Help to REDUCE Employment Law Risks. Lori J. Shapiro Pro Bono Partnership of Atlanta August 2014

Transcription

1 Help to REDUCE Employment Law Risks Lori J. Shapiro Pro Bono Partnership of Atlanta August 2014

2 Mission of Pro Bono Partnership of Atlanta: To provide free legal assistance to community-based nonprofits that serve the poor. We match eligible organizations with volunteer lawyers from the leading corporations and law firms in Atlanta who can assist nonprofits with their business law matters. 2

3 Pro Bono Partnership of Atlanta Eligibility & Other Information In order to be a client of Pro Bono Partnership of Atlanta, an organization must: Be a 501(c)(3) nonprofit organization. Be located in or serve the greater Atlanta area. Serve low-income or disadvantaged individuals. Be unable to afford legal services. Visit us on the web at We host free monthly webinars on legal topics for nonprofits To view upcoming webinars or workshops, visit the Workshops Page on our website. 3

4 Major Legal Risks to Employers 1. Misclassification of Employees 2. Harassment, Discrimination and Retaliation Claims 3. Requests for Accommodation and Leave 4

5 How to REDUCE these Risks Review policies and practices with counsel Educate yourself and your employees Document performance issues and decisions Uncover facts through investigation Create consistency Enforce policies 5

6 RISK #1: MISCLASSIFICATION OF EMPLOYEES Questions Who is an employee? Are employees, contractors, volunteers, and interns classified correctly? Are employees entitled to overtime pay under the Fair Labor Standards Act? 6

7 RISK #1: MISCLASSIFICATION OF EMPLOYEES Who is an Employee? An employee is anyone employed by an employer Employ means to suffer or permit to work 7

8 RISK #1: MISCLASSIFICATION OF EMPLOYEES Enforcement Initiatives Department of Labor Memorandum of Understanding with the IRS (2011) Sharing of information to prevent misclassification Misclassification Initiative (2013) Memoranda of Understanding with 14 States Wage and Hour Division Fiscal Year 2014: $3.8 million allocated to misclassification enforcement 8

9 RISK #1: MISCLASSIFICATION OF EMPLOYEES Potential Consequences Unpaid employment taxes, interest and penalties State unemployment compensation insurance and worker s compensation insurance penalties Entitlement to Benefits 9

10 RISK #1: MISCLASSIFICATION OF EMPLOYEES Definitions Employee: A worker in the service of another where the employer has the power or right to control or direct the worker in the material details of how the work is to be performed. Independent Contractor: A worker who is self-employed and contracts to do a piece of work according to his or her own methods and who is subject to an employer s control only as to the end product or final result of the work performed. 10

11 RISK #1: MISCLASSIFICATION OF EMPLOYEES Independent Contractors vs. Employees Most important question is who has control IRS uses a 20 factor test 11

12 RISK #1: MISCLASSIFICATION OF EMPLOYEES Three Indicia summarizing 20 factors: Behavioral Control: Amount of instruction and training provided; schedule and hours; location; and duration of work. Relationship Between the Parties: Employee benefits; termination; intent of the parties (written contracts); permanency; and regular course of business. Financial Control: Distribution of profits and losses; significant investment in materials and equipment; unreimbursed expenses; services available to the public; and method of payment. 12

13 RISK #1: MISCLASSIFICATION OF EMPLOYEES Ensure appropriate procedures are in place to differentiate contractors from employees Carefully drafted agreement between the parties Separate policies and procedures Review benefit plans Use appropriate terminology 13

14 RISK #1: MISCLASSIFICATION OF EMPLOYEES Unpaid Interns and Volunteers: Unpaid internships have come under increased scrutiny by the U.S. Department of Labor Individuals who volunteer or donate their services, usually on a part-time basis, for public service, religious or humanitarian objectives, not as employees and without contemplation of pay. 14

15 RISK #1: MISCLASSIFICATION OF EMPLOYEES Are unpaid interns employees? Six factors (The Fair Labor Standards Act): 1. Similar training to what would be given in an educational setting or vocational school. 2. Work is for the benefit of the intern. 3. No displacement of regular employees, but work under close supervision. 4. Employer derives no immediate advantage from activities, and may, at times, be impeded. 5. No job entitlement when training ends. 6. Mutual understanding of no compensation. 15

16 RISK #1: MISCLASSIFICATION OF EMPLOYEES Intern or Employee? Organization engages a student from a university externship program to shadow employees. Student engaged directly by organization rotates through several departments working with one employee in each department for the summer months. A students is paid $40 to intern and signs agreement that he is an intern. He receives some training and counseling, and then is asked to perform tasks that support the fee for service aspect of the organization. His low wages allow the organization to offer services at below-market rates. Student works on the manufacturing line, manufacturing items under the supervision of the line supervisor, and the items manufactured count toward the line s quota. 16

