$9.45 Million Reasons Not To Disclose Terminations

Most employers know that terminations should not be publicized externally or internally except to those who have a legitimate need to know the information.  On April 30th a federal jury in Kentucky reinforced this rule when it found that Charter Communications must pay over $9.45 million for defaming seven former employees by telling other employees about the incident that lead to their firing.

In October 2013 Charter fired seven employees for taking printers purchased by the company to their homes.  The former employees claimed they had permission to take and keep the printers.  The former employees alleged that a month after their firing a Charter Human Resources Manager gave a PowerPoint Presentation in which he referred to the incident as “Printer-gate.”  They also alleged that the PowerPoint mentioned “Printer-gate” with one incident in which an employee allegedly used a company credit card to make personal purchases and another incident in which former employees allegedly sold illegal drugs on Charter property.  The former employees contended that the use of the term “Printer-gate”, particularly in conjunction with references to employee theft and drug dealing, implied that the employees had engaged in criminal conduct.

The jury agreed with the former employees.  The jury was particularly bothered by the company’s actions, since it awarded each former employee $1,000,000 in punitive damages.  Punitive damages are designed to punish a defendant for its wrongful conduct.  The jury also awarded each plaintiff an additional $350,000 for embarrassment, humiliation and mental anguish.

This case serves as a reminder that when you terminate an employee you should not disclose the details to anyone who does not have a legitimate need to know the information.  And those that have a legitimate need to know the information are a small group.  The failure to follow this rule could result in expensive litigation and, in a worst case scenario, you writing the employee a large check in settlement or to pay a jury’s verdict.

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6th Circuit Holds Firing Because of Transgender Status Violates Title VII

Last week the U.S. Court of Appeals for the 6th Circuit, which covers Tennessee, Michigan, Kentucky and Ohio, issued a significant Title VII ruling.  In EEOC v. R.G &G.R. Harris Funeral Homes the Court held that discrimination on the basis of transgender and transitioning status is sex discrimination in violation of Title VII.

The EEOC sued the funeral home after it fired an employee, Stephens, who was transitioning from male to female.  It was undisputed that Stephens was fired because he was “no longer going to represent himself as a man” and “wanted to dress like a woman”.  In 2016  a Michigan  District Court dismissed the case based on the Religious Freedom Restoration Act of 1993 (‘RFRA”),  because the employer’s sincerely held religious belief “is that a person’s sex is an immutable God-given gift”.  The EEOC appealed.

In reversing the District Court and rejecting the RFRA defense the Court of Appeals held that Stephens was fired because of her failure to conform to sex stereotypes, in violation of Title VII.   While this type of claim has been recognized under Title VII since 1989 when it comes to men and women not conforming to the traditional stereotypes for their gender ( e.g. “you are not feminine enough”‘; “you dress too masculine”), the 6th Circuit took it a step further with this holding:

Discrimination on the basis of transgender and transitioning status is necessarily discrimination on the basis of sex, and thus the EEOC should have had the opportunity to prove that the Funeral Home violated Title VII by firing Stephens because she is transgender and transitioning from male to female.”

This is a landmark ruling that employers located within the 6th Circuit must adhere to going forward.  If you have questions about how it impacts your business, give us a call.

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DOL Announces Voluntary Payroll Audit Program

On March 6th the Wage and Hour Division (WHD) of the U.S. Department of Labor announced a new pilot program called the Payroll Audit Independent Determination  ( PAID) Program.  According to the DOL PAID is designed to expedite the resolution of “inadvertent overtime and minimum wage violations under the Fair Labor Standards Act “(FLSA).

Participation in PAID is voluntary.  If an employer chooses to participate in the program and FLSA violations are discovered the WHD will not impose penalties or liquidated damages as part of any settlement.  Instead, the employer will only pay the backpay owed to the employee or employees.

Employers may not participate in the program if they are in litigation (presumably involving the FLSA but the press release does not specify) or currently under investigation by the WHD for the wage and hour practices at issue.  Participation in PAID also requires employers to review the WHD’s compliance assistance materials, carefully audit their pay practices and agree to correct the pay practices at issue going forward.

