EMPLOYMENT-AT-WILL -- Traditional Rule: The courts once considered employment with no fixed duration as "terminable-at-will" -- that is, an employer (or employees) free to terminate employment (with or without notice) and make other decisions affecting employment status for a good reason, a bad reason, or no reason at all.  In recent years, an employer's discretion to make employment status decisions has been limited by anti-discrimination laws and judicially-created contract and tort actions. Before you terminate an employee, you should examine the Termination Checklist available on this site.

NEW EMPLOYEE HIRING -- The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires employers to report ALL new hires to child-support agencies.  All states and territories have a program that receives and processes information about newly hired employees. The New-Hire reporting program collects information from W-4 forms that all new employees must complete. The information from the W-4 form is used to track non-custodial parents. Information is transmitted from the local New Hire Directory and to the National Directory of New Hires, a component of the Federal Parent Locator Service (FPLS), operated by the Federal Office and Child Support Enforcement. Details here: new-hire

Public Policy/Retaliatory Discharge: Any employee who is discharged for some act that violates a clearly defined public policy (refusal to lie to protect an employer's unlawful acts or for reporting unlawful conduct of the employer) is protected by law.

Employee Manuals/Handbooks: Employee handbooks or manuals can create contractual rights. Employees can sue for breach of contract if you fail to follow the provisions of your own handbooks or manuals. Check our on-line library for sample policies.

Express Statements: If a manager or other person in a position of authority makes oral or written promises to an employee about job tenure,  job security or "permanent" employment status, you will be bound by that promise even if it is NOT in writing.

VERIFICATION OF IDENTITY AND WORK ELIGIBILITY -- It is unlawful to employ anyone who is not lawfully entitled to work in the U.S. or its territories. Immigration law requires you to verify the identity and employment eligibility of new hires (not applicants). You must use must INS Form I-9 (available here) to verify identity and work eligibility.

You must complete and keep on file an I-9 Form for every person you hire (even for a day) for employment in the United States. This includes citizens and non-citizens. You must verify the employment eligibility and identity documents presented to you by the employee and record the document information on the Form I-9. Acceptable documents are listed on the back of the I-9 form, and detailed under "Special Instructions" on the Internet website (linked above). SUGGESTION: make 2 copies of the I-9...one for the file you keep on the employee...and one in a separate file that contains ONLY -I-9 forms. That way you don't have to show inspectors 100 separate employee files...just the folder containing only I-9s. 

I-9 forms are subject to inspection by Immigration Service officers and agents of the U.S. Department of Labor. Employers are subject to $1,000 (per employee) penalties for failing to do these verifications; hiring someone who is not lawfully entitled to work in the U.S. is punishable by fines up to $10,000 per employee.

BACKGROUND CHECKS -- One third of all higher education claims are FALSE. Always verify resumes that list "big name" universities. A person listing experience as self-employed, family-owned business, or an employer that is now out of business may be trying to conceal employment gaps (were they unemployed,  in jail?). Get a specific chronology. Demand specific information -- from the applicant and from an objective third party. If you're hiring for high security positions, management,  financial employees, HR staff, ALWAYS investigate the resume. 

Failure to conduct background checks can expose you to seriou$ liability for negligent hiring (the apartment manager you just hired spent 10 years in prison for raping a tenant on his last job). Never, never, never rely on "police clearances" -- they get stale after 24 hours -- you should require court records to avoid a bad hire.

You should also look at: Guam's Sex Offender Registry  and the U.S. mainland at:
http://www.nsopr.gov 

A judge or jury can find you liable for "negligent hiring" and "negligent retention" lawsuits if you hire someone with an easy-to-verify record of violent crimes against co-workers after they engage in violent acts in your workplace. "Negligent retention" means keeping these characters on your payroll after you discovered the facts. You had a LAWFUL DUTY to know!

CRIMINAL, FINANCIAL and EDUCATIONAL RECORDS -- Arrests and Convictions: You may not ask job applicants about arrest records, you may ONLY ask about criminal convictions. It can be hazardous to require (or rely on) a "police clearance" (they get stale and it is easy to obtain a "clean" one). You should require applicants to present court records (federal, state, local) that indicate a record of convictions. Arrest records are meaningless -- you do not want to know how many people are arrested, but never get prosecuted -- the numbers will keep you awake at night!

Bankruptcy: You may not take disciplinary action or discriminate against an employee who has filed for bankruptcy.

Credit Reports: Job applicants must be notified if an employer routinely collects credit and other personal financial reports as part of job screening. The employer must also notify the applicant of the scope of any report requested and the name and address of the reporting agency.

