Do You Really Need that Employee Policy?

I enjoyed reading the new book Rework, by 37 Signals founders Jason Fried and David Heinemeier Hansson, which is filled with straight-forward tips for running a successful company.  Regarding employment policies, they say:

The second something goes wrong, the natural tendency is to create a policy.  “Someone’s wearing shorts?”  We need a dress code!”  No, don’t.  You just need to tell John not to wear shorts again.

Policies are organizational scar tissue.  They are codified overreactions to situations that are unlikely to happen again.  They are collective punishment for the misdeeds of an individual.

This is how bureaucracies are born.  No one sets out to create a bureaucracy.  They sneak up on companies slowly.  They are created one policy – one scar – at a time.

So don’t scar on the first cut.  Don’t create a policy because one person did something wrong once.  Policies are only meant for situations that come up over and over again.

After writing and revising hundreds of policies and employee handbooks, I wholeheartedly agree with Fried and Hansson.  I would add to their suggestion that many policies already adopted should be discarded.  Some policies, such as an anti-harassment policy, are needed.  But many other policies are unnecessary and may create an unintended liability risk.

For example, some employers have a policy telling employees it will recall employees based on certain factors, such as seniority.  When the rehire decision is actually made, the employer often wants to ignore the policy by basing the decision on other factors or hiring someone new rather than recall anyone.   Because of the policy, someone not recalled pursuant to the factors now has an argument that the employer is liable for not following its policy.  In essence, the company made things worse by creating a risk that otherwise would not have existed.

In return for this increased risk, I think the company got little, if any, benefit from having the policy.  I doubt that the when the employee got the policy he or she felt any better about the company because of the policy.   Many times, employees read a policy once, if at all, when hired and then not again until after they are no longer employed and have consulted a lawyer.   It is then that many policies become important for the first time — as weapons against the employer.

You may disagree on the benefit or risk of this or any other policy.  The important thing is to not have any policy without first thinking through how the policy will really work in practice, what it actually accomplishes, what are the risks, and whether any benefit actually outweighs the risk.

How to Avoid Misclassifying Independent Contractors

I just finished preparing an upcoming presentation for the National Business Institute on independent contractors.  To determine whether a worker is an independent contractor, the courts and agencies apply a number of complex tests that focus on different factors.  The consequences of misclassifying an employee as an indpendent contractor can be significant including back taxes, back pay, fines, penalties, interest, attorneys’ fees, and liquidated damages.

I like Kathleen Barrow’s take on the issue in an article she wrote for the Society for Human Resource Management.  She gave an easy-to-apply example that incorporates many of the complex factors that the courts and agencies look at.  She calls it the “Joe the Plumber” test:

A plumber is someone a company calls to fix a unique problem. Assuming the company is not in the plumbing business, the duties the plumber performs are neither central nor critical to the company’s ability to make a profit. The company calls the plumber only when events trigger a need for services. The plumber has a number of clients, the company being one of many that the plumber assists in a similar manner. The plumber advertises his or her services to third parties, drives his or her own truck, and brings his or her own tools to the workplace to perform the required job. The plumber would go out of business, not the company, if the plumber is not good at what he or she does.

The more your situation is like that of “Joe the Plumber” example, the more likely it is that you have a contractor relationship rather than an employer-employee relationship.

Here is my list of Best Practices to consider when structuring a relationship so that it is more likely to be deemed a contractor relationship rather than an employer-employee relationship:

  • Avoid having the independent contractors perform work vital to the company’s core business.
  • Avoid having independent contractors perform the same work as employees.
  • Have a written agreement.
  • Require some type of “cause” for terminating the agreement rather than “at will” agreements.
  • Require the independent contractor to have a business license and any professional licenses and to provide you with a copy.
  • Obtain copies of insurance certificates.
  • Obtain a copy of a signed W-9 form.
  • Create a structure under which the independent contractor has a substantial risk of loss and profit.
  • Require the independent contractor to provide his or her own tools and equipment.
  • Require the independent contractor to pay his or her own expenses.
  • Require the independent contractor to perform services for others as a practical matter and not just as a matter of contract.
  • Avoid training the independent contractor.
  • Avoid directing the independent contractor how to perform the work.
  • Avoid requiring the independent contractor to have constant contact with the company, to regularly come to the company’s location, or to attend meetings.
  • Avoid requiring regular status updates from the independent contractor.
  • Permit the independent contractor to reject work.
  • Do not require the independent contractor to personally perform the work.
  • Require the independent contractor to be responsible for damages caused by its actions.
  • Pay the independent contractors by an invoice with the independent contractor’s federal tax identification number.
  • Pay the independent contractor by the project, a fixed fee, achievement of goals, or some other method other than by the hour.
  • Require the independent contractor to obtain workers’ compensation insurance and provide evidence of the coverage.
  • Use language in communications that is consistent with a contractor relationship and not an employment relationship.
  • Contract for project or other discrete period rather than for regular or continuous services.
  • Allow the independent contractor to set hours of work.
  • Manage for results and avoid giving instructions about how to achieve the result.
  • Keep independent contractor files with other vendor files and away from employee files.
  • Collect evidence indicating independent contractor status such as business cards, yellow page ads, and other marketing material.
  • Do not have independent contractor complete employee application.
  • Do not provide the independent contractor with an employee handbook.
  • Do not provide the independent contractor with employee benefits.