17 RISK #1: MISCLASSIFICATION OF EMPLOYEES Can we use volunteers? Nonprofits are permitted to use volunteers under the FLSA Volunteers cannot replace paid staff There are risks involved when employees volunteer in the same organization where they work Advisable to have an agreement recognizing status as a volunteer, disclaiming any pay or benefits, and waiving any liability; may need background checks Do not pay volunteers 17

18 RISK #1: MISCLASSIFICATION OF EMPLOYEES Nonprofits are not immune from overtime claims 18

19 RISK #1: MISCLASSIFICATION OF EMPLOYEES Are employees entitled to overtime pay? Risks arise in failing to comply with FLSA Most employees are non-exempt from FLSA Must be paid overtime for every hour over 40 in one week Must be paid minimum wage Have employees keep accurate time records 19

20 REDUCING Risk #1: Misclassification of Employees Review policies and practices with counsel Educate yourself and your employees Document performance issues and decisions Uncover facts through investigation Create consistency Enforce policies 20

21 REDUCING Risk #1: Misclassification of Employees Review policies and practices with counsel Get help to classify correctly: Pay attention to the distinction between employees, independent contractors, interns and volunteers Educate yourself and your employees Do not allow employees to work unauthorized overtime Compensate employees for all overtime worked 21

22 Legal Compliance Requirements Nonprofits (like all employers) must comply with: Title VII of the Civil Rights Act of 1964 (Title VII) Section 1981 of the Civil Rights Act of 1966 The Age Discrimination in Employment Act (ADEA) Equal Pay Act Lilly Ledbetter Fair Pay Act Genetic Information and Nondiscrimination Act of 2008 (GINA) The Pregnancy Discrimination Act (PDA) The Americans with Disabilities Act (ADA) The Family and Medical Leave Act (FMLA) Uniformed Services Employment and Reemployment Rights Act (USERRA) 22

23 Risk #2: Harassment, Discrimination and Retaliation Claims Employers are prohibited from harassment, discrimination, and retaliation based on: Race Color National Origin Sex Religion Disability Pregnancy Age Military Status Genetic information Must avoid treating anyone differently or making employment decisions, including hiring, pay, discipline or termination decisions, based on any of these. 23

24 Risk #2: Harassment, Discrimination and Retaliation Claims Settlements against Nonprofits Disability discrimination lawsuit settled for $92,500 (King v. University of Maryland Faculty Physicians, Inc., D. Md. 2013) Sexual harassment and retaliation claims settled for $65,000 plus attorney s fees (Bumpers v. Mobile Community Action, S.D. Ala. 2011) Race discrimination and retaliation claims settled for $400,000 (EEOC v. Richmond of New York, S.D.N.Y. 2006) Racial harassment claim settled for $200,000 (EEOC v. Renaissance Ill, N.D. Tex. 2006) Sex discrimination and wrongful termination claim of teenage male employee of nonprofit settled for $750,000 (Doe v. Roe, Cal. 2000) 24

25 Risk #2: Harassment, Discrimination and Retaliation Claims In 2013, the EEOC achieved the highest monetary recovery in its history, recovering $372.1 million from employers. EEOC Charges Filed Race Discrimination: 33,068 Sex Discrimination: 27,687 Disability Discrimination: 25,957 Age Discrimination: 21,396 National Origin: 10,642 25

26 Risk #2: Harassment, Discrimination and Retaliation Claims Recent EEOC Actions against Nonprofits July 22, 2014: Goodwill Industries agreed to settle a retaliation claim filed by the EEOC for $100,000 July 10,2014: EEOC sued Dialysis Clinic, Inc. for disability discrimination in termination of employee seeking additional leave for cancer treatment June 17, 2014: Bobby Dodd Institute in Atlanta agreed to pay $40,000 to settle age discrimination claims January 13, 2014: Founders Pavilion agreed to pay $370,000 to settle genetic information discrimination claim filed by EEOC

27 Risk #2: Harassment, Discrimination and Retaliation Claims RETALIATION claims are on the rise» 38,539 charges in 2013; included in over 40% of EEOC charges Taking adverse action against an employee who exercises protected rights (such as filing or participating in the investigation of an EEOC charge, taking FMLA leave, etc.) Turning Points: Burlington Northern v. White (U.S. Supreme Court, 2006): held that any conduct that discourages an employee from speaking up can support a retaliation claim, even if it does not: (1) have an economic impact on the employee; or (2) impact the employee at work. Crawford v. Metropolitan Govt. of Nashville (U.S. Supreme Court, 2009): held that an employee could claim retaliation based on her participation in an internal investigation of sexual harassment allegations raised by another employee [On remand: $1.5 million verdict]. 27

