labor and employment seminar

Selecting Quality EmployeesCredit and Criminal Background Checks

© 2013 WARD AND SMITH, P.A.

Rendi L. Mann-StadtWard and Smith, P.A.82 Patton Avenue, Suite 300 (28801)Post Office Box 2020Asheville, NC 28802-2020P: 828.348.6016F: 828.348.6077E: [email protected]

More Than Just Guessing

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• Criminal Background

• Credit check

• References

• Internet

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Pre-Employment Background Checks

• Federal Fair Credit Reporting Act ("FCRA") requires: – Signed, separate release– If deny hiring, promoting, etc. based on credit

report, employer must provide a copy of the report and brochure of rights and advise the applicant know of his/her right to challenge the report under the FCRA

• Reasonably necessary for job duties or could be open to claim of discrimination

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Credit Check

NOT "IF" BUT "HOW"It's Not What You Learn, But How You Use It• EEOC does not dictate that an employer cannot

use arrest, conviction, or other criminal records in hiring and promotional decisions; but

• Avoid risk and claims of discriminatory treatment with careful and systematic checks

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Criminal Background Checks

EEOC Guidance

• Based on legal developments and studies over the past 20 years.

• Studies also show that incarceration and arrest rates are particularly high for African-American and Hispanic males.

• Criminal history information is more available but may be inaccurate or incomplete.

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TITLE VII

• Title VII does not prohibit employers from obtaining criminal background information about a candidate or employee. However, certain uses of criminal information, such as a blanket policy and practice of excluding applicants or disqualifying employees based solely upon information indicating an arrest record, can result in a charge of discrimination.

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Questions to Avoid

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• "Have you ever been arrested?"

• "Have you ever been charged with a crime?"

• "Other than a traffic ticket, have you been convicted of a crime?"

Use of Criminal Background Screening

Minimize risk in selection or promotion of employees by

a) Distinguishing between decisions based on arrest versus conviction; and

b) Making sure that the screening criteria are job-related and consistent with the employer's actual business necessity.

c) Avoid disparate treatmentd) Avoid disparate impact

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Job-Related and Consistent with Business Necessity

Employer should operate "to effectively link specific criminal conduct, and its dangers, with the risks inherent in the duties of a particular position." An employer should attempt to use the information for exclusion only where there is a tight nexus between the criminal conduct and the position.

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Considerations

1. The nature and gravity of the offense or conduct;

2. The time that has passed since the offense, conduct, or completion of the sentence; and,

3. The nature of the job held or sought.

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Other Screening

• Statutory requirements • References• E-verify• Drug testing• Physical exam

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Wage and Hour Issues


Grant B. OsborneWard and Smith, P.A.82 Patton Avenue, Suite 300 (28801)Post Office Box 2020Asheville, NC 28802-2020P: 828.348.6017F: 828.348.6077E: [email protected]

I. "He's an independent contractor." … Not.

The Fair Labor Standards Act of 1938 ("FLSA") does not cover every kind of paid worker.

The FLSA, for example, does not cover "independent contractors."

Independent contractors, as a rule, are evaluated based on results of their work rather than on their day-to-day operations.

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What You Don't Know Can Hurt You: The Top Five (or so) Best Ways to Avoid Clumsy Violations of Federal and State Wage and Hour Laws

What is a bona fide "independent contractor?"Traditional legal standard: "economic reality test." One federal Court of Appeals has described the test in this way:

"The focal point in deciding whether an individual is an employee is whether the individual is economically dependent on the business to which he renders service or is, as a matter of economic fact, inbusiness for himself. In applying this test, the courts generally focus on five factors: 1) the degree of control exerted by the alleged employer over the worker; 2) the worker's opportunity for profit or loss; 3) the worker's investment in the business; 4) the permanence of the working relationship; and 5) the degree of skill required to perform the work."

Note: Subjective opinions don't matter if facts show that worker is economically dependent upon the employer.

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What You Don't Know Can Hurt You: The Top Five (or so) Best Ways to Avoid Clumsy Violations of Federal and State Wage and Hour Laws (cont.)

Courts sometimes apply, instead of "economic reality test," a "right to control" test, which hinges upon six (6) factors:

1. Who exercises what degree of control over the manner in which the work is to be performed?

2. What is the so-called contractor's opportunity for profit or loss, depending on the amount of his or her investment, skills, and management?

3. Who has made what type of investment in materials or equipment?

4. Does the service or work require special skill?

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5. What is the degree of permanence of the working relationship?

6. Is the worker's service an integral part of the employer's business?Has been applied in our federal jurisdiction by federal appellate court where court held that members of Saudi prince's security detail were not independent contractors for FLSA purposes. Schultz v. Capital

International Security Inc., 460 F.3d 595 (4th Cir. 2006).

Why?

