Employment Liability Issues in a Recovering Economy Presented by: Thomas L. McCally, Esq. Employment and Labor Law Group Carr Maloney, P.C. With Frank Musica, Esq. Victor O. Schinnerer & Company, Inc.
Employment Liability Issues in a Recovering Economy A Schinnerer Webinar with Thomas L. McCally of Carr Maloney, P.C. Agenda Hiring Issues Background Checks Lawful/Unlawful Questions during Interviews Management Issues Employee opinions of employer in office and on Internet Threats of workplace violence/weapons in the workplace Political and religious freedoms of speech Clothing and grooming rules or reactions Discrimination by firm or because of client Sexual or other harassment colleagues/clients/workplace Wrongful Termination Issues Discrimination or change in needed employee skills Ability to negotiate waiver of employee rights Conclusion and Q&A Hiring Issues As firms grow or restructure, how do they handle staffing up in an increasingly competitive and hostile work environment? Hiring Issues Background Checks Finding out about past employment Checking references Questions including status of asking about criminal convictions, Two Wisconsin Circle, Chevy Chase, Maryland, 20815, www.schinnerer.com, www.planetriskmanagement.com 1
Employment Liability Issues in a Recovering Economy A Schinnerer Webinar with Thomas L. McCally of Carr Maloney, P.C. Hiring Issues Web searches including asking for access/passwords Legality and value Danger of introducing improper information into the process Hiring Issues Lawful/Unlawful Questions during Interviews Discussion of military service and possible problems Preferential military treatment programs/userra rights Asking about health status, pregnancy, lifestyle issues or smoking Ability to assess family/spousal/significant other status Hiring Issues Offering At-Will Employment Expectations of continued employment Statement that could be construed as an employment contract Methods to assure that at-will employment is understood and acknowledged, Two Wisconsin Circle, Chevy Chase, Maryland, 20815, www.schinnerer.com, www.planetriskmanagement.com 2
Employment Liability Issues in a Recovering Economy A Schinnerer Webinar with Thomas L. McCally of Carr Maloney, P.C. Management Issues What do firms need to be sensitive to as they manage an increasingly diverse and demonstrative workforce? Management Issues Employee opinions of employer Office discussions Internet postings Status of Federal protection for concerted activities Management Issues Threats of workplace violence Personal or online threats to employees or others Legally expected response by employer to threats Weapons in the workplace state law and employer rights, Two Wisconsin Circle, Chevy Chase, Maryland, 20815, www.schinnerer.com, www.planetriskmanagement.com 3
Employment Liability Issues in a Recovering Economy A Schinnerer Webinar with Thomas L. McCally of Carr Maloney, P.C. Management Issues Personal, political or religious freedoms Clothing and grooming rules or reactions Traditional religious clothing Provocative attire Physical appearance Tattoos, piercings or other body modifications Sizeism, body appearance and weight GLBTQ self-identification Expressions of religious beliefs Management Issues Discrimination against protected class By firm Because of client Sexual or other harassment By colleagues By clients In work situations outside the office Drug/alcohol or other impairment Wrongful Termination Issues Whether because of process restructuring, changing markets, or productivity problems, how can firms properly terminate the employment of some staff?, Two Wisconsin Circle, Chevy Chase, Maryland, 20815, www.schinnerer.com, www.planetriskmanagement.com 4
Employment Liability Issues in a Recovering Economy A Schinnerer Webinar with Thomas L. McCally of Carr Maloney, P.C. Wrongful Termination Issues Valid and Illegal Motives Age discrimination Other protected classes Change in needed employee skills Documentation of performance or financial analysis of job function Ability to negotiate waiver of possible legal rights Online Resources www.planetriskmanagement.com You can view or download claim studies, risk management information, contract language and commentaries Employment Practices Liability Management Advisory publications., Two Wisconsin Circle, Chevy Chase, Maryland, 20815, www.schinnerer.com, www.planetriskmanagement.com 5
Management Advisory Employer Liability For Sexual Harassment During strong economic times, professional service firms often develop a sense of teamwork and a mission that obscures many of a firm s legal responsibility to its employees. When the pace of business diminishes, however, employees sometimes refocus on their working conditions, opportunities for advancement and issues that affect an employee on a personal level. One of the areas of growing risk for construction-related professional service firms is claims of inequality in pay, status and stability that are based on charges of sexual harassment. Sexual harassment is defined as any unwelcome sexual conduct that is a term or condition of employment or that creates an intimidating, hostile or offensive work environment. The legal basis of this is Title VII of the Civil Rights Act of 1964, which imposes a duty on employers to maintain a workplace free from discriminatory ridicule and insult. Sexual harassment claims based on alleged actions by co-workers and supervisors have become common. United States Supreme Court decisions have made employers subject to vicarious liability for unlawful harassment of employees by supervisors. The court holds that an employer is always liable for a supervisor s harassment if it culminates in a tangible employment action. With quid pro quo sexual harassment when submission to sexual