In the months before it took effect, there was a great deal of political finger-pointing and intense debates on the looming sequester. The sequester, a plan implemented through the Budget Control Act of 2011, affects every “program, project and activity” of the federal government by reducing funding to the aforementioned. The cuts aim to save $1.2 trillion over ten years, with defense and domestic discretionary spending both on the chopping block. This year, $85 million dollars will be saved from a requested outlay of $3.803 trillion dollars.
Since the cuts took effect on March 1, 2013, media attention on the issue has waned. While the political noise has died down, local, state, and federal agencies are still very much entrenched in the topic. Officials at all levels are figuring out how to continue operations as normal when their resources are being reeled in by the government. Agencies have no choice but to tighten their belts by issuing mandatory unpaid days off (“furloughs”), hiring freezes, and other extreme measures to compensate for cuts to their department.
In light of the monetary deductions, the National Labor Relations Board (“NLRB”) has announced that its employees may be required to take up to twenty-two furlough days. Equal Employment Opportunity Commission (“EEOC”) employees may be forced to take 8.5 furlough days. The Occupational Safety & Health Administration (“OSHA”) froze new hires and bonuses. Department of Labor (“DOL”) agencies will reduce travel and training expenses.
The sequester not only imposes real consequences to employees who work for these federal agencies, but also serious impediments to labor law rights and regulations. Employers who are involved in agency charges, administrative hearings, or lawsuits before any of the above-named tribunals will likely feel the effects. At minimum, delays in processing and investigations of claims can be expected. More serious consequences are possible. OSHA chief David Michaels has stated that over 1,000 fewer compliance consultations will be made in wake of their funding cuts. An increasing number of EEOC cases may find their way into court, as a claim that goes unheard by the agency for more than 180 days must receive a “right to sue” status.
Although the sequester is in its infancy stages and the full extent of its accompanying problems is unknown, it is clear that there will be real effects on employers and employees everywhere. As workplace agencies and employers are finding out in a most unpleasant manner, everything—even budget cuts—comes at a price.
Brandon K. Johnson is an Associate in the Louisville, KY office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Johnson practices primarily in the areas of insurance defense, employment law, and general litigation. He can be reached at firstname.lastname@example.org or at (502) 327-5400.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Donald Trump makes it look easy. With a simple statement (“You’re fired!”), the employee gets up and exits the boardroom. And like that, the underachiever is nixed from the show, ushered into a limo, and never seen again (at least, until the “All-Star” season). If only the real world was that easy. The decision to terminate an employee can give any employer anxiety, even if it is undoubtedly for the betterment of the business. This sense of dread is not without warrant; termination can be a legal landmine. Even terminating “at-will” employees requires cautious consideration. You can cover your bases, though, by carefully drafting policies, adhering to procedures, and relying on some common sense. Before any action is taken, review these simple rules that can protect you from a lawsuit.
Determine the employee’s status
If someone is an “at-will” employee, he or she can be terminated any time, for any reason. Yes, you can fire someone simply because you do not like them. Review any existing employment agreements or contracts that could be deemed to negate the at-will status. If an employee is not at will, then they usually have a set period for employment and a termination is governed by an employment contract that likely includes a provision requiring termination “for cause.” In such an instance, you must remember to review the contract and follow its terms before terminating that employee.
It should be noted that even if all of your employees are at-will, you are still not out of the proverbial woods. At-will employees can file post-employment lawsuits for a variety of reasons. Any employee, no matter the status, can claim that he was terminated, at least in part, because of a legally protected category (such as gender, religion, disability or age). An employee can also always allege he was terminated for exercising a legal right, such as taking a leave as permitted under the Family and Medical Leave Act, or for refusing to engage in illegal activity. The term “at-will” is not an insulator for liability but there are steps an employer can take to protect itself against claims of wrongful discharge.
The key to avoiding termination lawsuits is documentation. All instances of substandard performance or misconduct should be documented (even for at-will employees). The recording of these things can provide support for the termination. Check records to see if an employee has received a previous warning or has been written up—evidence of past problems can go a long way in justifying a termination decision which negates against wrongful termination.
On the other hand, if an employee recently received a raise or earned a stellar performance review, then a sudden discharge may raise suspicion if other factors are present. A positive paper trail can indicate termination was predicated upon illegitimate (and perhaps unlawful) reasons.
Review company policies and procedures
Take time to review the company policies and procedures to make sure the punishment fits the crime. For example, if you are considering firing an employee who violated the company dress code, but the employee manual says that such an offense first requires a warning, you may be left to explain why you did not abide by your own rules.