A: 1. Prince and security firm, as joint employers, exercised nearly complete control over how workers did their jobs;

2. Workers had no opportunity for profit or loss that depended on managerial skills, as they were paid set rate per shift;

3. Firm and prince supplied all necessary equipment for workers, including cell phones, cars, firearms, and cameras; and

4. Prince employed some workers for several years.

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II. Exemptions under FLSA: "We call it a "salary." Isn't that enough?"

The "salary basis" test:

For an employee to be exempt from the minimum wage and overtime provisions of the FLSA, the employee's duties must match those of a statutory exemption and the employee must be paid on a "salary basis."

Exempt employees (with some exceptions, such as physicians, lawyers, teachers, and certain employees in computer-related occupations) may not be paid by the hour.

If salary basis requirement is not satisfied and no exception applies, the employee will not meet the requirements of the desired exemption and may have to be paid overtime pay, regardless of whether employee's total compensation equals or exceeds $455 per week.

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Basic rule: Exempt employee's salary cannot be reduced because of variations in the quality or quantity of work performed. Therefore, exempt employee must receive his or her full salary for any week in which he or she performs any work, without regard to the number of days or hours worked, unless an exception applies.

Exceptions??

They are: 1. Employee is absent from work for one or more full days for personal reasons, other than sickness or disability;

2. Employee is absent for one or more full days because of sickness or disability (or work-related accident), and deduction from pay is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary resulting from sickness and disability;

3. Employer imposes penalties in good faith for infractions of safety rules of major significance;

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4. Employer imposes, in good faith, unpaid disciplinary suspensions of one or more full days for infractions of work-place conduct rules;

5. Employee takes a leave of absence in accordance with the FLMA; or

6. Employee is absent for the entire work week.

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III. "You just call out my name, and you know, wherever I am, I'll come running. . ." (C. King 1971):

"On-call" time under the FLSA:

Time spent by employees, usually off the working premises, in their own pursuits where the employee must remain available to be called back into work on short notice if needed. The FLSA requires employers to compensate workers for on-call time when such time is spent "predominately for the employer's benefit."

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According to U.S. DOL regulations (way before ubiquitous cell phones, apparently):

"An employee who is required to remain on call on the employer's premises or so close thereto that he cannot use the time effectively for his own purposes is working while "on call." An employee who is not required to remain on the employer's premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call." 29 CFR §785.17.

Whether on-call time is "compensable" is always fact-specific, but certain factors have long predominated, such as:

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1. The terms of the employment agreement, if any;

2. Physical restrictions placed upon the employee while on call;

3. The maximum period of time allowed between the time that the employee was called and the time that he or she is required to report back to work (i.e., "response time");

4. The frequency of calls received during on-call periods;

5. Actual uses of on-call time by the employee; and

6. The disciplinary actions, if any, taken by the employer against employees who fail to respond to calls.

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Underlying inquiry in most on-call pay disputes:The amount of freedom enjoyed by the employee while on call, and whether this measure of freedom permitted the on-call time to be effectively used by the employee for his or her own purposes.

Example: Police officers assigned to a county airport were required to carry pagers that operated on a state-wide basis while off duty, and some of the officers were required to live within 30 miles of the airport. Court held that no compensation was required, because the officers were free to engage in their regular personal activities, the actual calls were infrequent (i.e., 20 times in 3 years),and the officers' off-duty time was not utilized predominately for the employer's benefit. (6th Cir. 2006.)

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IV. "You can't touch this!": Deductions from wages under North Carolina Wage and Hour Act.

Controlled by North Carolina statutes and related regulations.

When may an employer withhold earned wages from an employee?

1. When the employer is required or empowered to do so by federal or state law (e.g., wage garnishments ordered by the IRS or child support garnishments ordered by state court).

2. When the amount or rate of the proposed deduction is known and agreedupon in advance, in which case the employer must obtain written authorization from the employee that meets statutory requirements (e.g., if deduction is for the convenience of the employee, such as savings plans, union or club dues and uniform rental), the employee must be given a "reasonable opportunity to withdraw the authorization."); and

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3. When the amount of the proposed deduction is not known and agreed upon in advance, the employer must still obtain written authorization from the employee that meets statutory requirements, which include (in part) written notice of the right to withdraw the authorization and that the employee be given a "reasonable opportunity to withdraw the authorization in writing."

Fundamental requirements:

1. In non-overtime work weeks, the employer may reduce wages to the minimum wage level;

2. In overtime work weeks, the employer may reduce wages to the minimum wage level for non-overtime hours; and

3. "No reductions may be made to overtime wages owed." N.C. Gen. Stat. §95-25.8(b).

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"May I make deductions for costs of personal protective equipment that the employee wears only on the job?"

NO.: Regulations "[require] …. the employer to provide, at no cost to the employee, all personal protective equipment which the employee does not wear off the jobsite for use off the job."

What if the employee is stealing from me?

"In addition to complying with" the written authorization requirements set forth above, "an employer may withhold or divert a portion of an employee's wages for cash shortages, inventory shortages, or loss or damage to an employer's property after giving the employee written notice of the amount to be deducted seven days prior to the payday on which the deduction is to be made, except that when a separation occurs the seven-day notice is not required."