Protecting Employees from Workplace Violence

The horror in Connecticut today reminds us of how real the danger of workplace violence is.  It was not that long ago that a former employee here in Seattle was convicted of killing two coworkers and wounding two others at a local shipyard.

Dennis Schwartz, himself in Connecticut, provides some valuable insights about workplace violence on his Connecticut Employment Law Blog and suggests steps employers can take to address the danger.   Among his suggestions are:

  • Provide training to employees. Recognizing the signs of potential workplace violence is crucial to any prevention campaign. Teach employees of the “warning signs” to look for and ensure that employees are sensitive to this area.
  • Encourage an “open door” policy. Much like New York Transit’s “If you see something, say something” slogan, the employer should encourage employees to report potential safety risks or unusual behavior.
  • Don’t be afraid to contact the police. Some employers take the view that they can handle a matter “internally”.  Resist the urge. Contact law enforcement when appropriate; they may already have information on the subject that would help with an existing case or have knowledge of a prior history.  Obviously, not all incidents rise to that level, but some do.
  • Take incidents seriously.  While some employers have instituted “zero tolerance” policies, a one-size-fits-all policy may not be appropriate. Employers should consider what type of approach they want to take to workplace violence incidents or incidents of lesser severity that still indicate a problem.  Employers should immediately respond to such incidents when they happen.

To his suggestions, I would add considering consultation with someone experienced in threat assessment.  For example, I have worked with James S. Cawood out of San Leandro, California a couple of times.  He did an excellent job of helping realistically assess the specific nature of the risks posed by employees based on our specific circumstances rather than on just a generalized fear.  With his help, our responses were appropriately tailored to match the nature of the actual risks we faced.

Providing Breaks for Nursing Mothers

Buried in the many pages of the Patient Protection and Affordable Care Act signed into law on March 23, 2010, is a provision amending the Fair Labor Standards Act, which covers most employers,  to require employers to provide employees with break time to express milk.  The Department of Labor recently issued a fact sheet that provides guidance on the law.

Under the new law, employers are required to provide “reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk” and “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.”  The frequency and duration of the breaks is left open-ended;  essentially as much time as needed by the mother is required.

The location for nursing does not have to be dedicated for just nursing, but “it must be made available when needed in order to meet the statutory requirement.  A space temporarily created or converted into a space for expressing milk or made available when needed by the nursing mother is sufficient provided that the space is shielded from view, and free from any intrusion from co-workers and the public.”

The break time can be unpaid, and the requirement applies only to non-exempt employees.   Also,  employers with fewer than 50 employees are not subject to this requirement if providing a break would cause an undue hardship based on factors such as the size, financial resources, nature, and structure of the employer’s business.

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Accommodating Disabilities Affecting the Ability to Commute

Two recent cases show that employers must consider accommodating employees with disabilities affecting the ability to commute.

In Colwell v. Rite Aid, a cashier became blind in one eye, which made it difficult and dangerous for her to drive at night.  Colwell sued for failure to accommodate her disability when Rite Aid refused to schedule her for only day shifts.  The trial court concluded  that Rite Aid had no duty to accommodate Colwell’s limitations concerning her commute because the Americans with Disabilities Act was designed to only cover an employee’s ability to work in the workplace.  The Third Circuit disagreed.  It wrote:

… we hold as a matter of law that changing Colwell’s working schedule to day shifts in order to alleviate her disability-related difficulties in getting to work is a type of accommodation that the ADA contemplates.

On July 21st, the Ninth Circuit Court of Appeals reached the same result in a similar case.  In Livingston v. Fred Meyer Stores, a wine steward with a vision impairment that affected her ability to see after dark asked for a modified schedule during the fall and winter to minimize after dark driving.   She was discharged after she refused to work her scheduled late shift.

