10 Ways HR Departments Violate the Law Without Realizing It
December 10, 2013
Employers of all varieties face lawsuits arising from claimed violations of employment laws. Often such violations are inadvertent and entirely avoidable. Here is a list of ten ways a company or even a human resources department may violate the law without realizing it.
1. Terminating employees on leave
Here is a common scenario faced by Human Resources: a business unit inquires about terminating an employee who has been on leave for over twelve weeks for a health condition. The employee has exhausted all FMLA job protected leave and PTO and the workload is piling up. Before discharging the employee, the employer should first evaluate whether the employee is entitled to additional leave as a reasonable accommodation under the Americans with Disabilities Act (the “ADA”). Although jurisdictions vary on whether “indefinite leave” is a reasonable accommodation under the ADA, it would be risky to discharge the employee without first analyzing whether the ADA may apply. For this reason, policies providing for immediate or automatic discharge of employees failing to return to work after medical or disability leave are discouraged.
“…employers should avoid relying solely on a job title or job description when classifying a position; the better practice is to evaluate what the employee actually does.”
2. Blindly classifying employees as exempt
Federal law requires that all employees be paid minimum wage for all hours worked and overtime, unless certain well-defined exemptions apply. Improper classification can result in penalties in the form of back wages and overtime, as well as negative publicity associated with costly and protracted wage and hour litigation. Problems arise when employers make classification decisions without thoroughly vetting an employee’s job duties for compliance with an exemption. And, employers should avoid relying solely on a job title or job description when classifying a position; the better practice is to evaluate what the employee actually does. Employers should conduct regular audits of all exempt positions, interviewing managers of such persons and avoiding over reliance on job descriptions and titles.
3. Incorrectly classifying employees as independent contractors
Misclassifying an employee as an independent contractor can result in penalties from the IRS and can impact the application of various other laws, including laws regarding payment of wages and medical leave. To minimize the risk associated with this misclassification, employers should audit their relationships with independent contractors and limit the amount of control over their independent contractors. Employers should also ensure their contracts with independent contractors clarify that these individuals retain independence and control over their schedule, among other factors.
4. Failing to respond to claims for unemployment insurance (“UI”) benefits
Employers commonly do not respond to notices of claims for UI benefits, accepting such charges as a cost of doing business or due to company policies of not contesting such claims. Some employers do not have a centralized process for routing such notices internally for response. Under the Federal Unemployment Insurance Integrity Act, employers may be subject to a host of penalties for failing to respond adequately to such notices. Going forward, employers should designate one person or department to oversee the process of responding in a timely manner to claims for UI benefits. Employers should also remove clauses from their employment agreements that promise not to contest UI benefit claims.
5. Having unpaid interns
The law imposes strict criteria for an individual to be considered an intern (and exempt from minimum wage and overtime pay requirements). Among other criteria, the internship must be primarily for the benefit of the intern, the intern must not replace regular employees and the employer must not obtain any immediate advantage from the activities of the intern. Employers with internship programs should carefully audit their practices and policies to ensure they comply with all applicable criteria. This issue is particularly critical in light of the recent flurry of lawsuits filed by interns against their former employers seeking back pay.
“…employers should check the laws of the states in which they operate to determine requirements for wage deductions and revise their policies and practices accordingly.”
6. Making certain wage deductions
Many states have laws prohibiting or limiting employers from deducting wages from employees’ paychecks for payments owed to the employer. In Virginia, for example, employers can only make such deductions after obtaining voluntary and written consent from an employee that is not obtained as a condition of employment and is not a blanket authorization. Additionally, deductions often are subject to federal law concerning minimum wage and overtime payments. Wage deduction is an issue of state law, rather than federal law; accordingly, employers should check the laws of the states in which they operate to determine requirements for wage deductions and revise their policies and practices accordingly.
7. Entering into overbroad non-compete agreements
State laws concerning the enforceability of non-solicitation and non-competition provisions vary significantly. Some states (such as California) prohibit them almost entirely. Employers should determine the laws and current trends with respect to the enforceability and judicial interpretation of such clauses in the states in which they operate and modify their agreements accordingly. Although some states will “blue pencil” such agreements (striking the offensive clauses and enforcing the reasonable clauses), other states will invalidate such agreements entirely if they are overly broad and not narrowly tailored to protect the legitimate business interests of the employer.
8. Requiring strict confidentiality from employees
Rules prohibiting employees from discussing the terms and conditions of employment and/or issues related to investigations of employee misconduct may run afoul of Section 7 of the National Labor Relations Act, which protects employees who engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection ….” Note that this right applies to both unionized and non-unionized employees. Employers should avoid global prohibitions on employee discussions of the terms and conditions of employment and should revise their confidentiality policies and employment agreements to reflect the language that has been approved by the Office of the General Counsel of the NLRB.
9. Failing to manage the process of background checks
In recent years, the EEOC has focused on the use of arrest and conviction records by employers in light of concerns of the disparate impact such checks may have on certain protected groups in violation of Title VII of the Civil Rights Act of 1964. A growing number of states are also enacting laws prohibiting or restricting certain pre-employment inquiries. Employers should determine the laws of the states in which they operate and also review the EEOC’s recent guidance on background checks and modify their policies and practices accordingly.
“The implications for employers due to social media activity by their employees cannot be emphasized enough…”
10. Not having a social media policy
Social media activity by employees poses several important questions for employers, such as: When is it lawful for employers to access information online about applicants and employees? What kind of social media activity is permissible in the workplace? The implications for employers due to social media activity by their employees cannot be emphasized enough. For example, if an employee posts harassing statements on Facebook about a colleague using a work computer, that colleague could potentially bring legal action against the poster and the employer for defamation and harassment. Home Depot is currently in the crosshairs for an offensive tweet on Twitter that was posted using the company’s Twitter account. Given this, employers without social media policies should implement a policy immediately, but should ensure it complies with guidance from the NLRB as noted above.
Employers risk legal liability and significant expense resolving disputes arising out of these issues. Human resources departments should work with their legal departments to address the matters identified above, determine areas of risk and revise policies and procedures accordingly. Employers should also implement internal processes to provide for prompt legal review of these and other pressing areas to ensure compliance going forward.
[Rebecca Signer Roche serves as senior counsel on all labor and employment matters for DynCorp International’s global operations and worldwide workforce of 25,000+ employees. Previously, Rebecca was a labor and employment associate at Littler Mendelson, P.C. and at McGuireWoods, LLP. Connect with Rebecca on Twitter and LinkedIn.]