WHD will implement PAID nationwide for approximately six months and will then evaluate the program and consider future options.  More information about PAID is available at http://www.dol.gov/whd/paid

For employers who believe they may have “inadvertent” violations of the FLSA participation in PAID may be a good option.  But before you agree to invite the WHD into your place of business I recommend that you conduct your own audit of your compensation practices to identify any potential violations or areas of concern.  We assist clients with self-audits frequently.   Remember, an ounce of prevention is worth a pound of cure!

 

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Shhh? Sexual Harassment Settlements May No Longer Be Deductible

The tax reform law that passed in December has been the topic of much discussion.  One aspect of it that has not received as much discussion is a provision which impacts whether a payment made as part of a sexual harassment settlement is deductible.

In response to the #MeToo Movement Congress included the following in the new tax reform bill:

No deduction shall be allowed under this chapter for – (a) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement; or (b) attorney’s fees related to such a settlement or payment.”

It seems clear that the intent of this provision is to remove the tax deduction from a payment made to settle a sexual harassment or sexual abuse suit  if the payment is subject to a nondisclosure or confidentiality agreement.   But several questions remain.

What if there are multiple claims being settled?  Is the entire payment not deductible if a confidentiality provision is included in the agreement, or just a portion of it? And will allocating a specific portion of the payment to the sexual harassment claim suffice, so that only that amount is not deductible?

What about the attorney’s fees? If a nondisclosure agreement is required is the deduction lost for all the fees in the case, or just the portion “related to such a settlement or payment”?

In most cases the settlement is subject to a confidentiality provision.  Congress has now given employers settling sexual harassment claims reason to pause before automatically making confidentiality a part of the settlement.  Remember to discuss this with your lawyer, and consider the pros and cons of silence verse the tax deduction,  before you make this decision.

 

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NLRB Establishes More Employer-Friendly Standard Governing Workplace Policies

Earlier this month the NLRB reversed its decision in Lutheran Heritage Village-Livonia.  In doing so the Board set a new standard for review which is more employer-friendly.
Under the prior Lutheran Heritage standard, the Board found that employers violated the NLRA by maintaining workplace rules that do not explicitly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities, if the rules would be “reasonably construed” by an employee to prohibit the exercise of NLRA rights.
In place of the Lutheran Heritage “reasonably construe” standard, the Board established a new test: when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.
The Board also announced that, prospectively, three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions.
• Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of Category 1 rules are the no-camera requirement maintained by Boeing, and rules requiring employees to abide by basic standards of civility.  Thus, the Board overruled past cases in which the Board held that employers violated the NLRA by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.
• Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
• Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  An example would be a rule that prohibits employees from discussing wages or benefits with one another.
Applying the new standard, the Board concluded that Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit.  The Board majority reasoned that the rule potentially affected the exercise of NLRA rights, but that the impact was comparatively slight and outweighed by important justifications, including national security concerns.
While this standard is more employer-friendly, employers should be mindful that  applying a lawful workplace rule or policy to an employee that has engaged in NLRA-protected activity may be unlawful, depending on the circumstances.  As always, when in doubt consult with your lawyer.
Happy New Year!
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How To Avoid Sexual Harassment Claims

Today,  NBC announced long-time Today Show host Matt Lauer has been fired because of sexual harassment allegations.  Recently, sexual harassment claims against film producer Harvey Weinstein have been all over the news.  Allegedly,  Weinstein sexually assaulted and harassed women over four decades, dating back to the 1970s.  Sexual harassment is reprehensible and should never occur.

To prevent sexual harassment from occurring, and to make your workplace safer,  follow these tips:

  1. Train Your Workforce-  Conduct sexual harassment training annually so that your employees know what sexual harassment is, who to report complaints to, that complaints will be investigated promptly and thoroughly, and that sexual harassment will not be tolerated.
  2. Maintain And Distribute A Strong Policy-  You must have a policy which clearly defines sexual harassment, has a clear complaint procedure, states that all complaints will be investigated and prompt, corrective action will be taken to address substantiated complaints.   The policy should be distributed to all employees and posted on the real or virtual employee bulletin or information board.
  3. Be Alert- Be aware of what is occurring in the workplace.  Are there calendars or other postings with  inappropriate pictures?  Dirty jokes or sexual innuendos via email? Banter with sexual content?  All of these things should be stopped as soon as you become aware of them, even if no one complains.
  4. Investigate – All complaints must be investigated promptly and thoroughly, even if the complainant asks you not to investigate it or says she will handle it herself. This also applies to reports of harassment or inappropriate conduct happening outside of work or at a Halloween or other holiday event.
  5.  Take Prompt, Corrective Action-  If the investigation substantiates that harassment occurred take prompt, corrective action designed to resolve the issue once and for all.  This may mean a verbal discussion, a written warning, or termination, depending on the circumstances.  But as NBC did with Lauer, take action without delay, no matter who is involved and no matter how important they are to your organization.

Following these tips will result in a safer workplace, happier employees, and lower legal costs.

 

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Hiring Lessons From UT Football

I love the University of Tennessee.  I am blessed to have two degrees from UT.  Over the years UT and its sports teams have given me many joyous times.  Lately, those teams have given me many unhappy, angry and frustrated times.  And now UT’s most recent attempt to hire a  head football coach has given me material for a blog post.

By now everyone knows that UT offered its head coaching job to Ohio State Defensive Coordinator Greg Schiano and the offer was accepted.  When news of the offer leaked UT fans revolted on social media and protested on campus.  Amid all of the backlash UT rescinded its offer.

So what can employers learn from these events (besides social media is powerful)?

Do Your Due Diligence-  UT claims it thoroughly vetted Schiano before making him an offer.  If that is accurate one has to seriously question why he was made an offer.  A quick google search on Schiano reveals an allegation that he knew about Jerry Sandusky’s sexual assault of a young boy while the two coached at Penn State and multiple allegations about Schiano’s strained relationships with his players while a college and NFL coach.

Employers should always thoroughly research their candidates.  Some employers use formal background checks.  At a minimum, a proper internet search should be conducted.

Know Your Audience –  We do not know if the allegations against Schiano are true.  But looking solely at the objective data, he would have been, at best,  a square peg in a round hole as the head football coach at UT.  He would not have been accepted by the fans, as evidenced by the social media backlash and campus protests.

Employers must know their audience too.  For example, if you are hiring someone to lead the sales team, you have to know whether he or she has the skill set and personality to lead your team.  If your current team responds better to positive reinforcement and praise, hiring a highly critical, micro-manager likely will not motivate that team to achieve better results.

Don’t Rush It-   Loyal readers will recall me saying generally you should “Hire Slow and Fire Fast”.  By hiring slow you take the time to vet the candidate and make sure you are hiring the right person.  There are lots of big-time college football jobs open now and no one else is making an effort to hire Schiano.  UT should have considered that before it rushed to hire him.  The Vols also rushed it in the past when they hired Derek Dooley.  They would be wise not to rush this hire as they regroup from the Schiano fiasco.

Talk To The Right People – There are conflicting reports as to whether certain members of the UT search committee had input on the Schiano hiring.  Employers always want to get input from the key members of the management team.  This would include HR, the President/CEO , and the head of the department where the employee will work.

Follow these lessons and your hiring decisions will be more successful than UT’s decision to hire Schiano.  Now, for all Vol fans, lets hope UT’s next hire is the right hire!

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Prevent Sexual Harassment Claims To Make Your Workplace Safer

Today,  NBC announced long-time Today Show host Matt Lauer has been fired because of sexual harassment allegations.  Recently, sexual harassment claims against film producer Harvey Weinstein have been all over the news.  Allegedly,  Weinstein sexually assaulted and harassed women over four decades, dating back to the 1970s.  Sexual harassment is reprehensible and should never occur.

To prevent sexual harassment from occurring, and to make your workplace safer,  follow these tips:

  1. Train Your Workforce-  Conduct sexual harassment training annually so that your employees know what sexual harassment is, who to report complaints to, that complaints will be investigated promptly and thoroughly, and that sexual harassment will not be tolerated.
  2. Maintain And Distribute A Strong Policy-  You must have a policy which clearly defines sexual harassment, has a clear complaint procedure, states that all complaints will be investigated and prompt, corrective action will be taken to address substantiated complaints.   The policy should be distributed to all employees and posted on the real or virtual employee bulletin or information board.
  3. Be Alert- Be aware of what is occurring in the workplace.  Are there calendars or other postings with  inappropriate pictures?  Dirty jokes or sexual innuendos via email? Banter with sexual content?  All of these things should be stopped as soon as you become aware of them, even if no one complains.
  4. Investigate – All complaints must be investigated promptly and thoroughly, even if the complainant asks you not to investigate it or says she will handle it herself. This also applies to reports of harassment or inappropriate conduct happening outside of work or at a Halloween or other holiday event.
  5.  Take Prompt, Corrective Action-  If the investigation substantiates that harassment occurred take prompt, corrective action designed to resolve the issue once and for all.  This may mean a verbal discussion, a written warning, or termination, depending on the circumstances.  But as NBC did with Lauer, take action without delay, no matter who is involved and no matter how important they are to your organization.

Following these tips will result in a safer workplace, happier employees, and lower legal costs.

 

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Not Every Work Environment Is Hostile

One of the most overused terms in today’s workplace is “hostile work environment”.  Many employees believe their environment is a “hostile work environment” prohibited under applicable law.  But the reality is that simply having a difficult boss or supervisor does not make the environment a hostile work environment under the law.  The recent decision by the Sixth Circuit Court of Appeals in Daniels v. Pike County Commissioners reinforces this point.

Ms. Daniels, who worked as a secretary in the Pike County, Ohio Prosecutor’s office, claimed that Mr. Junk, the Pike County Prosecutor, subjected her to a hostile work environment because of her sex.  The Court rejected her claim because none of the incidents Daniels pointed to were acts of harassment based on her sex.  The Court found that Junk’s treatment of Daniels was not based on his sexual attraction to Daniels or based on a hostility toward females.  Instead, the proof showed that Junk was a difficult boss for both male and female subordinates.

In rejecting Daniels’ claim the Court reiterated that Title VII is not a “general civility code for the American workplace”.  This means that acts of harassment will not be illegal under Title VII or similar state employment laws unless the harassment is based on sex, race or another protected class.  The conduct may, however, be illegal under a state tort law theory.

Employers, if you have a supervisor who is known to be a difficult boss or a “jerk” make sure you investigate any complaints about his or her conduct and take appropriate steps to address it – which may include training and/or discipline.  Just because a supervisor’s conduct may not create a hostile work environment, it could still disrupt your workplace and result in low employee morale, loss of productivity and, potentially, an expensive lawsuit.

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New I-9 Form Required September 18, 2017

Effective September 18, 2017 employers must use a new and updated version of Form I-9, the Employment Eligibility Verification Document.  The easiest way to identify the new form is by the date (07-17-17) noted in the bottom left corner.

Key points for employers include the following:

  1. The new I-9 must be used for any new employees hired on or after September 18, 2017. It is not necessary to complete the new form for any current employee.
  2. Using the wrong version of the form is considered a violation and could subject the employer to civil fines if Immigration and Customs Enforcement (“ICE”) conducts an I-9 inspection.
  3. As was the case previously the I-9 Form must be completed on the employee’s first day of employment. The Form now states it must be completed “no later than the employee’s first day of employment.”  Previous instructions noted that the form had to be completed by “the end of” the first day of employment.
  4. The list of acceptable documents on Page 3 of the Form has been revised. There are changes to List C to include certain documents evidencing the birth abroad of an employee.  These documents are Certificate of Report of Birth (Forms DS-1350 and FS-545) and the Consular Report of Birth Abroad (Form FS-240).
  5. The Handbook for Employers: Guidance for Completing Form I-9 Form (M-274) was updated in July 2017.  This handbook is a great resource on completing I-9s, retention requirements, unlawful discrimination and other prohibited practices and use of the E-Verify system. You can obtain a copy of the handbook and the new I-9 Forms by visiting the website I-9 Central, which is the official website of the Department of Homeland Security.
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