If the employee manual is silent, consider whether treatment of this employee is consistent with the treatment of others similarly-situated. Consistency is crucial. An experienced HR employee can help you determine if uniformity in management decisions is present.
Calm down and investigate
Never, ever (ever!) explode on an employee and end the outburst by telling him he is fired. Acting out of anger or frustration can just cause more problems. An employee whose termination is preceded with yelling or other emotion-driven acts is much more likely to become disgruntled. There may be times when a sudden discharge seems warranted, however, best practices dictate that you should suspend an employee first and conduct an investigation. This will give you time to cool off and collect evidence of the wrongful act.
More often, though, a decision to terminate may not be so clearly defensible. If an investigation is required, act promptly. Document your findings, and remain neutral in your treatment of the suspect employee (and the accuser employee, if there is one) until the facts are uncovered.
Cut the cord face-to-face
When it is time to let the person go, do not take the easy way out by writing an email or letter. Not only is this impersonal, but things in writing can be misinterpreted. Likely, if you do put something in writing, the employee will read it, think it over, and then confront you about the decision. It is better for all involved to handle the issue head-on and with a witness present.
If you are nervous about how the employee will handle the news, then take time to “script” how you would like it to go. By planning the encounter, you will be less likely to deviate from the objective or make the meeting more excruciating than it has to be. Termination is like pulling off a Band-Aid—it hurts less if you do it in one sweeping motion. Before the meeting, remember to:
- Arm yourself with any documentation you may need to back up your reason for the decision.
- Decide who else you would like to be present in the room; it is always a good idea to have an unbiased party privy to the meeting.
- Be stern in what in what company items or information must be handed over before departure and review with the employee any non-compete or confidentiality clauses that have been signed.
- State exactly how long the employee has to remove his belongings and self from the premises. If you do not want it to disrupt the office environment, consider letting the employee gather his things during off-hours with the accompaniment of security or personnel.
- If there is any chance of violent retaliation, have a procedure in place beforehand for removing the employee from the premises and consider having company security personnel on-hand.
Before you sit down with the employee, you should contemplate the issue of severance pay. Any time an employee is fired, there is possibility that legal action will follow. To avoid this, a severance agreement can be negotiated with the employee. The employee will sign a release foregoing their right to sue in exchange for something of value. Keep in mind that the exchange does not have to be money, but can be something intangible, such as an agreement to provide positive job references or to not contest unemployment benefits.
To ensure that your agreement will hold up if challenged in court, make sure any agreement is in writing, signed by the employee, and states that the waiver of right to sue is knowing and voluntary. You will also want to allow the employee some time to consider signing it and in certain circumstances, the law sometimes requires a twenty-one day consideration period. Also always allow the employee to review the document with an attorney if he so chooses.
Once the employee is out the door, you can breathe a sigh of relief. But know there is still work to be done. A terminated employee may be legally entitled to benefits, such as COBRA or vested 401(k) or pension benefits. You will want to check with your HR staff or an attorney about the necessary procedures for compliance with these. You will also have to issue the employee’s final paycheck, which may have to include payment for accrued or unused vacation days.
Letting go of an employee is rarely as easy as Mr. Trump makes it look, but with some planning and forethought, you can traverse the legal landmine safely.
Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at email@example.com or at (502) 327-5400, ext. 316.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Trade Associations in Kentucky are being asked to show that they meet ERISA “bona fide association” requirements in order to continue to provide group health insurance for their members under health reform requirements effective in 2014. Such group health insurance may be a more affordable option for some businesses as new health reform requirements begin to take effect.
In a nutshell, ERISA requires that an association be considered an “employer” to sponsor a group health plan at the association level. In order to qualify as an “employer”, an association must meet bona fide association requirements, including like-industry and participant control requirements. By sponsoring a group health insurance plan at the association (rather than the individual employer) level, associations are able to pass along to their employer members reduced coverage premiums available under large group plans.
Important health reform changes are applicable to insurance plan renewals occurring on or after January 1, 2014. Trade associations should act now to confirm that they are structured to be eligible to purchase group insurance coverage, if their member benefits include health care coverage. If you need help restructuring your association for this purpose or have questions, contact Clay Wortham in the Lexington office. He can be reached at firstname.lastname@example.org or at (859) 231-8780.
Clay B. Wortham is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Wortham concentrates his practice in healthcare law and is located in the firm’s Lexington office. He can be reached at email@example.com or at (859) 231-8780.
This article is intended as a summary of state law and does not constitute legal advice.
There is no shortage of recent court rulings dealing with implications and consequences of social media. One of the latest comes from a New Jersey federal court and its holding should get employers’ attention. In Gatto v. United Airlines and Allied Aviation Servs., et al., No 10-CV-1090 (D.N.J., March 25, 2013), the plaintiff, Frank Gatto, was employed as a ground operations supervisor at John F. Kennedy Airport. He brought suit against United Airlines claiming that, while he was unloading baggage, a United Airlines aircraft caused a set of fueler stairs (owned by Allied Aviation) to crash into him. Gatto claimed that the resulting injuries rendered him permanently disabled.
After the suit was filed, the defendants made a request for documents and information that related to Gatto’s social media account. The request was based on defendants’ suspicion that Gatto’s Facebook posts detailed physical and social activities that would be inconsistent with his claimed injuries and damages. Gatto refused to comply with the request and a U.S. Magistrate Judge ordered him to execute an authorization for the release of his Facebook records and provide access to the account by disclosing his password to defendants.
Counsel for United thereafter accessed the account and printed portions of Gatto’s Facebook page. This action prompted Facebook to send a notification to Gatto advising him that his account had been accessed from an unfamiliar IP address. Upon notification, Gatto proceeded to deactivate his account. Facebook permanently deleted the data fourteen days later, in accordance with its company policy.
Defendants asked for sanctions against Gatto for purposely deleting evidence. So, how did the court rule on this matter? Did Gatto intentionally destroy the evidence of his social media accounts? Did the employer have a right to ask for it? Check back on Wednesday to learn about the court’s ruling.
Jaron Blandford is a member of McBrayer, McGinnis, Leslie & Kirkland, PLLC and is located in the firm’s Lexington office. Mr. Blandford focuses his practice on civil litigation with an emphasis in all areas of labor and employment law. He can be reached at firstname.lastname@example.org or (859) 231-8780.
According to the 2012-2013 Edition of Jury Award Trends and Statistics, the national median award for employment practice claims in 2011 was $325,000, up from $172,500 in 2010. This figure confirms what many in the employment law community already know to be true, that the number of employment practices claims has increased, and with that increase there has been an increase in the size of awards over the years as well. There is no reason to believe that this trend will not continue, and no business should believe itself to be immune from employment practice claims.
Every business of size should seriously consider carrying Employment Practices Liability Insurance (“EPLI”) to protect itself from employment-related claims, which can encompass everything from sexual harassment, to wrongful termination, to defamation. Although a business’s first line of defense should always be thorough up-to-date and well written HR procedures and policies, EPLI coverage can be a valuable lifeline when an expensive and lengthy lawsuit is looming and it just may save your business from financial ruin.
Costs of EPLI policies vary greatly; the price is generally based on your business type, size and associated risk of employment practices. Insurance companies will normally want to review copies of the HR forms, policies, and manuals to assess risk probability. If you seeking EPLI, there are some things you should be looking for in a policy. These include, but are not limited to,
- A broad definition of “insured,” so that all directors, officers, and employees are covered;
- A broad definition of “claim,” so that criminal, civil, and administrative proceedings are covered, as well as arbitrations and investigations;
- A practical deductible that can be met if the insurance is needed;
- A carve-out for claims under federal statutes; if an employee brings a whistleblower claim for exercising rights pursuant to certain statutes such as COBRA, ERISA, or OSHA, you will likely want these claims to be covered by the policy; and
- A choice of counsel provision so that the business can utilize an employment attorney that is familiar with the business, locality, governing law, and particular claim.
As an added bonus, some EPLI insurers even offer additional services free to their customers, such as a call-in line for general employment questions or sample employee handbooks. EPLI can offer peace of mind and valuable protection in the increasingly litigious employment law arena, and the attorneys at McBrayer, McGinnis, Leslie & Kirkland, PLLC, are happy to provide assistance in this area.
Luke A. Wingfield is an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Wingfield concentrates his practice in employment law, insurance defense, litigation and administrative law. He is located in the firm’s Lexington office and can be reached at email@example.com or at (859) 231-8780.
This article is intended as a summary of federal law and does not constitute legal advice.
The Americans with Disabilities Act (“ADA”) requires any employer with fifteen or more employees to provide reasonable accommodations to individuals with disabilities, as long as doing so does not result in “undue hardship” to the employer. A reasonable accommodation can be any change in the work place that helps a person with a disability to enjoy equal employment opportunities. The ADA has very strict guidelines about when and how an employer may inquire about an employee’s disability. What happens, though, when a non-ADA employee asks you, the employer, why another employee is receiving perceived preferential treatment?
The ADA strictly prohibits employers from disclosing medical information about employees, but even if privacy rules are adhered to, some accommodations will be obvious to others. For example, consider these situations:
- A diabetic employee takes more scheduled breaks than others so that he can eat small meals.
- An employee with temperature sensitivity is allowed to wear a modified dress code.
- An employee who experiences seizures is receiving a service dog and, as a result, she must leave work to train with the animal for two weeks.
Obvious accommodations that are incorrectly viewed as “special treatment” can lead to an uncomfortable work environment. An ADA-employee may choose to disclose their disability and accommodation(s) with their co-workers, but if they do not, an employer needs to know how to handle the situation.
If confronted with a question about an ADA accommodation, you should generally inform the inquiring employee that you have policies in place for those who may face difficulties in the office. You should not disclose who the person experiencing the disability is (even if it is obvious) or what the disability is. Emphasize that the business, and employees, must respect the privacy of every employee.
In addition, consider what you can do before inquiries start. Although employers are not under an obligation to explain the ADA to employees, it could be beneficial to outline the Act in your employee manual. By doing so, you will help employees become familiar with its rules and regulations. Training is another way to educate your work force. If employees know disability information is confidential, they will be less likely to ask.
You can also designate in your handbook who an employee should speak with in the event an accommodation is needed. Employees may feel as though they have to share their need with the boss, but it is a smart policy to have employees instead discuss the issue with an HR manager or department. HR personnel should be more familiar with the ADA and its requirements. If needed, the HR personnel can then share the information with necessary parties.
The ADA safeguards fairness for all in the work place. By knowing how to discuss the topic appropriately and lawfully, you will ensure that no employee feels slighted by another’s reasonable accommodation, as well as protecting the privacy of the employee requiring the accommodation. As with all employment issues, if a question arises which you or your HR professional is unsure how to answer, contact legal counsel before you act.
Preston Clark Worley is an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Worley concentrates his practice in employment law, land development, telecommunications, real estate and affordable housing. He is located in the firm’s Lexington office and can be reached firstname.lastname@example.org or at (859) 231-8780.
This article is intended as a summary of state and federal law and does not constitute legal advice.
On Monday, we discussed how to determine if you are a “large employer” for purposes of the ACA’s employer mandate. Once you know whether the mandate is applicable, the next step is to know what you will be signing up for if you decide to “play.” The mandate requires you to offer “minimum essential health coverage” that is “affordable” to all full-time employees in 2014. Of course, you need to know what these vague terms really mean. Here’s a general description:
- “Minimum essential health coverage”: The plan must pay at least 60% of the expected health care costs. The remaining 40% may be paid by the employee through co-pays, deductibles, or co-insurance.
- “Affordable”: The employee’s share of the premium for employee-only coverage must not exceed 9.5% of his or her income. Employers must offer dependent coverage, but the cost of this coverage does not factor into the affordability calculation.
Employers are not required to provide coverage for all employees. There is a safe harbor provision so that no penalties will apply for any month in which an employer offers coverage to all but 5% of its full-time employees (or five full-time employees for employers with less than 100 employees). In simple terms, you must offer coverage to 95% of your employees, not all of them.
Likewise, you need to know what you are going to “pay” if you forego providing coverage. Large employers risk extensive penalties, both for failing to offer coverage to their full-time employees and for failing to offer “affordable” coverage to full-time employees and their dependents. If you do not offer coverage, you will face a penalty of $2,000 for every employee in excess of 30. If the coverage offered is not affordable, you risk a penalty of $3,000 for every full-time employee who receives a tax credit or reduction under the new, ACA-created Exchanges.
Before you decide to play or pay, make sure you know the rules of the game. The mandate is detailed, complicated, and comes with costly penalties. Employers must determine which course of action is best for them; many are seeking professional advice. If you need someone to help you understand the mandate and how it will affect you, contact the employment law attorneys at McBrayer, McGinnis, Leslie & Kirkland.
Benjamin L. Riddle is an associate in the Louisville, Kentucky office. Mr. Riddle is a member of the firm’s Litigation team, where he focuses his practice on employment law, commercial disputes and personal injury matters. Mr. Riddle can be reached at (502) 327-5400, ext. 305 or email@example.com
This article is intended as a summary of newly enacted federal law and does not constitute legal advice.