conduct is explicitly or implicitly a term or condition of an individual s employment employers are strictly liable for the unlawful conduct. Any employment action qualifies as tangible if it results in a significant change in employment status. An individual qualifies as an employee s supervisor if: the individual has authority to undertake or recommend tangible employment decisions affecting the employee or has authority to direct the employee s daily work activities. The question of liability arises only after there is a determination that unlawful harassment occurred. Employer liability also exists in hostile work environment cases. If the plaintiff shows that he or she belongs to a protected class, was subject to unwelcome sexual harassment based on the plaintiff s sex that was so severe and pervasive that it altered the employment conditions, and that the employer knew, or should have known, of the harassment and failed to take proper remedial action, the employer will be held liable. Federal law does not prohibit simple teasing, offhand comments or isolated incidents that are not extremely serious. Instead, the conduct must be so objectively offensive as to alter the conditions of the victim s employment. The employer may avoid liability or limit damages by showing that it exercised reasonable care to prevent and promptly correct harassing behavior. To adequately prevent sexual harassment, a firm should have an effective training program that educates employees about their rights and the employer s commitment to a harassment-free working environment. The firm can escape liability if the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the firm. In order to prevent and correct harassment, firms should implement a written enforcement procedure that encourages employees to report harassment to management before it becomes severe or pervasive. Moreover, the employer should assure employees that it will protect the confidentiality of harassment complaints to the highest extent possible. This policy should state that the employer will not tolerate retaliation against anyone who complains of harassment or who participates in an investigation. Smaller businesses may be able to discharge their responsibilities through a less formal exchange. If an employer maintains regular contact with all employees, this complaint procedure information can be verbally disseminated at staff meetings.
2007, Victor O. Schinnerer & Company, Inc. Schinnerer s risk management resources have been prepared solely for the purpose of sharing general information regarding insurance and practice management issues and are not intended to constitute legal advice or a determination on issues of coverage. Victor O. Schinnerer & Company, Inc. makes no representations about the accuracy, completeness, or relevance of this information. Schinnerer and CNA policyholders have a non-exclusive, revocable license to reproduce this information for in-firm and client educational purposes. No other republication or redistribution of this material is allowed without the approval of Victor O. Schinnerer & Company, Inc. For more information on practice management, please visit our website at www.schinnerer.com or www.planetriskmanagement.com. You can reach our Risk Management Department at 301/951-9753, fax at 301/951-5496, or email at vos.rmeducation@schinnerer.com. Victor O. Schinnerer & Company, Inc. Two Wisconsin Circle Chevy Chase, Maryland 20815 301/961-9800
Management Advisory Staffing Up: Do Not Ask the Wrong Questions Design firms have reported increasing difficulty in finding the staff they now need to meet client demands. As firms expand their scope, the reach for employees often extends to skilled professional and technical candidates with qualifications that many design professionals find difficult to evaluate. While it used to be easier for firms to select new hires often it seemed that the search was for a clone of the interviewer the interview process now must assess a more diverse pool of candidates and must abide by increasingly specific legal parameters. While job application forms, for the most part, have been carefully worded to avoid mistakes, the interview process depends on skill to avoid mistakes. The interview often includes informal conversations. If you discuss an off-limits topic, however, what may have been small talk can develop into a large loss. Some questions should be avoided. They involve information that is not specifically needed to determine job qualifications. In all cases, if a candidate volunteers such information, the interviewer should not comment and certainly should not write it down. CRITICAL: You may want to delve into the candidate s personal life, but do not do this. Marital status does not matter, and do not ask for a maiden name merely asking can raise questions of discrimination based on marital status, gender or even national origin. Remember, there are very few bona fide occupational qualifications based on marital status or gender, and there are none recognized based on race. In fact, even information such as birthplace, citizenship, ownership of a residence and arrest records can all lead to discrimination charges. With issues of disability, health and workers compensation history, remember that the Americans with Disabilities Act (for employers with at least 15 employees) prohibits many health-related questions. Defer medical or physical exams, if necessary, until after you make a conditional offer of employment and gather needed workers compensation information only after the offer has been made. TROUBLESOME: Unless you ask, Are you at least 18? do not ask about age. Avoid asking about events that could be interpreted as establishing a candidate s age. Even a question about dates of school attendance can be viewed as a means of asking age. It is permissible, but certainly not recommended, to ask about children through a general question such as, Have you made arrangements for the care of any children? since that can be justified on the grounds of availability and reliability. Such questions can increase a firm s exposure to discrimination claims; men as well as women should be asked the same question and their answers treated in the same way. In getting information from a candidate, you should only ask for information that is really needed to judge competence or qualifications for the specific job. Asking irrelevant questions may offend your applicant, damage your business reputation and put you at great risk for a discrimination claim or legal action. 2007, Victor O. Schinnerer & Company, Inc. Schinnerer s risk management resources have been prepared solely for the purpose of sharing general information regarding insurance and practice management issues and are not intended to constitute legal advice or a determination on issues of coverage. Victor O. Schinnerer & Company, Inc. makes no representations about the accuracy, completeness, or relevance of this information. Schinnerer and CNA policyholders have a non-exclusive, revocable license to reproduce this information for in-firm and client educational purposes. No other republication or redistribution of this material is allowed without the approval of Victor O. Schinnerer & Company, Inc. For more information on practice management, please visit our website at www.schinnerer.com or www.planetriskmanagement.com. You can reach our Risk Management Department at 301/951-9753, fax at 301/951-5496, or email at vos.rmeducation@schinnerer.com. Victor O. Schinnerer & Company, Inc. Two Wisconsin Circle Chevy Chase, Maryland 20815 301/961-9800
Management Advisory Avoid Mistakes When Investigating EPL Claims Often, in a busy work environment, firms do not address internal complaints of harassment or discrimination promptly or adequately. A delayed or cursory reaction to a complaint can put the firm at a significant disadvantage before administrative agencies, judges, and juries. Ignoring a complaint can, and probably will, make matters worse and could create or increase a firm s liability. When a firm is accused of harassment or discrimination, a whole host of legal obligations arise, one of which is that the firm s own policies must be followed. An employee may simply make an informal complaint. He or she may not want to make a big deal out of the situation and perhaps does not want to be identified as a victim, but just wants the action to stop. But once management is on notice, complaints must not be ignored simply because the party asks that the matter be kept confidential or because he or she expresses concern about possible future retaliation. Although the specific obligations will vary depending on the nature of the accusation and the applicable laws and regulations, a response is necessary. Some guidance includes: Act Promptly A timely response is essential. If the allegations are true, failure to respond quickly and take appropriate action may increase the employee s emotional distress and anxiety, and along with it, the firm s potential legal liability. Witnesses should be interviewed when the event is fresh. Documents should be collected before they are lost or destroyed. Keep Good Records A firm should open a separate investigation file for all original interview notes, statements, and similar key documents. They could be essential in any defense. Be Thorough and Complete To aid in the defensibility of potential claims, firms should record admonitions about confidentiality, the questions asked of witnesses, documents, and all collected relevant information such as emails, transcriptions of voice mail messages, notes, and other evidence. Apply Equal Standards Some firms do not apply the same standards of fairness and objectivity to all situations. Allegations against high-level executives are sometimes ignored even though such misconduct can have much more serious consequences for a firm. Organizations may be held strictly liable for the conduct of managers, and a firm s acceptance of improper conduct can subject a company to staggering liability for punitive damages. Firms should not overreact to allegations, and internal disciplinary actions should be appropriate and consistent. Effective remedial measures must be designed to put a stop to offending conduct and keep it from happening again. Following up after any investigation or disciplinary action is essential to obtain a sense of closure that takes into account the privacy and emotions of the accuser and keeps the firm focused on fair treatment and productive activities. 2007, Victor O. Schinnerer & Company, Inc. Schinnerer s risk management resources have been prepared solely for the purpose of sharing general information regarding insurance and practice management issues and are not intended to constitute legal advice or a determination on issues of coverage. Victor O. Schinnerer & Company, Inc. makes no representations about the accuracy, completeness, or relevance of this information. Schinnerer and CNA policyholders have a non-exclusive, revocable license to reproduce this information for in-firm and client educational purposes. No other republication or redistribution of this material is allowed without the approval of Victor O. Schinnerer & Company, Inc. For more information on practice management, please visit our website at www.schinnerer.com or www.planetriskmanagement.com. You can reach our Risk Management Department at 301/951-9753, fax at 301/951-5496, or email at vos.rmeducation@schinnerer.com. Victor O. Schinnerer & Company, Inc. Two Wisconsin Circle Chevy Chase, Maryland 20815 301/961-9800