Following Colwell, the Ninth Circuit said that an employer has a duty to accommodate an employee’s limitations that affect the ability to get to and from work.

These cases make clear that employers should consider modifying an employee’s schedule when a disability is affecting the employee’s ability to commute.  Just how far the duty to accommodate commuting issues extends, though, is unclear.  For example, what if an employer has multiple locations in an area and the employee has a long commute.  Must the employer consider transferring the employee to a location closer to home if the employee has an impairment that limits the amount of time that can be spent driving?  Does it matter if there is public transportation the employee could use?

We will have to wait for other cases to understand the full scope of an employer’s duty.  For now, employers faced with accommodation requests concerning commuting should consider whether the accommodation is a reasonable one and whether providing it would cause the employer an undue hardship.

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Get the Whole Story

One of my favorite references to the Shirley Sherrod fiasco last week came from Peter Sagal, host of National Public Radio’s weekly radio broadcast “Wait, Wait, Don’t Tell Me.”  “Wait, Wait, Don’t Tell Me” is an entertaining quiz show based on the week’s news.   When Sagal was discussing  USDA Secretary Tom Vilsack’s firing of Sherrod based on his viewing a two-minute video segment from Sherrod’s  45-minute speech, Sagal quipped:

“This explains why Agriculture Secretary Tom Vilsack thinks that the Wizard of Oz is a black and white film about a farm girl in Kansas.”

Sagal’s comment made me think of some employers I’ve represented and the risks associated with firing someone without getting the employee’s side of the story.  First, the employer’s conclusions about what happened will often be wrong.  Second, if the employee later sues for discrimination or retaliation, the employer’s not getting the employee’s side of the story makes it look like the employer was acting out of a discriminatory or retaliatory motive.   The employee, now turned plaintiff, will argue that the employer did not get the employee’s side of the story because the truth did not matter — what was really motivating the discharge was the employee’s race, age, sex, protected activity, etc.

Employers getting the employee’s side of the story before taking any disciplinary action make better and safer decisions.

Happy Birthday ADA!

The Americans With Disabilities Act turns 20 on July 22nd.  To celebrate, the EEOC will sponsor a panel of ten civil rights experts discussing the landmark law.  I wish I could attend the Washington D.C. event, which is described here.    We’ve been expecting the final regulations under the ADAAA this month.  I wouldn’t be surprised if the EEOC brings them to the birthday party on Thursday!

Financial Services Reform Bill Adds Whistleblower Protections

Thanks to the Employment Law Group for a thorough summary of the whistleblower provisions in the new financial services reform bill passed by the senate.  The article, including a link to the new law, can be found here

Some of the new provisions of the law include:

  • Section 922 provides for remedies including, among other things, double back pay with interest;
  • Section 1057, which provides whistleblower protection for financial services employees, permits employees to prevail in a lawsuit if they can prove that protected activity was a “factor which, alone or in connection with other factors, tends to affect in any way” in an employer’s decision to take unfavorable action regarding the employee unless the employer can show by clear and convincing evidence that the action would be taken in absence of the protected activity; and
  • Section 929 expands Sarbanes-Oxley coverage by making clear that the law applies to “employees of any subsidiaries of publicly-traded companies whose financial information is included in the consolidated financial statements of [a publicly] traded company” even when the company “has few, if any, direct employees, and instead employs most of its workforce through non-publicly traded subsidiaries.”

Whistle blower cases can be difficult cases for employers.  Juries and judges find it easy to believe that someone, i.e. an employer, retaliates against someone, the employee, for complaining that the employer’s actions are unlawful or for going to an oversight agency or body.   As a result, after someone engages in whistleblowing activity, any adverse action an employer takes is suspicious.  And the closer the adverse action is to the whistleblowing activity, the more it appears retaliatory.  In addition, juries and judges do not like retaliation and, when they find that an employer retaliated for whistleblowing activity, they often award large judgments.   This new law continues the recent trend of laws expanding whistleblower protections to more employees under more circumstances

Referendum 71 Expands Employees’ Rights

With the passage of Referendum 71, state registered domestic partners will be treated under state statutes the same as married spouses.  Although the change will impact employers in several ways, one of the most significant changes will be the expansion of leave rights under the state Family Leave Act (“FLA”), which applies to employers with at least 50 employees. Continue reading “Referendum 71 Expands Employees’ Rights”