Garnishment: There are restrictions on the amount of employee earnings that are subject to garnishment and child support orders. You may not make employment decisions based on court-ordered garnishments or child support orders.

The Fair and Accurate Credit Transactions Act was enacted to reduce identity theft and help victims recover. FACTA has special paperwork and compliance problems for employers. FACTA amended the Fair Credit Reporting Act (FCRA is the federal law that governs consumer credit reports and their use for employment purposes). FACTA requires that any person who maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for business purpose, to properly dispose of that information.

EXAMINATION AND TESTING -- Medical Examinations: The Americans with Disabilities Act (ADA) allows you to require medical examinations, ONLY if those exams are required of all newly-hired employees. ADA prohibits you from requiring medical examinations of current employees unless the examinations are job-related and meet a business necessity. Federal law strictly protects the privacy of employee medical/health data. You must keep medical/health records in files that are SEPARATE from ordinary personnel records.

Polygraphs: There are restrictions on the use of polygraphs ("lie detectors") to screen job applicants. Polygraph results are not admissible in U.S. courts because the machines can be tricked and manipulated. Polygraphs should be thought of as useful -- but highly unreliable -- investigative tools. You may not require current employees to submit to a polygraph without reasonable suspicion that they may be involved in a substantial economic loss to the employer -- or compromised National Security or nuclear weapons information. You MAY NOT take disciplinary action based solely on polygraph tests.

Drug Testing: The Drug-Free Workplace Act and a broad spectrum of other laws and regulations require employees who are engaged in interstate transportation or defense contracting work to be tested for drug use. Successful completion of this testing and a continuing drug-free physical status can be considered to be a condition of employment. If you don't take drug testing seriously, you will LOSE your government contracting...permanently.

UNLAWFUL DISCRIMINATION -- Race, Color, Religion, Sex, National Origin and Age: Several laws prohibit you from making employment decisions (to hire, promote or discharge) based on a person's age, race, color, religion, sex, national origin or disability (these are "protected groups"). Prohibited sex discrimination includes discrimination base on pregnancy, including sex-specific fetal protection policies. The ban on age discrimination covers people who are 40 years of age or older.

There are two types of discriminatory conduct: (1) disparate treatment -- intentionally treating someone differently because they are part of a protected group; and (2) disparate impact -- when an employer's practices have an adverse effect on people in a protected group.

Sex Harassment: This conduct is a form of unlawful discrimination and includes: (1) a demand for sexual favors in exchange for job benefits -- what lawyers call "quid pro quo"; and (2) sex-related conduct that interferes with an employee's work or creates a "hostile" work environment.

"Quid pro quo" relates to "give me sex and I'll give you a raise. "Hostile work environment" ranges from dirty jokes, provocative pinup pictures, profanity or "adult" speech, objectionable behavior involving sex matters. 

Disability: The ADA prohibits discrimination against qualified people with disabilities and requires you to make reasonable accommodation for them. The ADA applies to public and private employers with 15 or more employees. The ADA protects people with AIDS and AIDS-related conditions, former drug abusers and former alcoholics.  The Rehabilitation Act of 1973 prohibits employers who do business with the government (including sub-contractors and recipients of federal financial assistance) from discriminating on the basis of disability. 

Expanded Remedies: The Civil Rights Act of 1991 provides for jury trials, and limited compensatory and punitive damages in all cases alleging intentional race, color, religion, sex, national origin or disability discrimination.  Retaliation: It is unlawful to retaliate against an employee who complains about unlawful discrimination.

Equal Pay: Employees who do jobs requiring equal skill, effort and responsibility may not be paid different wage rates based on their sex. Differences may only be based on seniority and bona fide merit systems.

Marital or Family Status: Job discrimination based on marital or family status. You may not question job applicants about their marital or family status. 

Affirmative Action: Employers that do business with the government (including sub-contractors), and employers that receive federal financial assistance (grants) are prohibited from discriminating on the basis of race, sex, disability and veteran status.  Prime contractors are liable for the compliance of their sub-contractors. Covered employers must include non-discrimination clauses in their contracts and employment advertisements, and must take other affirmative action to employ and promote members of protected groups. 

These employers must also maintain a written Affirmative Action Plan describing steps they are is taking to employ or promote members of the protected groups. NOTE: The Employers Council has a 60+page, Affirmative Action Plan (AAP) that meets government requirements. This AAP is available at very modest cost -- far lower then it would cost you to engage an attorney to write one. The actual file can be downloaded, but it is not listed in our Library because we sell it to member companies. Contact bgibson@ecouncil.org for details. Covered employers are subject to compliance audits.  Reporting Requirements: Covered employers are required to submit reports describing and analyzing the racial and sexual composition of their workforce.

FAIR LABOR STANDARDS ACT -- The FairPay Act (successor to the FLSA) is a major employment regulation statute. It sets rules on minimum wages, overtime, record-keeping and prohibits oppressive child labor.  Minimum wage: You must pay employees at least the minimum wage.  In addition, employees must be paid "overtime" at 1 and 1/2 times their hourly regular rate when they work more than 40 hours a week.  Workweek: A regularly recurring seven-day period.

Money saving tip: Workweeks should begin and end at midnight on a Tuesday, Wednesday or Thursday -- never over a weekend. Your accounting staff will give you 1,000 reasons why they can't change the break in your workweek (Accounting people work 9-5 M-F which is why your workweek breaks when it does.) Order them to change it -- it has to be done carefully and with detailed advance notice to employees -- and you will save TONS of money. Guaranteed.

Pay periods: May be weekly (40 hours), every 2 weeks (80 hours) or monthly. You may not combine a 35-hour workweek and a 45-hour workweek to avoid payment of the overtime penalty. Pay must be given to employees no later than 7 days after the end of the pay period. (Employees who are discharged must be paid at the time of termination or before the close of business on the next regular business day.)

Vacations and holidays: The FLSA does not require pay premiums for work done on holidays. It does not require you to give paid time off for holidays, vacations or sick leave.

Recordkeeping: Time and attendance records must be maintained for all employees, hourly-paid, salaried, exempt and non-exempt employees. NOTE: tampering with time records by managers and supervisors can result in a large fine and a term in a federal prison.

Child Labor: It is unlawful to employ children in non-farm jobs. Youths under 18 may not work in hazardous occupations, youths 14 and 15 are allowed to work limited hours outside of school-time. Age certificates should be obtained when employing minors. Verification of identity, age and work eligibility is crucial when employing minors.

Exempt and non-exempt employees: To be exempt from overtime rules, employees must be: executives, administrators, professionals or outside salespeople. Exempt employees may be paid a regular weekly or monthly salary. Paying someone a salary does not automatically make them exempt from payment of overtime. The Fair Pay Act of 2004 contains complete information about exemptions and other parts of the Fair Labor Standards Act.

Non-exempt employees should ALL be paid by the hour.  Reminder: paying an employee a salary does not automatically make them exempt from overtime rules.

Deductions from pay: Pay deductions are severely limited. Deductions may only be made under court order, government regulation, or for payments (allotments, union dues) that have been expressly authorized in writing by the employee. 

Deductions for cash shortages, damage due to employee negligence are prohibited. In NO case may an employer withhold payment of wages to recover losses. There are NO exceptions. (see Discharge).

WORKER'S COMPENSATION INSURANCE -- All employers (regardless of size) are required to purchase and maintain an approved insurance policy to compensate and provide medical expenses or death benefits for employee injuries or death arising "out of and in the course of employment".

The basic theory of workers compensation is the same in every industrialized nation in the world. Workers comp laws eliminate legal problems between the "little employee" and the big corporations and their lawyers.  They are "no-fault" systems to provide compensation and medical or death benefits for workplace injuries without either party having to go to court and litigate over liability. Benefits vary by jurisdiction and are set by local laws.

"RIGHT TO KNOW" LAWS -- Several laws require you to post or distribute notices describing employees' rights under laws dealing with discrimination, wages, and workers' compensation, and workplace safety. "Right To Know" laws require you to: (a) establish a central file containing "hazardous substances fact sheets"; and (b) post a notice that this information is available to employees.

Plant Closings: Federal law requires certain employers to give employees 60 days' notice of certain types of workforce reductions.

Personnel Records: In many jurisdictions, employees have no absolute right to inspect, copy and seek correction of documents contained in the employer's personnel file that covers them. To avoid litigation of these issues, we recommend that you give employees a copy of anything placed in company personnel records -- including disciplinary documents.

Hazardous Substances: Federal law requires certain employers to notify employees of hazardous substances in work areas. 

FAMILY AND MEDICAL LEAVE -- The Family Medical Leave Act (FMLA) applies to employers with 50 or more employees. Covered employers are required to give employees up to 12 weeks of leave per year for the birth or adoption of a child, or the serious health condition of an employee or immediate family member. To be eligible, the employee must have worked for at least 12 months, and for at least 1250 hours (25 hours/week) over the previous 12 months. "Serious health condition" means a physical or mental condition involving inpatient care or continuing treatment by a physician or other health care provider. "Immediate family member" means the employee's child, spouse or parent. Although leave may be unpaid, an employer must continue the employee's coverage under the employer's group health insurance plan. Upon return from leave, an employee must be returned to their former job or to an equivalent position.

JURY DUTY -- You are prohibited from discharging or otherwise disciplining employees for serving on a jury. You are not required to pay employees while they are on jury duty, but most pay the difference between jury pay and the employee's regular hourly rate -- for reasonable periods of jury service.

VETERANS' REEMPLOYMENT -- You may not discriminate against employees who leave their jobs to serve in the Armed Forces, with reserve components and the National Guard. The law provides these "special Americans" with broad reemployment rights. For example, an employer must reinstate a returning veteran to their prior position, or to a substantially equivalent position.

UNIONS -- You may not interfere with employees' rights to join or assist unions -- or to refrain from union activities. The National Labor Relations Act is enforced by the National Labor Relations Board (NLRB), the agency that investigates unfair labor practice charges (against employers and unions) and conducts elections in which employees vote for or against union representation. Because Congress has been actively legislating workplace issues, union membership in the U.S. has declined sharply since 1975 and today less than 10 percent of the private-sector workforce is unionized. If you learn that union "organizing" is taking place among your employees, you should immediately contact THE EMPLOYERS COUNCIL to protect the rights of your company and your employee.

WORKPLACE ACCESS, SOLICITATION and DISTRIBUTION To maintain a union-free workplace, management must establish and diligently enforce rules to control solicitation of employees and distribution of materials in the workplace. Rules on access must prohibit solicitation by unions and political, religious, social or charitable groups, otherwise the NLRB will require that you permit unions to solicit employees and distribute materials in your workplace. Your ban on solicitation and distribution must stress the principle that "work time is for work".  Recommended notice: Soliciting employees or distributing material to employees in work areas during work time is prohibited. Solicitation or distribution that involves employees is only allowed in non-work areas during non-work time. Non-employees are never allowed to solicit anyone or distribute anything on these premises.

DISCIPLINARY PROCEDURE: Step 1. Verbal Warnings and Counseling by the employee's supervisor. Unsatisfactory performance or improper conduct is discussed privately on an informal basis. A written report of this action is filed. Step 2. Written warnings. More serious violations are documented and the employee is given a written warning. Step 3. Suspension without pay. If verbal warnings, counseling and written warnings do not result in a change in behavior, the employee is suspended without pay for a time, depending on the seriousness of the offense. Step 4. Termination. Authority to terminate must be reserved to the principal company official; not underlings. Terminations should first involve a review of the record by your attorney, an interview with the employee and then formal discharge (with a letter of termination).

Conduct subject to disciplinary action: 1. Theft, dishonesty, falsification of information. 2. Tardiness or failure to report for work. 3. Possession or use of deadly weapons in the workplace. 4. Fighting, sexual harassment or discriminatory activity. 5. Discourtesy to customers, clients or co-workers. 6. Being under the influence of or in possession of alcohol or controlled substances during work-time. 7. Negligence, refusal to obey instructions, destruction of property or gross misconduct. 8. Any behavior, during or outside work-time that may bring discredit to our company. Give notice to employees that these are just a few examples of things that will bring about disciplinary action, the list is not all-inclusive. NOTE: In cases involving theft, dishonesty, falsification of information, alcohol, controlled substances, weapons, fighting or harassment, a single offense should ALWAYS result in immediate suspension and later, termination. 

DISCHARGE: Required Compensation: Employees must receive full payment of all wages dues when employment is terminated. Most employers also pay for "earned, but unused" vacation and sick leave benefits. Doing so is strong evidence of your company's good faith in dealing with "problem employees".

Employers with 20 or more employees must permit employees who quit or retire to participate in the company's health insurance play under a federal lawn known as "COBRA". The ex-employee and dependents must pay 102 percent of the premiums for this protection. Employees who are discharged for "gross misconduct" can be denied this continued coverage.  

Termination Procedures: The courts recognize a "cause of action" for intentional infliction of emotional distress when employment termination is carried out in an abusive, degrading or humiliating manner.

Power to terminate employment should be reserved to TOP management only -- and only after an attorney has reviewed the decision. (Lower-level management should ONLY have authority to SUSPEND employees, until the CEO has acted.) It is cheaper to read our Termination Checklist than it is to do a hasty discharge.  

REFERENCES: You are sometimes best served by releasing only neutral references (dates of employment, pay rates, and jobs held). While you may have what attorneys call a "qualified privilege" if a disgruntled former employee sues for defamation based upon an unfavorable reference, a neutral reference is usually the best way to avoid problems -- however, in cases involving employee theft or violence, you may be liable for not disclosing that behavior to a prospective employer.

RECORDS: The importance of complete, accurate record-keeping can not be over-emphasized. We ardently believe in the theory that: "If it is not written down, it never happened!" For information on the records you should keep and how long they should be maintained, see: records. 

 

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