28 Risk #2: Harassment, Discrimination and Retaliation Claims Retaliation Claims Can Be Costly On March 22, 2013, a jury in Pennsylvania awarded a former employee of a nonprofit: $1.5 million in punitive damages $100,000 in compensation for pain and suffering $78,000 in back pay Claim: employer retaliated against her by terminating her employment after she complained about co-worker s conduct. 28

29 REDUCING Risk #2: Harassment, Discrimination and Retaliation Claims Review policies and practices with counsel Educate yourself and your employees Document performance issues and decisions Uncover facts through investigation Create consistency Evaluate employment decisions 29

30 REDUCING Risk #2: Harassment, Discrimination and Retaliation Claims Educate yourself and your employees Have clear policies prohibiting harassment, discrimination and retaliation; train supervisors, managers and employees to understand and apply those policies Document performance issues and decisions Ensure that employment decisions are based on documented evidence and are consistent with past practice 30

31 REDUCING Risk #2: Harassment, Discrimination and Retaliation Claims Uncover facts through investigation Have clear avenues for complaints Investigation thoroughly and document steps taken Conclude the investigation Create consistency Be consistent in how employees are treated and employment decisions are made Take action to address any violations uncovered in your investigation 31

32 Risk #3: Requests for Accommodation and Leave Laws Requiring Accommodation and Leave ADA: The Americans with Disabilities Act FMLA: The Family and Medical Leave Act PDA: The Pregnancy Discrimination Act USERRA: The Uniformed Services Employment and Reemployment Rights Act Disability and pregnancy leave issues are part of the EEOC s Strategic Enforcement Plan 32

33 Risk #3: Requests for Accommodation and Leave ADA prohibits discrimination based on disability AND requires the provision of reasonable accommodation amended in 2008 to make it easier to claim disability No mitigating measures Episodic conditions or conditions in remission Regarded as claims FMLA permits employees to take up to 12 weeks of unpaid leave for a serious medical condition, or to care for a family member, including military service members 33

34 Risk #3: Requests for Accommodation and Leave Risks in interaction of ADA and FMLA EEOC v. Princeton Healthcare (June 20,2014) EEOC files claim indicating that leave policy that is in compliance with FMLA violates ADA accommodation requirement Organization agrees to: pay $1.35 million engage in an interactive process with employees Not use progressive discipline for ADA-related absences train managers on ADA

35 Risk #3: Requests for Accommodation and Leave Pregnancy Discrimination Act Includes pregnancy, childbirth, and related medical conditions in definition of gender under Title VII EEOC Enforcement Guidance (July 2014) Expanded coverage to include many pregnancy-related impairments as disabilities under the ADA, entitling employees to reasonable accommodation Reasonable accommodation may include light duty, alternative assignments, disability leave, or extended unpaid leave Cannot deny light duty to pregnant worker based on policy limiting to on-the-job injuries 35

36 Risk #3: Requests for Accommodation and Leave USERRA (Uniformed Services Employment and Reemployment Rights Act): Non-Discrimination: A person cannot be denied initial employment, reemployment, retention in employment, promotion, or any benefit of employment on the basis of membership, application for membership, performance of service, application for service, or obligation for service in the U.S. armed forces Leave: requires employers to provide up to 5 years of unpaid leave to eligible employees for uniformed service 36

37 REDUCING Risk #3: Requests for Accommodation and Leave Review policies and practices with counsel Educate yourself and your employees Document performance issues Uncover facts through investigation Create consistency Enforce policies 37

38 REDUCING Risk #3: Requests for Accommodation and Leave Review policies and practices with counsel Ensure your policies related to leave are upto-date and reflect current legal requirements Ensure job descriptions are up-to-date and include essential job functions Create consistency Ensure that there is a process in place to identify and address requests, that includes documentation of the request and of all efforts to address it 38

39 REDUCING Risk #3: Requests for Accommodation and Leave Enforce policies Follow internal policies and procedures in evaluating every request Ensure managers understand how to apply the policies and procedures 39

40 Remember to REDUCE your Risk! Review policies and practices with counsel Educate yourself and your employees Document performance issues and decisions Uncover facts through investigation Create consistency Enforce policies POTENTIAL LIABILITY FOR YOUR ORGANIZATION! 40

41 Employment Additional Resources: employees-the-fair-labor-standards-act 41

42 For More Information: If you would like more information about the services of Pro Bono Partnership of Atlanta, contact us at: Phone: Fax: