should provide employees with clear notice that no work is to be performed during the vacation/sabbatical and take measures to ensure this directive is followed. Such measures might include requiring employees to return employer-owed remote access devices and prohibiting employees from accessing company e-mail while on vacation/sabbatical. Keep in mind that employees who perform work must be paid for that work, even if the work is not authorized. If employees are engaging in work while on vacation/sabbatical, this can undermine any cost savings to the employer, because the employer will have to pay the employees for the work or risk exposure to potentially significant liability. Engaging in unauthorized work should therefore be treated as a serious disciplinary issue. Third, because exempt employees must be paid their entire salary for weeks they perform any work, vacations/sabbaticals for exempt employees should be in full week increments. Finally, as with any employment decision, employers should select employees for vacations/sabbaticals based on objective business criteria, and the criteria used should not have an adverse impact on any protected group. Overall, forced vacations/sabbaticals can be an effective way for employers to manage costs in uncertain economic times if implemented in a considered, careful manner, ideally with the assistance of legal counsel.
Question: In an effort to motivate better attendance, our company wants to adopt a perfect attendance bonus program. If an employee is away from work on a leave protected under the Family and Medical Leave Act ("FMLA"), are we allowed to count that absence against the employee for purposes of qualification for the perfect attendance bonus?
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The answer has changed as a result of the new FMLA regulations that became effective on January 16. Under the previous United States Department of Labor ("DOL") regulations, employers were prohibited from disqualifying employees from perfect attendance awards based on the employee having taken FMLA leave. The DOL's old view was that bonuses or other awards for perfect attendance do not require performance by the employee but rather contemplate the absence of occurrences, and an employee who otherwise met the requirements for such a bonus could not be disqualified because the employee had taken FMLA leave. In a dramatic shift, in the new regulations, the DOL instructs that if a bonus or other payment is based on the achievement of a specified goal, such as hours worked, products sold or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied to the employee, unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave. In other words, an employer can disqualify an employee from receiving a perfect attendance award because the employee took leave or was otherwise absent, including for an FMLA-protected absence, if the rules for disqualification are applied in a non-discriminatory manner. For example, if an employee who used paid vacation for a non-FMLA purpose would receive the payment, then the employee who uses paid vacation for an FMLA-protected purpose also must receive the payment. (Of course, under the FMLA, generally, an employer can require the use of, or an employee can choose to use, paid leave, such as vacation or sick leave, while the employee is on FMLA leave.) With this new rule, employers now have the opportunity to make use of perfect attendance awards to encourage exemplary attendance. However, because the award program must be completely non-discriminatory, an employer should ensure that an employment attorney carefully reviews any proposed award program, in conjunction with the employer's other leave and attendance policies, to confirm that the program is lawful.
Question: We are a growing business currently with 50 employees. We've heard a lot about the Lilly Ledbetter Fair Pay Act. What is its significance and what practices should we adopt going forward to ensure compliance?
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The Lilly Ledbetter Fair Pay Act represents a significant change to employment discrimination laws, including Title VII, the Age Discrimination in Employment Act and the Americans with Disabilities Act, with respect to pay discrimination. In a nutshell, the Act eliminates the time limit within which an employee must file a charge of pay discrimination. For example, if an employer in 1990 makes a discriminatory decision to pay an equally qualified/experienced female employee less than a male employee in the same job and as a result, the female employee continues to earn less than the comparable male employee in 2009, the female employee can file a discrimination charge based on a paycheck issued in 2009, even though the actual decision was made in 1990. Under the law before the Act, a charge and resulting lawsuit filed in 2009 would be untimely if the discriminatory decision were made in 1990. What does this mean to employers such as you? The Act will make it more difficult to defend pay discrimination lawsuits, particularly where the decision was made years in the past, since the supervisor who made the decision may no longer be employed, or even if the supervisor is employed, memories fade over time. To avoid problems going forward, your business may want to consider adopting a formalized pay administration program that relies upon measurable objectives uniformly and consistently applied within job classifications. Your business also needs to train supervisors on the impact of the Act and on the need to document carefully and thoroughly pay decisions and why they are made, e.g., evaluations, experience levels, qualifications. You also need to put in place a record retention program that maintains pay records and supporting documentation for longer time periods, since lawsuits might not result until years after a pay decision is actually made.
Question: We are moving our plant to a different site. If some of the employees choose not to travel to work at the other site, will they be able to collect unemployment benefits if they quit?
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The Texas Unemployment Compensation Act allows for differing interpretations regarding when an employee is eligible for unemployment benefits based on a voluntary separation of employment that results from a plant's relocation. The answer depends on the distance between the old and new locations of the plant and the extent and availability of the employee's means of transportation to the new location. As a general rule, if a plant relocates to another city or state, it is likely that the employees will be eligible for unemployment benefits. More specifically, a distance of ten miles between the old location and the new location is typically considered a reasonable distance to expect that an employee can travel; eighty miles has been considered unreasonable. The availability of public transportation and shared transportation (i.e. car-pooling) can render an employee ineligible for unemployment based on plant's relocation. For example, if an employee is able to carpool with a co-employee who lives near that employee's home, the employee will most likely not be eligible for unemployment benefits (so long as the distance between the locations is reasonable). If that employee cannot reasonably access or rely on public transportation or car-pooling to travel to the new location, he or she will probably be eligible for unemployment. In short, the answer depends on the distance between the old plant and the new plant and the individual employee's access to available means of transportation.
Question: I understand that the American Recovery and Reinvestment Act of 2009 ("ARRA") made changes to COBRA. What changes have been made that will affect my business?
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The American Recovery and Reinvestment Act of 2009 "ARRA"), which is the recently passed federal economic stimulus package, includes significant provisions related to COBRA benefits for some employees. Attached is a Department of Labor ("DOL") fact sheet addressing these provisions. Also attached is the applicable language from the ARRA.
The law provides for a 65% reduction in the cost of COBRA benefits for up to 9 months for employees who were involuntarily terminated between Sep 1, 2008 and Dec 31, 2009 (ie, all of our laid off employees), provided they otherwise qualify. It applies to those who rejected COBRA coverage when first offered, and establishes a second 60-day election period. Those employees can now change their mind and elect coverage now, even though they previously rejected coverage. The reduction is not retroactive to the date of the qualifying event for those who did initially elect coverage, but may be applied for the next 9 months of COBRA coverage. The subsidy is graduated for those who had an adjusted gross income starting at $125,000 ($250,000 for those who file joint income tax returns) in the year in which they would receive the subsidy, and is not available to those with an adjusted gross income of more than $145,000 (or $290,000 for those who file joint income tax returns).
The law has notification requirements that must be met within 60 days by the administrator of the group health plan to anyone who may qualify for the reduction. (See 5th page of ARRA attachment.) The law is set up so that the employer pays the 65% that the employee no longer must pay, and is then allowed to reduce the payroll taxes it would otherwise pay by the same amount. The Department of Labor is required to produce model notices in the next few weeks.
The new law also allows employers to offer an optional enrollment plan to allow involuntarily terminated employees to enroll in a lower cost option for coverage that is different than the coverage the employee had prior to the event that qualified them for COBRA coverage, provided the premium is no more than the premium for the coverage in which the employee was enrolled at the time of the qualifying event, and the optional coverage is coverage that is also offered to active employees at the time the qualifying employee makes the election. The optional coverage cannot be limited to dental, vision, counseling or referral services; flexible spending accounts; or services consisting primarily of wellness or first-aid care provided by an employer maintained medical facility. This optional plan is not required by the new law, and may or may not be provided depending on the employer's choice.
It is important that you get in touch with your carrier to discuss making the required notifications, orchestrate the resulting premium reductions, and coordinate the related tax credits.
The following are helpful links to Department of Labor resources to help further answer your questions.
- COBRA Premium Reduction Fact Sheet
- Job Loss Poster (8½" x 11")
- Job Loss Poster (11" x 17")
- Flyer for Employers
- Flyer for Employees
- COBRA Continuation Health Coverage FAQs for Employees
- COBRA Continuation Health Coverage FAQs for Employers
- IRS Information on COBRA Premium Reduction
- DOL Information Related to the American Recovery and Reinvestment Act of 2009
Question: How do you handle pay issues when you have to shut down the office or company when there is inclement weather? Do you need to pay the non-exempt employees? What do you do about someone who doesn't come in because of bad weather when others from the same area in town make it in?
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Hourly (non-exempt) employees are paid for hours worked. If an employee did not work, regardless of the reason, then the employee does not have to be paid. Of course, like most things in employment law, there are exceptions. Contracts guaranteeing a certain wage have to be honored. Likewise, policies regarding pay for periods that the business is closed due to emergencies have to be followed. Other factors to take into consideration include morale and fairness issues. However, salaried (exempt) employees are a different matter. Those who are exempt must be paid their full salary if the business shuts down for less than a full workweek or if the employer does not have work available for the employee for the full workweek. Making improper deductions from pay can endanger the employee's exempt status. If the business was open and work was available, deductions can be made from an exempt employee's salary if the employee is absent from work for one or more full days for personal reasons. Deductions can also be made for a full day's absence if it occurred because of sickness or disability, as long as the deductions are made pursuant to a bona fide sick or disability leave plan, policy or practice. Texas law prohibits discrimination for participation in an emergency evacuation. An employer may not discharge or discriminate against an employee who leaves the employee's place of employment to participate in a general public evacuation ordered under an emergency evacuation order. (But, emergency service personnel are exempt from this provision.) Additionally, an employee who is called to active duty in the uniformed services as a result of a national emergency has job protections. Sometimes employees who lost some, but not all of their income due to the bad weather, may be entitled to unemployment benefits. And if you had to reduce employees' hours, which triggers a loss in health insurance coverage, your employees may be entitled to COBRA coverage depending on the circumstances.
Question: How can I know that my company and our employees are working with a quality investment professional?
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Bernie Madoff had it all. Besides stellar returns in his managed fund, posh lifestyle in New York City, and famed reputation, above all, his clients trusted him. Trust is something that is difficult to market and usually comes as a result of performing smaller services well or from respected individuals in the community who enjoyed a good experience and speak highly of that individual or company. The recent betrayal of trust by Madoff to his clients calls into question the trust others may have in their own financial advisor. Legitimate advisors want to be checked out and there are ways of learning detailed information about their background and operations without making them feel un-trusted or suspected. Types of advisors There are two types of advisors: Registered Investment Advisors (RIAs) and Registered Broker/Dealer Representatives (RRs). The primary difference between an RIA and a RR is the law that governs each. An RIA is governed by the Securities Exchange Commission (SEC) and are fiduciaries, while RRs are regulated by the Financial Industry Regulatory Authority (FINRA) and held to a standard of suitability. http://www.financial-planning.com/news/false-fiduciaries-527549-1.html Governing bodies One of the main missions of the SEC is to protect investors and maintain fair, orderly markets. As such, they provide a resource to investors to search for their advisor's ADV (a document which discloses how RIAs run their business). While this is a good start, regulatory agencies failed to detect Madoff's scheme. http://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx Other RIAs that are smaller and registered at the state level can be found at www.nasaa.org. The Financial Industry Regulatory Authority (FINRA) provides unbiased information on the industry, broker dealers, and allows one to verify the background of a broker who represents a broker dealer. http://brokercheck.finra.org/Support/TermsAndConditions.aspx The Certified Financial Planner Board of Standards (CFP®) is the recognized standard of excellence for personal financial planning. Visit their website to check on certificate holders and if any disciplinary actions exist. http://www.cfp.net/search/ Most advisors run legitimate business and welcome the opportunity to build trust with their clients. Investigating the background of your advisor will solidify the relationship so they can focus on what they do best, solving problems for clients. Bernie Madoff was too big, too credentialed, and too aloof to be questioned—and in the end, too good to be true. Take the next step and check out your advisor. At the least, it will give you additional confidence in the way they operate their business.
Question: What is the Employee Free Choice Act (EFCA) and should I be worried about it?
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The election of Barack Obama as the next President of the United States, coupled with the Democratic Party increasing its majority in both the Senate and House, increases the chances of passage of legislation making it much easier for unions to organize employers in the United States. Organized labor has publicly stated that its top priority in the 111th Congress, which begins in January 2009, is passage of the EFCA. If enacted in its current form, EFCA would result in sweeping changes to the National Labor Relations Act (NLRA). It would amend the NLRA to:
- Require the National Labor Relations Board (NLRB) to certify a labor union as the exclusive bargaining representative of employees through union authorization cards signed by employees, without the benefit of a government-supervised, secret-ballot election.
- Require mandatory interest arbitration if an employer and a newly certified union are unable to reach a first contract within a relatively short period of time.
- Expand the NLRB's remedial power for employer unfair labor practices during union organizing campaigns and during bargaining, including the authority to award civil penalties.
So, the answer to the question is yes, every business should be worried about EFCA. In addition to active participation in the political process, employers need to develop a strategy to avoid the potential problems of the EFCA. This should begin with a comprehensive human resources audit to assess vulnerability to union organizing. From the results of the audit, a plan should be implemented to minimize exposure. Finally, training on the impact of EFCA should take place. Employers should begin now to evaluate and reduce the level of union risk.
Question: Our company is small (less than fifteen employees), and in order to keep costs down, the owners have decided to declare everyone a "salaried employee." None of the employees work more than thirty hours a week, and all perform, as part of their daily duties, some degree of administrative work on client contracts. However, for accounting purposes, we require each employee to track the amount of time that they spend in the workplace each day. Additionally, on those occasions when employees do work more than their regular thirty hours within a week, they are paid on a per-hour basis (as determined by a percentage of their salary) for each hour over thirty that they work. Are there any issues with our paying our employees in this manner?
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Your scenario has raised some red flags. While you have classified your employees as "salaried," you are not treating them that way. Or, more precisely, you are treating them as "salaried/non-exempt." In other words, they are paid a set amount each week that they work, but you are in all other respects treating them as hourly employees, particularly if they work more than their allotted number of hours. Thus, while they may be "salaried" they may also be entitled to overtime. Without knowing more about the specific duties of your workforce it is impossible to determine whether they would qualify as exempt employees as that term is defined by the Department of Labor. Nevertheless, the way that you have treated these employees in terms of hours worked and payment for those hours suggests that they are not exempt from an entitlement to overtime. The good news is that, based on you description, it is likely that the company has not violated any wage and hour laws provided none of the employees have ever worked more than forty hours within a given week. Therefore, while it may be more accurate to simply classify them as hourly or truly salaried/non-exempt, unless and until you go over the 40-hour mark within a given week, it ends up being a distinction without any real difference.
Question: One of our former employees failed to return his company-issued laptop computer. What options do we have for getting it back?
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Employers commonly provide expensive portable computers to their employees. Among other things, a laptop allows traveling employees to work on the road, and it gives employers the option of allowing people to work from home. However, such portability can sometimes result in the employee treating the computer as his or her own — and even failing to return it after leaving the company. Not only does this deprive the company of a valuable piece of equipment, it can also expose the company to a serious breach of its confidential information, which is often stored on the computer. So what are some options an employer has to get its property back? Often, a strongly-worded demand letter from an attorney will do the trick. However, if that is ignored, more significant legal action may be necessary. If the primary concern is the value of the laptop itself, as opposed to the loss or disclosure of any sensitive information, the cost of the unreturned property could be deducted from wages if the employee previously signed an agreement authorizing such action. However, the deduction must not violate minimum levels of pay mandated by federal law for the employee's classification. If there is no such agreement then the company may be able to recoup its loss by filing a suit in small claims court. The company may also consider filing criminal charges for theft. It is a much more serious problem, however, when the laptop contains sensitive company or client information. In that scenario, and possibly in addition to the measures described above, the company may need to seek an immediate court order that the computer be returned and that no confidential information be destroyed or disclosed. Seeking such an order is often expensive, but depending upon the company's exposure to harm, it may be necessary. It is important to act quickly in this kind of situation, because delay makes it less likely that a court will believe that the danger of disclosure is substantial enough.
Question: Creditors are bothering one of my employees. What law prohibits creditors from calling employees at the workplace?
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As with much of the law, prohibiting creditors from calling employees at the workplace is situation specific. The federal law that regulates debt collection is known as the Fair Debt Collection Practices Act ("FDCPA"). The FDCPA expressly prohibits particular creditors from communicating with certain employees at the workplace IF the creditor should know that the employer prohibits such communication. The FDCPA has two important limitations you should be aware of. First, employers cannot make a claim under this statute, only employees may do so. Second, only third-party debt collectors are prohibited from calling employees, and not creditors collecting debts in their own names. The Texas law that regulates debt collection is known as the Texas Debt Collection Act ("TDCA"). The TDCA is similar to the FDCPA, but it applies to many more creditors because it covers anyone who engages in debt collection, not just third-party debt collectors. The TDCA has one major limitation — it does not expressly prohibit creditors from communicating with employees at the workplace. Only specific conduct violates the TDCA, such as threats, coercion, harassment, abuse, unfair or unconscionable means of collection, or fraudulent, deceptive or misleading representations. The specific list of prohibited conduct can be found in the Texas Finance Code, starting at Section 392.301. In addition to claims under the state and federal statutes mentioned above, Texas courts recognize claims for unreasonable collection practices. Such claims may apply to creditor conduct that is not expressly prohibited by the TDCA. You should be aware that in addition to employees, employers may also make claims against creditors if the employer becomes the object of unreasonable collection efforts. Frequent telephone calls at all hours, use of harsh and abusive language, and calls to employers are some of the activities found to constitute unreasonable collection efforts.
Question: What changes can companies expect to see in their audits as a result of the new standards influenced by Sarbanes-Oxley?
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Note: In response to corporate business failures that began with Enron in late 2001, Congress issued the Sarbanes-Oxley Act ("Sarbanes"), which codified the responsibilities of corporate executives, lawyers and accountants. The Public Companies Accounting Oversight Board ("PCAOB") was created to establish auditing standards and in 2003, the PCAOB began issuing audit standards that resulted in audits of internal control over financial reporting performed in conjunction with the audits of financial statements. Auditors of private companies continue to be required to comply with generally accepted auditing standards (GAAS) issued by the Auditing Standards Board ("ASB"). In response to this new financial reporting environment, the ASB developed more definitive auditing standards that incorporated some of the basic aspects of the PCAOB standards. Companies will see the most significant changes to audit procedures during the planning phase of their audits, which is now referred to as the risk assessment process. Auditors will obtain a more in-depth understanding of the company and its environment in order to perform a more rigorous assessment of the risks of material misstatement in the financial statements and what management is doing to mitigate these risks. Auditors will also test gaps in the design of controls by obtaining an understanding of the key control activities related to material transactions, account balances and disclosures by tracing transactions in each significant business process from transaction initiation to final reporting in the financial statements In addition, auditors do not have as much discretion to use their professional judgment to determine audit procedures; regardless of the auditor's assessed risk of material misstatement, auditors are required to perform substantive testing to address all relevant assertions related to each material class of transactions, account balance and disclosure. The new standards created additional auditor reporting and communication requirements with management and a company's governance/oversight function, generally the Board of Directors or Audit Committee. Auditors are required to report control deficiencies, classified as significant deficiencies or material weaknesses, identified through the audit of the financial statements. In the first year of implementation of these standards, companies should be prepared to receive one or more significant deficiencies or material weaknesses. The internal control standard includes types of control deficiencies which must be classified as significant deficiencies or material weaknesses, as well as specific guidelines on how to evaluate and classify control deficiencies. Auditors are also required to communicate directly with the governance function regarding 1) the auditors' responsibilities under GAAS, 2) an overview of the planned scope and timing of the audit, 3) significant findings from the audit and 4) information related to the audit of the financial statements that is significant and relevant to their responsibilities in overseeing the financial reporting process. For more information on the effects of the new auditing standards, please visit the TAB commentary section at www.txbiz.org.
Question: Can you accept an expired driver's license when filling out the new employee's I-9?
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Many might be surprised to hear this, but the answer is yes. The U.S. Department of Homeland Security Handbook for Employers, revised in November 2007, specifically states that "an employer may... accept an expired document from 'List B' to establish identity." (DHS Handbook, p. 23.) However, a driver's license can only be used to establish a new hire's identity for I-9 purposes. It is one of a number of documents, called "List B" documents, which establish identity for I-9 purposes. The new employee must still provide an unexpired document from "List C" to establish authorization to work. This rule also means that if an unexpired List B document is used to establish a new hire's identity, you do not need to reverify the I-9 Form when that document expires. This question, however, is quite topical given that the Department of Homeland Security has demonstrated a renewed commitment to enforce our immigration laws over the last year or so. The Bureau of Immigration and Customs Enforcement (ICE) within the Department of Homeland Security (DHS) has increased its focus on I-9 inspections and audits, workplace raids, and arrests and detentions from day labor gathering sites. This new wave of activity appears to be touching all areas of enforcement — civil, criminal, administrative, and judicial. Consequently, employers should consider conducting their own self-audits of I-9 compliance. A random audit by a trusted outside source is also a good way to make a cost-effect assessment of I-9 compliance. Of course, if a self-audit or consultant suggests that I-9 forms need attention, it would be wise to fix problems right away.
Question: I have a real problem with one of my best employees. She is the lead processor in our billing department and there is no position that is more critical. If we are even a day late on getting bills out it can really hurt the financial performance of the business. I feel bad because she has had so many problems, but I am afraid that they are going to interfere with her work. She has a three year old boy, who has severe developmental disabilities. Her mother lives with her and she is very nice, but she is getting older and has had some medical problems herself that has caused my employee to ask for some time off from work. She hasn't really missed much work, but I am concerned that she will. Today, she told me that she was pregnant. I am really concerned, so I talked with her about moving to accounts payable because that would not hurt as bad if she missed. It wouldn't be as the lead, but it would still be a good job and I could keep her at the same rate of pay, although I couldn't give her a raise this year. She was not happy about the idea and I have now heard that she was saying that maybe I was guilty of "family responsibility discrimination." I never even heard of that. Is there some new law I missed?
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No, there is not a new law. However, there has been increased focus on how employees who have caregiver responsibilities are being discriminated against. In fact, one law school has even started a special program, the Center for Worklife Law to focus on such problems, and the Equal Employment Opportunity Commission (EEOC) has put out special guidance on discrimination against care givers. It provides a number of examples on how employers can violate Title VII or the Americans with Disabilities Act when their employees have family obligations. Your employee's situation provides a good example of just how many current laws can come into play, even without a law specifically protecting caregivers. In considering whether moving her to another position would be illegal, you have to consider whether it is a violation of Title VII by discriminating against her on the basis of her pregnancy, a violation of the Americans with Disabilities Act because of her relationship with her disabled son, and/or a violation of the Family & Medical Leave Act if the care for either her son or mother qualified under the FMLA. Since at this point your concerns about her missing work have not occurred, but are only possible, any move to a lower status position would be hard to justify and could put you at risk under all three.
Question: We issue laptops, cell phones, and special ID badges to our employees. If they lose or damage those items, can we make a deduction from their pay?
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If an employee causes such a loss during employment, it is easy enough to have the employee repay the loss in installments from future paychecks, as long as the deductions do not take the employee below minimum wage (Fair Labor Standards Act) and are made with the employee's written authorization (Texas Payday Law). However, if the loss is discovered when the employee leaves the company, there may not be enough final pay to cover the deduction and still leave minimum wage, even if the employee has authorized a lump-sum deduction. To avoid such a situation, try using a "property return security deposit", whereby the employee would authorize a deduction from each paycheck that would be held to cover non-return or damage of property. Following is an example of such an agreement: Property Return Security Deposit Agreement I understand and agree that my employer, ____________________ (the Company), may deduct $ ______ from my pay each pay period for a property return security deposit (deposit) that will be held in my name. I understand that no such deduction will reduce my pay below minimum wage for the pay period in question. I further understand that if I return all company-owned property issued to me in connection with my employment in good shape, aside from normal wear and tear, the full amount of the deposit will be paid to me within ____ days of the date that the last of such items has/have been returned to the Company, and that if I fail to return an item, or if an item I return must be repaired to be usable by another employee, the Company may deduct the reasonable cost of replacing or repairing the item from the amount of the deposit and pay any remaining balance to me within ____ days of the date such deduction is made. (Adapted from the Texas Payday Law Guide, © 1999-2008, William T. Simmons, Attorney at Law, free from the author at tommy.simmons@twc.state.tx.us) Significantly, Department of Labor regulations do allow for certain discretionary bonuses to be excluded from the regular rate calculation. Specifically, bonus amounts paid to an employee in recognition of services performed during a given period may be excluded if (a) both the fact the payment is to be made and the amount of the payment are determined at
Question: Our company is very concerned about safety and we have adopted a safety bonus plan under which nonsupervisory employees receive certain bonus amounts for achieving specific safety goals. I now have been told that paying these bonuses increases the overtime pay due to employees for overtime hours they work. Is that correct?