Note: "If criminal process has issued against an employee, an employee has been indicted, or an employee has been arrested…for a charge incident to a cash shortage, inventory shortage, or damage to an employer's property, an employer may withhold or divert a portion of the employee's wages in order to recoup the amount of the cash shortage, inventory shortage, or damage to the employer's property, without the written authorization required" by the Wage and Hour Act.

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V. "This guy has been a 'no call, no show' for three days. And, when he's here, he sleeps on the job, when he's not on Facebook. I need to fire him. Do I really have to pay him his accrued vacation time?"

Answer: Yes. Unless you don't.

"No employer is required to provide vacation pay plans for employees. However, if an employer provides these promised benefits for employees, the employer shall give all vacation time off or payment in lieu of time off inaccordance with the company policy or practice. Employees shall be notified in accordance with [a designated statute]…of any policy or practice [that] … requires or results in loss of forfeiture of vacation time or pay. Employees not so notified or not subject to such laws or forfeiture." N.C. Gen. Stat. §95 25.12.

If an employer wants the right to withhold accrued vacation pay from an employee who has been discharged for cause, such a forfeiture had better be prescribed in a written and disseminated vacation policy.

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A Brave New World:

Social Media Issues Affecting the Workplace


Hayley R. WellsWard and Smith, P.A.82 Patton Avenue, Suite 300 (28801)Post Office Box 2020Asheville, NC 28802-2020P: 828.348.6018F: 828.348.6077E: [email protected]

Current Legal Issues

• Social Networking and the Hiring Process• Employer vs. Employee: Whose Rights Are

Stronger?– Traditional Employment-Related Claims– Claims under the National Labor Relations

Act• Protecting the Company's Confidential

Information, Image and Brand: How to Craft Social Media Policies that Survive Scrutiny

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Using Social Media in theHiring Process

• A recent online survey reports that 45% of participating employers use social networking sites to research candidates.

• Benefits:– Efficient means to gather information– Gather information not on resume

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Your Applicant

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Risks to Using Social Media in theHiring Process

• Once an employer reviews a candidate's online profile, a court will assume that it is are aware of the applicant's protected characteristics that are part of his/her online postings.– Race; Age; Disability; Religion; Pregnancy

• The information, positive or negative, may be inaccurate.– Wrong individual– The information may not have been posted by the

individual

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Risks to Using Social Media in theHiring Process (cont.)

• Potential violations of the Fair Credit Reporting Act ("FCRA")– FCRA requires that an applicant or employee give consent

before an employer engages a "consumer reporting agency" to produce a "consumer report" on that individual.

– FCRA requires that notice be given to an applicant or employee when the information results in an adverse employment action.

– An employer that uses a third party to screen online activity of job applicants may be subject to the FCRA'sconsent and notification requirements.

– The FCRA does not apply to employers that perform online screening.

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Develop Policies for Using Social Media in Hiring

• Develop clear policies concerning the purposes for which social media may be used and relied upon for information about job candidates.

• Make sure that the policies are adhered to and enforced consistently.

• Print or save screenshots if you find something that causes you to question a candidate’s candor, professionalism, or judgment.

• Ensure that application materials, employee handbooks, etc., include the necessary permission forms and notifications concerning the company's policies on screening practices.

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The National Labor Relations Act ("NLRA")

• NLRA generally governs employers' relationships with unions, BUT portions of the Act apply to virtually ALL employers.

• NLRA limits the way employers can react to workers who engage in concerted activity related to workplace issues.

• Supervisors are not "employees" under the NRLA and, generally, are not subject to its protections.

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Basics of NLRA• National Labor Relations Act originally passed in 1935

– Basic rights of employees under NLRA:• To form, or attempt to form, a union in the

workplace for collective bargaining• Join a union (even if union is unrecognized by

employer)• Assist union in organizing coworkers• Decertify union that has lost support of employees• To be fairly represented by a union

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Section 7

"Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection."

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Definition of "Concerted Activity"

• "[A]n activity is concerted when an employee acts with or on the authority of other employees, and not solely by and on behalf of the employee himself." – NLRB Assoc. General Counsel Memo

OM 11-74 (quoting Meyers Industries, 268 NLRB 493 (1984))

– Note that not all concerted activity is protected under NLRA.

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"For Other Mutual Aid or Protection"

• Concerted activity under Section 7 is protected if its purpose is connected to terms and conditions of employment.– This generally is not a difficult standard to meet. – Eastex, Inc. v. NLRB (1978): Supreme Court holds

that distributing literature encouraging employees to vote against a constitutional amendment for right to work provision met standard because it sought to improve all employees' work conditions.

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Concerted Activities Under Section 7

• When employee forms, joins, or aids a union, he is by definition engaging in concerted activity.

• Employees in non-unionized workforces can engage in concerted activity for mutual aid and protection.

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The Water Cooler

• The proverbial water cooler was the meeting place of the past for potential protected concerted activity.

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Social Media's Expansion of Concerted Activity

• Social media has given employees a new platform to engage in concerted activity.

• Under Section 7 of NLRA, such activity is generally protected, regardless of the size of the company.

• Section 7 applies to non-unionized workforces.

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Impact of Social Media

• Unlike the water cooler, employees' use of social media to discuss work issues easily can reach thousands, even millions, of people.

• These people can include coworkers, but also customers, vendors, government agencies, media, and others.

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Section 8(a)(1)

• Makes it an unfair labor practice for any covered employer to "interfere with, restrain, or coerce employees in the exercise of the rights guaranteed" by Section 7.

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National Labor Relations Board ("NLRB") Guidance

• The Acting General Counsel of the NLRB has issued three lengthy reports regarding social media cases.– OM 11-74 (August 18, 2011) ("First Report")– OM 12-31 (January 24, 2012) ("Second

Report")– OM 12-59 (May 30, 2012) ("Third Report")

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NLRB's Definition of Social Media

• From First Report: "Social media include various online technology tools that enable people to easily via the internet share information and resources. These tools can encompass text, audio, video, images, podcasts, and other multimedia communications."

• First Report specifically mentions Facebook, Twitter, and YouTube.

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Losing Section 7 Rights

• Under Atlantic Steel Co., 245 NLRB 814 (1979), employees can lose protection of Section 7 if their language is so abusive, vulgar, offensive, scurrilous, or insubordinate.

• NLRB considers four factors– Place of the discussion;– Subject matter of the discussion;– Nature of employee's outburst; and– Whether outburst was provoked by employer's unfair

labor practice.

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Gripes

• Example:– An employee at a home improvement store

was reprimanded by her supervisor in front of the Regional Manager for not doing a task she was never asked to do.

– During her break, she used her phone to update her Facebook status "with a comment that consisted of an expletive and the name of the Employer's store."

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Gripes (cont.)

• Four people, including one coworker, "liked" her Facebook status.

• Thirty minutes later, the employee posted once more, stating that the company did not appreciate its employees.– Several people commented on this post; none

of the employee's coworkers did. She was friends with four coworkers.

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Gripes (cont.)• Employee was later fired for her Facebook posts.• NLRB found that the employee was not engaged in

protected concerted activity; instead she had expressed an "individual gripe."– First status update was mere frustration about an interaction with

her supervisor. Employee had no particular audience in mind, and the post contained no language suggesting that she was calling for group action. Furthermore, the comment did not grow out of earlier group discussions or activity.

– Interestingly, NLRB did not specifically analyze second post. Because no coworkers "liked" this post, and because this post also did not spring from earlier discussions, it was not concerted.

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Tips For Addressing Section 7 Discipline Issues

• Familiarize supervisors with the company's obligations under Section 7. Make sure supervisors consult with senior HR employees before taking action.

• When disciplining employees for social media postings, be cognizant of whether the posting represented a gripe or venting, or whether the individual was speaking on behalf of herself and other employees.

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Tips For Addressing Section 7 Discipline Issues (cont.)

• Do not assume that employee's use of profanity or other vulgar terms disqualifies her from protection under Section 7.– Focus instead on whether concerted activity is

present.• Have legal counsel review policies and procedures for

Section 7 compliance.• Consult legal counsel prior to terminating any employee

related to social media postings.– This is very important, because the NLRB's guidance on this

issue has been in almost constant flux over the last two years.

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Social Media Policies

• The NLRB Reports also addressed the lawfulness of employers' social media policies.

• The NLRB consistently strikes down policies as overbroad if they can be reasonably construed to restrict employees' Section 7 activity.

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Policies Prohibiting"Disparaging Comments" Online

• NLRB ruled that policy prohibiting employees from "making disparaging comments about the company through any media, including online blogs, other electronic media, or through the media" was overbroad because employees could reasonably construe it as limiting Section 7 rights.– NLRB specifically mentioned that policy could be interpreted to

apply to statements that employer was "not treating employees fairly or paying them sufficiently."

– NLRB also noted that there was not limiting language to clarify that Section 7 rights were not affected.

– Furthermore, NLRB found that employer violated Section 8(a)(1) because it fired employee for violating this overbroad policy.

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Use of Company's Name or Trademarks

• NLRB has analyzed policies prohibiting employees from using company's name and/or trademarks, service marks, or copyrights without prior approval.

• While recognizing that companies have proprietary interests in these materials, the NLRB found such prohibitions to be too broad.

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Policies Regarding Accuracy Online

• The Third Report analyzed a policy admonishing employees to ensure that all of their online postings about the company were "completely accurate and not misleading."– Same policy warned employees: "When in doubt

about whether the information you are considering sharing falls into [a prohibited category], DO NOT POST." In that event, employees were encouraged to consult with the company's PR or legal departments.

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Policies Regarding Accuracy Online (cont.)

• NLRB struck down this policy as overbroad.

• One basis for doing so was policy's admonition that employees should consult with company prior to posting.– "The Board has long held that any rule that requires

employees to secure permission from an employer as a precondition to engaging in Section 7 activities violates" the NLRA. Brunswick Corp., 282 NLRB 794, 794-95 (1987).

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Online Tone and Content Rules

• The Third Report also addressed a policy with the following general prohibitions regarding its employees online interactions:– "Adopt a friendly tone when engaging online." – "Don't pick fights."– Maintain a "professional tone" without making

"objectionable or inflammatory" remarks.

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Online Tone and Content Rules (cont.)

• NLRB struck this policy down as unlawful.– "Discussions about working conditions or unionism

have the potential to become just as heated or controversial as discussions about politics or religion."

– No context or examples to clarify what was "objectionable or inflammatory."

– Thus, employees reasonably could construe rule to prohibit "robust but protected discussions about working conditions or unionism."

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Savings Clauses

• Many social media policies will include a savings clause, through which the company tries to clarify that its policy is not intended to restrain employees' rights under Section 7.

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Savings Clauses (cont.)

• Examples:– "This Policy will not be construed or applied in

a manner that improperly interferes with employees' rights under the National Labor Relations Act."

– Company's "Social Media Policy will be administered in compliance with applicable laws and regulations (including Section 7 of the National Labor Relations Act)."

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• Example:– "This policy will not be interpreted or applied in a way

that would interfere with the rights of employees to self-organize, form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, or to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection or to refrain from engaging in such activities."

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• NLRB struck each of these savings clauses down as unlawful.

• In each case, it felt that the savings clauses did not cure the otherwise unlawful aspects of the rest of the policies.

• Furthermore, it stressed that the savings clauses did not "explain to a layperson what the right to engage in 'concerted activity' entails."

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Prohibition of Harassment

• In the Third Report, NLRB considered the following policy:– "[A]ny harassment, bullying, discrimination, or

retaliation that would not be permissible in the workplace is not permissible between co-workers online, even if it is done after hours, from home and on home computers. . ."

– NLRB found this policy to be lawful, because employer provided a list of "plainly egregious conduct." Thus, the policy would not chill employees' Section 7 rights.

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Prohibition of Harassment (cont.)

• Contrast the upheld policy from previous slide with the following policy, which NLRB struck down:– "TREAT EVERYONE WITH RESPECT. Offensive,

demeaning, abusive, or inappropriate remarks are as out of place online as they are offline, even if they are unintentional. We expect you to abide by the same standards of behavior both in the workplace and in your social media communications."

• Unlike the harassment policy, this policy did not give enough context for employees to determine what was and was not "demeaning, abusive, or inappropriate."

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Posting on Behalf of Employer

• NLRB has considered policies prohibiting employees from giving impression that their online posts reflect the company's position.– "No unauthorized postings: Users may not post

anything on the Internet in the name of [Employer] or in a manner that could reasonably be attributed to [Employer] without prior written authorization from the President or the President's designated agent."

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Posting on Behalf of Employer (cont.)

• NLRB found this policy to be lawful. This provision could not be reasonably construed to restrain Section 7 activities, because it is limited to official communications of the company.

• NLRB also blessed a requirement that employees posting about their employment included the disclaimer: "The postings on this site are my own and do not represent [Employer's] positions, strategies, or opinions."

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Wal-Mart Policy

• Prohibits "inappropriate postings" including "discriminatory remarks, harassment, and threats of violence or similar inappropriate conduct."

• Tells employees that they "are more likely" to resolve disputes by speaking directly to coworkers and using open door policy than by "posting complaints to a social media outlet."

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Wal-Mart Policy (cont.)

• Prohibits communications that "reasonably could be viewed as malicious, obscene, threatening, or intimidating," as well as any that "disparage" individuals (including employees) or that "might constitute harassment or bullying."

• Prohibits disclosure of trade secrets and other confidential information.

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Wal-Mart Policy (cont.)

• NLRB felt that there was enough context in this policy to allow employees to know that their Section 7 rights were not affected.

• Many employers have criticized the NLRB on this point, because some of the provisions in Wal-Mart's policy are very similar to others previously held unlawful by the NLRB.

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Tips For Drafting Social Media Policies

• Use NLRB memos for a guide, but craft the provisions to fit your company's needs.

• Avoid references that violate Section 7 on their face.

• Use examples that clarify what activities are prohibited, rather than relying on general terms such as "inappropriate."

• Be wary of vendors with "cookie cutter" handbooks.

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Tips For Drafting Social Media Policies (cont.)

• Include a "savings provision" that explains Section 7 rights in terms that laypeople can easily understand.

• Avoid any application of the policy that violates Section 7.

• Have policy blessed by an attorney familiar with the NLRB's enforcement of Section 7 in the social media context.

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FMLA, ADA, and REDA Issues


Grant B. OsborneWard and Smith, P.A.82 Patton Avenue, Suite 300 (28801)Post Office Box 2020Asheville, NC 28802-2020P: 828.348.6017F: 828.348.6077E: [email protected]

I. Family and Medical Leave Act of 1993:

Twelve (12) weeks of leave during a 12-month period? What 12 months?