Management Advisory Protection from Third Party Sexual Harassment You witness a client making suggestive comments to your receptionist. The designer you assigned to a project complains that the project manager is making unwelcome personal remarks. The contractor s superintendent tells you he wants a closer personal working relationship with your site representative. For all you know, it is just talk and you do not want to know more. Sexual harassment claims based on alleged actions by co-workers and supervisors have become common. Now employers are experiencing claims that third parties, over whom they have little control, have sexually harassed an employee. Sexual harassment is defined as any unwelcome sexual conduct that is a term or condition of employment or that creates an intimidating, hostile or offensive work environment. The legal basis of this is title VII of the Civil Rights Act of 1964, which imposes a duty on employers to maintain a workplace free from discriminatory ridicule and insult. With quid pro quo sexual harassment when submission to sexual conduct is explicitly or implicitly a term or condition of an individual's employment employers are strictly liable for the unlawful conduct. Employer liability in hostile work environment cases exists if the plaintiff shows that he or she belongs to a protected class, was subject to unwelcome sexual harassment based on the plaintiff s sex that was so severe and pervasive that it altered the employment conditions, and that the employer knew, or should have known, of the harassment and failed to take proper remedial action. Recently, courts have expanded the hostile work environment liability to when a non-employee harasses an employee. This outside abuse raises unique employee concerns about the employer s perception that they are unable to handle job responsibilities. Will a failure to comply result in retaliation against the employer and ultimately retaliation by the employer toward the victim? Will the employee be disciplined for not working with the client? A third party can be in a relatively powerful position and employees often sense an obligation to tolerate abusive conduct. There are significant employer concerns as well, some of which are economic. Should such action be condoned to prevent the loss of business? Or, does the harm to the firm s reputation and employee pride and trust not to mention the potential damage awards to the injured employees, and the possibility of punitive damages and defense costs provide an economic and moral imperative to protect the employee from abuse? An employer s actual liability for allowing a third party to create a hostile work environment turns on the facts and circumstances. What constitutes immediate and appropriate corrective action must also be determined within the context of a specific case. Deliberate ignorance is no excuse and callous disregard is seen as ratification. To adequately prevent sexual harassment, a firm should have in place an effective training program that educates employees about their rights and the employer's commitment to a harassment-free working environment. 2007, Victor O. Schinnerer & Company, Inc. Schinnerer s risk management resources have been prepared solely for the purpose of sharing general information regarding insurance and practice management issues and are not intended to constitute legal advice or a determination on issues of coverage. Victor O. Schinnerer & Company, Inc. makes no representations about the accuracy, completeness, or relevance of this information. Schinnerer and CNA policyholders have a non-exclusive, revocable license to reproduce this information for in-firm and client educational purposes. No other republication or redistribution of this material is allowed without the approval of Victor O. Schinnerer & Company, Inc. For more information on practice management, please visit our website at www.schinnerer.com or www.planetriskmanagement.com. You can reach our Risk Management Department at 301/951-9753, fax at 301/951-5496, or email at vos.rmeducation@schinnerer.com. Victor O. Schinnerer & Company, Inc. Two Wisconsin Circle Chevy Chase, Maryland 20815 301/961-9800
Management Advisory Employee Handbooks: Essential Protection from Downsizing Litigation An employee handbook that is well-drafted, carefully communicated and consistently followed throughout an organization is an excellent aid in preventing employment-related problems and defending employment practices claims. Conversely, a handbook that fails in any of these ways may be a real liability either because it is poorly drafted or because the policies and procedures it represents are not consistently followed. During a time when construction-related professional service firms are reducing work-forces in an attempt to match costs due to declining opportunities, it is important for firms to confirm that their employee handbooks are appropriate in content, are in conformance with employment laws and are followed by firm management. In many states, employee handbooks can be construed by courts as creating binding contractual agreements and may, of themselves, defeat the common law presumption that an employee is an at-will worker. All handbooks should include disclaimers stating that they do not create a contractual obligation and may be revised by the employer without notice. In many cases, these management rights clauses have been effective in preventing manuals from being used against employers in litigation. It is highly advisable to have an attorney who is experienced in employment law review all employee manuals and handbooks before they are distributed, and on a regular basis thereafter. Topics that should be included in the handbook include: Policies on tardiness, absenteeism, vacation time and sick pay. Employee benefits such as workers compensation coverage, medical and life insurance, profit/pension plans and other benefit programs. Procedures to handle employee complaints about working conditions, including harassment and discrimination. Performance evaluation procedures and frequency including a special note that promotions should not be expected regularly. A description of disciplinary actions and procedures such as written warning notices and probation. Probationary period standards and length for new employees. Policies on sexual harassment, discrimination, smoking, illegal drug use and alcohol abuse. Voluntary and involuntary termination procedures. Once an employee manual has been prepared, reviewed by legal counsel and distributed, it is essential that management adheres to the procedures and guidelines it outlines. Schedule to update the employee manual at least every two years and involve an attorney expert in employment law issues in the revision process. At a time when litigation is on the rise, the small amount of time invested in developing an employee handbook will be well spent toward limiting future legal and personnel issues.
2007, Victor O. Schinnerer & Company, Inc. Schinnerer s risk management resources have been prepared solely for the purpose of sharing general information regarding insurance and practice management issues and are not intended to constitute legal advice or a determination on issues of coverage. Victor O. Schinnerer & Company, Inc. makes no representations about the accuracy, completeness, or relevance of this information. Schinnerer and CNA policyholders have a non-exclusive, revocable license to reproduce this information for in-firm and client educational purposes. No other republication or redistribution of this material is allowed without the approval of Victor O. Schinnerer & Company, Inc. For more information on practice management, please visit our website at www.schinnerer.com or www.planetriskmanagement.com. You can reach our Risk Management Department at 301/951-9753, fax at 301/951-5496, or email at vos.rmeducation@schinnerer.com. Victor O. Schinnerer & Company, Inc. Two Wisconsin Circle Chevy Chase, Maryland 20815 301/961-9800
Management Advisory Hiring and Firing: Managing Increasing Risks The professional service industry is changing. Many firms are cutting back on staff, and some are doing it in a way that makes employment practices claims inevitable. The few firms that are hiring have become far more selective. This selectivity often includes inappropriate or illegal recruiting and interviewing activities, and that is when trouble starts. The hiring and firing of employees can generate employment practices claims. Terminations often result in claims; selecting new employees carefully can reduce this risk. Your recruiting process is doubly important because it can also be a direct source of employment claims. In addition, how you hire and fire personnel influences the workplace environment. A firm s mishandling of either end of the employment process could affect the attitudes, and litigious tendencies, of a firm s staff. Recruiting and Interviewing All applications and an employer s suggested interview format should be reviewed for compliance with federal and state regulations. The following comments will apply to most organizations in most jurisdictions. The key to properly structuring employment applications and interviews is to focus entirely on job-related questions and criteria. This is one of the reasons that there should be a job description defining the essential functions of every job. The law does not specifically forbid the asking of any type of question. What is forbidden, however, is the use of any information gained that is not job-related. Any time questions are asked that are not clearly job-related, this can be offered as evidence that discrimination has taken place. Any written application form should have a section that states that if the applicant accepts employment, it will not be on a contractual basis for a specific duration, and the employer can discharge the employee with or without cause at any time for any non-discriminatory reason. This is the basis of at-will employment. ( At-will is the legal concept used by an employer to be able to terminate employees at any time if there is no employment contract in place; on the other hand, an employee can leave at any time without notice.) It is most effective to make this a disclaimer section preceding the applicant s signature. The written application should have an authorize-and-release provision that authorizes the employer to perform drug testing, check references and conviction records, when job-related, and provides immunity from liability for obtaining and appropriately using any personal information. Certain types of questions should never be asked, including questions about age, religion, national origin, financial and marital status, family plans, child care arrangements, prior workers compensation claims and general health. You may inquire as to the ability of the applicant to travel or work overtime, but such questions must be carefully worded so as not to deter applicants whose religious beliefs prevent them from working on certain days. You must make it clear that accommodations will be made to resolve scheduling problems. Interview questions should focus specifically on the applicant s ability to successfully perform the duties inherent to the position. Interviewers should be aware of what constitutes an inappropriate or unlawful question. Use performance-based questions such as: What were your successes and failures in your last job? What do you think led to your company s growth or downsizing?
I notice you have been out of work for several months. Why is it taking you so long to find a position and what have you been doing? What do you seek in your next job that was missing from your last one? What were the limitations? Never conclude an interview with a promise of employment or longevity if an offer is accepted. Even the most casual comments may be interpreted as offering a guarantee of job security. Put offers in writing. Clarify the details of your offer and confirm the candidate s understanding of the offer; confusion leads to claims. Include the following information in the offer: performance expectations, salary or wages, benefits, relocation allowances, conditions (i.e., drug testing or medical exam), starting date and deadline for accepting the offer. Clarify that employment is at-will and that the offer letter is not a contract for employment. Notify the prospect that employees are given a 90-day probationary period and will be presented with an employee handbook outlining their rights and responsibilities. Terminating Employment or Accepting Resignations More than 50 percent of employment practices claims against design firms arise from alleged wrongful termination based on gender, race or age. This risk is magnified because of the very nature of providing professional services. Firms staff up for a project and usually have a reduction in their workforce once a project is completed. In the past, such shifts were seen as normal; now the possibility of a wrongful termination suit is quite high. To prevent employment practices claims that can sap productivity and firm assets, keep the following in mind: A reduction in force should proceed from an initial financial analysis showing the need for the reduction through an objective job function analysis to the decisions regarding which positions can be eliminated. When layoffs are unavoidable, the entire program must be reviewed in light of identifying any disparate impact on older employees or any other protected classes. Firms should properly document lay-off decisions so that they are able to prove that the action was fully justifiable and that the firm would have taken the same action, notwithstanding the age, gender or race of the employee, because the motivation behind the termination was a business necessity. In addition, no termination should take place without an exit interview being conducted. This gives the firm another opportunity to discuss the reasons for the employee leaving and to document the discussion. In the case of an involuntary termination, such as a lay-off, it is important to reiterate the firm s reasons for the action and to have the employee sign a standardized exit form acknowledging the discussion. Many firms have employment practices that could generate claims, lead to an uneasy employment relationship or establish grounds to claim wrongful termination. As in all employment matters, a rational basis for employment actions and consistency in the application of employment policies are both prudent and demanded by the law. 2007, Victor O. Schinnerer & Company, Inc. Schinnerer s risk management resources have been prepared solely for the purpose of sharing general information regarding insurance and practice management issues and are not intended to constitute legal advice or a determination on issues of coverage. Victor O. Schinnerer & Company, Inc. makes no representations about the accuracy, completeness, or relevance of this information. Schinnerer and CNA policyholders have a non-exclusive, revocable license to reproduce this information for in-firm and client educational purposes. No other republication or redistribution of this material is allowed without the approval of Victor O. Schinnerer & Company, Inc. For more information on practice management, please visit our website at www.schinnerer.com or www.planetriskmanagement.com. You can reach our Risk Management Department at 301/951-9753, fax at 301/951-5496, or email at vos.rmeducation@schinnerer.com. Victor O. Schinnerer & Company, Inc. Two Wisconsin Circle Chevy Chase, Maryland 20815 301/961-9800