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Yes, these types of payments do impact the amount of overtime pay due. The Fair Labor Standards Act requires employers to pay non-exempt employees one and one-half times the employee's "regular rate" of pay for all hours worked over forty in a workweek. When we think of the regular rate, we typically think about the hourly rate the employer has agreed to pay the employee. However, the amount used to calculate that regular rate may include other payments besides the stipulated hourly wage or weekly salary - such as bonuses. Types of bonus payments that generally must be included in calculating the employee's effective regular rate include production, safety, quality, attendance, and other work-related bonuses as well as other monetary awards. As a result, if you, for example, paid an employee $300.00 for achieving certain safety goals during a particular quarter of the year, once the employee has met those goals at the end of the quarter and is paid the bonus, the employer would have to determine the amount of the bonus on a weekly basis for the quarter, and then recalculate the employee's regular rate for each overtime workweek during that quarter and then pay the employee for any additional overtime due as a result. Although this calculation can be complex, the Department of Labor provides a co-efficient table to more readily calculate the additional amount due. Significantly, Department of Labor regulations do allow for certain discretionary bonuses to be excluded from the regular rate calculation. Specifically, bonus amounts paid to an employee in recognition of services performed during a given period may be excluded if (a) both the fact the 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 (b) not pursuant to any prior contract, agreement or promise causing the employee to expect such payments regularly. If the bonuses are paid pursuant to a safety, productivity or other work-related incentive bonus program, in the view of the Department of Labor, the payment would not be regarded as a "discretionary" bonus that could be excluded because the existence of the program creates the expectation for the employee that some amount will be paid if the specified goals are met. Determining when a particular bonus payment can be excluded from the regular rate calculation is often complicated and dependent on the specific facts. As a result, employers should consult with employment law counsel in making those determinations.
Question: An employee quit and gave her two weeks notice. We decided to let her go immediately without requiring her to work the two-week period. Do we have to pay for the two-week period and if so, when is her final paycheck due? Can we withhold money for some unreturned manuals from that final pay?
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Whether you are required to pay the employee for the two-week period depends upon your written policies. Under the Texas Payday Act, wages are defined to include severance pay owed to an employee under a written agreement or a written policy of the employer. Therefore, if you have a written agreement or policy, such as a policy in a handbook, under which you require an employee to give two weeks notice or have agreed to pay employees when they provide that notice, then you are obligated to pay, even if you do not require the employee to work the entire period. However, if you have no such agreement or policy, then there is no obligation to pay for the time not worked. The Texas Payday Act also dictates when you must pay a final paycheck. If the employee is discharged, you must pay not later than the sixth day after the date of discharge. If the employee leaves employment voluntarily, the employee must be paid by the next regularly scheduled payday. In your scenario, since the employee has resigned, your obligation is to pay by the next regularly scheduled payday. Finally, as to deduction for the unreturned manuals, there are two considerations. First, on the assumption that you are paying "wages" under the Texas Payday Act, you may deduct from the employee's wages anything not otherwise required by state or federal law (e.g., taxes) only if you have a written authorization from the employee allowing the deduction. Second, if the employee is a nonexempt employee under the Fair Labor Standards Act, you must also ensure that whatever amount is deducted does not cause the employee's hourly wage to fall below minimum wage requirements. If the employee is exempt under the FLSA, then this concern does not apply.
Question: We are moving our plant to a different site. If some of the employees choose not to travel to work at the other site, will they be able to collect unemployment if they quit?
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Like so many questions of law, the answer is "it depends." Each employee's situation will have to be reviewed separately. Generally, the Texas Workforce Commission (TWC) does not allow a claimant to refuse suitable work and receive unemployment benefits. There are many factors to consider when deciding if a job is suitable work for a particular claimant. These factors include the risk involved to the claimant's health and safety, the claimant's prior training and experience and the distance and travel time to the job. For example, the TWC has held that an employee who refused to accept a job because of the 20 mile distance she would have to travel was disqualified from benefits because the distance was not excessive and such commutes were customary in that area. In another case, the claimant refused a job because she said she would have to get up too early in the morning to catch the bus. She was disqualified from benefits because the TWC held the job was suitable in all respects and she had no good cause to refuse the offer. Likewise a claimant refused a job referral in downtown Houston because it was not in the vicinity of her home and she did not want to use public transportation to get to work. She was disqualified from benefits when the TWC held her objection was not valid because thousands of workers in Houston rely on public buses daily to get to work. However, another claimant was awarded benefits after refusing a job that was located in a remote area that was difficult to reach by city bus, would have required two transfers and taken about 1 1/2 hours. The TWC found this job was not reasonably accessible. In the question presented above, it is possible some employees would be granted unemployment benefits and others would be denied. It will depend on the distance from the employee's home to the new location, the travel time and the customary commutes in that area. And a word of warning: a relocation of the plant site could also trigger requirements under the Worker Adjustment and Retraining Notification (WARN) Act.