Qualified employees of covered employers may take up to 12 weeks of unpaid FMLA leave during any 12-month period (with the exception of "service member family" leave for "qualified exigencies" and the 26 weeks of FMLA covered leave to care for a service member or veteran who is injured or ill during active duty).

How to measure the 12-month period?FMLA left it up to the Department of Labor to figure that out.

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FMLA, ADA, and REDA Issues

The regulations offer four (4) options:

1. The calendar year;

2. Any fixed 12-month leave year, such as a fiscal year, or one starting on the employee's "date of hire" anniversary date;

3. The 12-month period measured forward from the date on which the employee first took FMLA leave; or

4. A rolling 12-month period measured backward from the date on which the employee uses any FMLA leave.

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FMLA, ADA, and REDA Issues (cont.)

The third and fourth options can be a little tricky because they are not fixed.

Option number 3: This third alternative varies with the individual and changes every time that the employee uses FMLA leave. The employee is entitled to 12 weeks (or 26 weeks in some cases) of leave during a year that begins on the first day on which FMLA leave was taken. After completion of 12 months from that date, the next 12-month period begins the next time that FMLA leave is used. The cycle is repeated as FMLA leave is used. The leave year is tied to the employee's need for such leave.

Example: Chris takes 12 weeks of FMLA leave on May 1, 2008. Her leave year is established as May 1, 2008, through April 30, 2009. She does not need leave again until September 1, 2009. Her new leave year will be September 1, 2009, through August 31, 2010, during which she is entitled to take up to 12 weeks of FMLA leave if she qualifies. The leave year will change every time that she takes FMLA leave during a 12-month period.

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Option number 4: Eliminates the problem of stacking FMLA leave from one year to the next. The 12-month leave period is measured backward from the date on which the employee used FMLA leave. Every time that the employee takes FMLA leave, the remaining balance in the leave entitlement is equal to the portion of the 12-week leave entitlement that was not used during the immediately preceding 12 months.

Rolling period provides a snapshot of the preceding 12-month period that changes daily. On each day of the year, an eligible employee's FMLA leave entitlement is determined by the amount of leave that he or she used during the preceding 12 months. As each new day is added, one day from 12 months ago is eliminated.

Note: An employee, to be entitled to FMLA leave, must have worked 1,250 hours during the last 12 months. The employer will, therefore, need to conduct a new 1,250-hour test looking back at the 12 months preceding the date on which the employee begins the leave of absence. The employee qualifies for a new 12 week period of family medical leave if she has worked 1,250 hours during the 12-month period in question and has not already exhausted her FMLA leave for the year.

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II. Americans With Disabilities Act of 1990:

"Feeling just fine, thank you. You?": Permissible and impermissible questions under the ADA.

The ADA prohibits employers from discriminating against qualified applicants with disabilities by using job screening techniques that would eliminate such individuals from consideration. Employers should therefore not ask job applicants about their health or require medical examinations or other tests that might reveal disabilities before a firm offer of employment has been made.

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Questions to avoid:

1. Have you ever had or been treated for any of the following conditions or diseases?

2. Have you been treated in the past three years for any conditions or diseases and, if so, what were they?

3. Have you ever been hospitalized? If so, for what condition?

4. Have you ever been treated by a psychiatrist or psychologist? If so, what for?

5. Is there any health-related reason that you may not be able to perform the job for which you are applying?

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6. How many days were you absent from work because of illness last year?

7. Do you have any disabilities or impairments that may affect your performance in the position for which you are applying?

8. Are you using prescribed drugs?

9. Have you ever been treated for drug addiction or alcoholism?

10. Have you ever filed for workers' compensation insurance?

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In contrast, permissible questions:

1. What is your name?

2. Can you fulfill the requirements of our attendance policy?

3. Can you perform the essential tasks of this position with or without some kind of accommodation?

4. Describe or demonstrate how you would perform this function, with or without an accommodation. (May be asked of applicants who have a known disability that might prevent them from performing a job function.)

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5. Do you use unlawful drugs?

6. Have you ever been arrested for driving under the influence?

7. Do you have the required licenses and degrees to perform this job?

8. Where are you from?

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III. North Carolina Retaliatory Employment Discrimination Act:

State statute adopted in 1991 that prohibits discrimination or "any retaliatory action against an employee because the employee in good faith does or threatens to" take specified actions. Applies to all employers in North Carolina.

Protects the right of every employee to "file a claim or complaint, initiate any inquiry, investigation, inspection, proceeding or other action, or testifying or provide information to any person with respect to any of the following":

1. The Workers' Compensation Act;

2. The North Carolina Wage and Hour Act;

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3. The Occupational Safety and Health Act of North Carolina;

4. The Mine Safety and Health Act of North Carolina;

5. The N.C. statute pertaining to "discrimination against any person possessing sickle cell trait or Hemoglobin C trait";

6. The N.C. "National Guard Reemployment Rights" statute; or

7. The N.C. statute pertaining to "discrimination against persons based on genetic testing or genetic information."

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Procedure: 1. Employee may file a written complaint with N.C. Commissioner of Labor within

180 days of alleged violation; Commissioner of Labor may investigate complaint.

2. Commissioner "shall attempt to eliminate the alleged violation by informal methods" ("conference, conciliation, and persuasion"). Supposed to make determination within 90 days of filing of complaint.

3. Department of Labor typically will issue a "right-to-sue" letter that enables employee to file suit.

4. "An employee who has been issued a right-to-sue letter or the Commissioner of Labor may commence a civil action against the employer. The action must be filed within 90 days of the date upon which the right-to-sue letter was issued."

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Possible remedies:

1. An injunction to enjoin continued violation of the Act;

2. Reinstatement of the employee to the same position held before the retaliatory action or discrimination occurred;

3. Reinstatement of full fringe benefits and seniority rights; and

4. Compensation for lost wages, lost benefits, and other economic losses that were "proximately caused by the retaliatory action or discrimination."

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But wait, there's more!

1. Right to jury trial: Yes.

2. "The trouble with trebles": If "the court finds that the employee was injured by a willful violation" (what the heck is "non-willful retaliation"), then "the court shall treble the amount awarded under subdivision 4" (i.e., shall treble all back wages and all "other economic losses" caused by the unlawful conduct).

3. "I may have to pay HIS lawyer too??":The court may award to the plaintiff "the reasonable costs and expenses, including attorney's fees, of the plaintiff in bringing an action pursuant to this section."

Note: "If … court determines that the plaintiff's action is frivolous, it may award to the defendant … the … attorney's fees, of the defendant in defending the action".

Good luck with that.

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Patient Protection and Affordable Care Act and 2013: How Employers Must Brace For Compliance


Bridget L. WelbornWard and Smith, P.A.Wade II, Suite 400 5430 Wade Park Boulevard (27607)Post Office Box 33009 Raleigh, NC 27636-3009P: 919.277.9125F: 919.277.9177E: [email protected]

• Patient Protection and Affordable Care Act and 2013: How Employers Must Embrace the Affordable Care Act

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Affordable Care Act

• Patient Protection and Affordable Care Act ("ACA")

• Signed into law on March 23, 2010• Beware of the January 1, 2014 Compliance Date

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Affordable Care Act (cont.)

• Insurance Quality and Coverage Initiatives • Transformations to the Delivery of

Health Care• Exchanges• Medicaid Expansion• Individual Mandate• Employer Shared Responsibility

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What's in 974 Pages of Legislation?

• Minimum Essential Coverage• Preventive Care with No Cost Sharing to

Insured• No Lifetime or Annual Limits• Dependent Coverage up to Age 26• Medical Loss Ratio

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Insurance Quality and Coverage Initiatives

• Quality Reporting of Certain Health Care Providers

• Transparency Reporting (Physician Payments Sunshine Act)

• Revisions to Medicare Coverage and Payments

• Expanded Access to Primary Care Physicians

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• Federal Exchange – Default and Current N.C. Option

• State-Based Exchange• Federal and State Partnership Exchange

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Exchanges

Medicaid Expansion

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• Expanded Medicaid access to 133% under the poverty line.– Approximately $14,000 for a single adult

in 2010• February 12, 2013, Governor McCrory stated

North Carolina would not expand Medicaid under the ACA.

Individual Mandate and Shared Responsibility

Individual Mandate– Requirement for individuals to buy health coverage if not

available through employer

– 2014: Penalty is $95 per adult and $47.50 per child (up to $285 per family) or 1% of family income, whichever is greater

– 2015: $325 per adult and $162.50 per child (up to $975 per family) or 2% of family income, whichever is greater

– 2016 and beyond: $695 per adult and $347.50 per child (up to $2,085 per family) or 2.5% of family income, whichever is greater

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Individual Mandate and Shared Responsibility (cont.)

Individual Shared Responsibility– If you make more, you pay more.

– For wages earned on or after January 1, 2013, an additional Medicare care tax of 0.9% will apply to income in excess of $200,000 for single filers or $250,000 for married filing jointly.

– New 3.8% Medicare Tax on "unearned" net investment income for taxpayers with an AGI in excess of $200,000 for single filers or $250,000 for married filing jointly.

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Employer Shared Responsibility

Pay or Play Mandate– Beginning January 1, 2014, "applicable large

employers" may be subject to a penalty tax for (1) failing to offer minimum essential health coverage for all full-time employees (and their dependents) or (2) offering health coverage that is not "affordable" or does not offer a "minimum value."

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Employer Shared Responsibility (cont.)

Translation – Employers with 50 or more full-time employees (including full-time equivalents) are subject to penalties if they fail to offer adequate coverage to full-time employees.

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Analysis

1. Does the mandate apply?2. When will the mandate apply?3. To whom must I offer health coverage?4. What are the potential penalties?

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Does the Mandate Apply?

The mandate applies to "applicable large employers" which are employers with 50 or more full-time or full-time equivalent employees.

Full-time employees + 30+ hourly employees + Full-time equivalents = Employer status

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Does the Mandate Apply?Company A has 70 employees

20 – Full-time salaried employees10 – Hourly workers each averaging 35 hours per week40 – Part-time workers each averaging 20 hours per week

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When Will the Mandate Apply?

Current health insurance renewal date or the plan may qualify for a delay if the current plan is a non-calendar year plan.

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To Whom Must I Offer Coverage?

• To all full-time employees (and their dependents).

• But not to part-time employees.• And not to full-time equivalents unless

they work more than 30-hours per week.

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To Whom Must I Offer Coverage?

Return to Company A Example

70 Employees:

20 – Full-time salaried employees10 – Hourly workers each averaging 35 hours per week40 – Part-time workers each averaging 20 hours per week

Company A must offer coverage to 30 employees

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What are the Potential Penalties?

1. Penalties for not offering coverage to all full-time employees.

(Number of Full-Time Employees – 30) * $167 = Monthly Penalty

Monthly Penalty * 12 = Annual Penalty

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What are the Potential Penalties?

The penalty for Company A would be $0.00!

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What are the Potential Penalties? (cont.)

2. Penalties for not offering affordable coverage that meets minimum value requirements to all full-time employees. Affordable means the employee's premium contribution is not more than 9.5% of the employee's household income.Minimum Value means the health plan pays for at least 60% of the total costs of benefits provided under the plan.

Number of full-time employees receiving subsidy on exchange* $250 = Monthly Penalty

Number of full-time employees receiving subsidy on exchange* $3,000= Annual Penalty

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Employer Hot List for 2013

1. Pay or Play Mandate: Avoid the Sledgehammer Penalty

2. Summary of Benefits and Coverage3. Notice of Exchange 4. W-2 Reporting 5. Notice of Material Change to a Plan Outside

Renewals

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Termination of EmploymentWhat to Think About When It's Over


Rendi L. Mann-StadtWard and Smith, P.A.82 Patton Avenue, Suite 300 (28801)Post Office Box 2020Asheville, NC 28802-2020P: 828.348.6016F: 828.348.6077E: [email protected]

Mechanics of the Interaction• Timing• Witness• Quickly and efficiently• Firmly• Security measures

– IT access– Keys– Property

• Return appointment for personal items• As private as possible• Consider law enforcement assistance

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Ending Employment

• Contractual Buyout• Severance Agreement• Confidentiality Agreement• Non-Compete

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Post-Employment Agreements

• Consideration• Advantages:

– Release of claims– Non-disparagement– Non-disclosure/confidentiality– Return of property

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Severance Agreement

• All wages due at next regular pay period• Vacation pay/PTO accrued, unless

published forfeiture policy• Earned bonuses/commissions when they

can be calculated• Deductions from pay only with written

authorization for specific instances

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Post-Employment Wage Payment

• COBRA

• North Carolina Continuation of Benefits• Exceptions:

– Misconduct– Length of employment– Availability of other insurance

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Health Benefits

• Less is probably better• Consistent policy avoids future problems• Address neutral reference policy in

severance agreement

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References

The World is Round, but the Playing Field is Not Level

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• Goal of ESC is to provide displaced worker with benefits

• Payment of claims from fund so no direct economic impact for most employers

• Payment of claim may affect "mod" or "experience" rating

• Some categories are "non-charging"

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Employment Security Benefits

• Notice of Claim• Response• Initial Determination• Right of Appeal• Hearing Officer/ Appeals Referee Decision

after Appeal• Appeal to Full Commission• Appeal to Superior Court

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Employment Security Benefits (cont.)

DISQUALIFICATION• "left work without good cause

attributable to employer"• "discharged for substantial fault on part of

employee connected with work not rising to the level of misconduct"

• "misconduct connected with the work"– Exception for severely disabled veteran

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Qualifying Reasons• Disability incurred or other health condition

• Bona fide medical diagnosis• Advance notice to employer

• Moving spouse• Unilateral reduction in pay more than 15% or

hours more than 20%• Domestic violence/family hardship

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• Misconduct connected with the work:• "intentional acts or omissions evincing disregard

of an employer's interest or standards of behavior which the employer has a right to expect or has explained orally or in writing to an employee or evincing carelessness or negligence of such degree as to manifest equal disregard."

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Misconduct

• Disability incurred or other health condition

• Moving spouse• Domestic Violence• Family hardship• Inability to do work within 100 days of

hiring

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Non-Charging to Employer

• Usually by telephone• Employer has burden if the employee

claims involuntary separation• Consider partial disqualification/stipulation• Send all exhibits in advance• Caution witnesses re speed of hearing

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Employment Security Hearing

• Blacklisting is a Class 3 misdemeanor

• Enforcement of non-compete and other restrictive covenants

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Post-Employment


Ward and Smith, P.A.www.wardandsmith.com

800.998.1102

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