With increasing employee lawsuits and workplace regulation and with jobs being the primary source of medical insurance and retirement benefits, the need for employers to be aware of legal pitfalls in the employment process is greater than ever. A step-by-step examination of how the law affects the employment process can help growers avoid legal trouble when it comes to their employees.
Once a business owner becomes an employer, the obligation to comply begins. Both state and federal laws regulate employment — and they may differ. Often the employer must comply with both. For example, wage issues or leave rights are generally addressed by both state and federal laws. On the other hand, when it comes to unemployment compensation, jury-duty pay, time off to vote and workers’ compensation, the matter may be one of state laws alone with no federal laws involved. Pension law is governed almost exclusively by federal laws.
Whether state or federal laws, the compliance obligation will vary with the number of employees. Many of the most important employment laws — those that have produced significant legal action — reach down to the smallest of employers (See Figure 1, right).
Child labor laws, wage laws, immigration laws, workplace safety laws, workers’ compensation and unemployment compensation laws all apply to an employer with just one employee.
State Anti-discrimination Laws. These laws usually apply with just three or more employees, though it depends on the state. There are some states with higher thresholds: For example, the Massachusetts anti-discrimination law applies to an employer with six employees. Most states have fair employment practice laws that will prohibit discrimination on the basis of characteristics such as sex, race, religion, age, disability and others.
Federal Discrimination Laws. Federal discrimination laws apply to employers with 15 employees. Á Title VII of the Civil Rights Act prohibits discrimination on the basis of age, sex, race, religion and national origin. The Americans with Disabilities Act, which requires employers to reasonably accommodate employees with disabilities, also applies. With just five more employees (for a total of 20), the federal age law applies to prohibit discrimination against those who are 40 and older. Those with medical-insurance coverage and 20 employees must provide terminated employees with a right to continue medical coverage through the federal COBRA law.
Family and Medical Leave Act. With 50 employees, the federal Family and Medical Leave Act requires employers to provide a 12-week leave of absence each year for the birth or adoption of a child or the serious health condition of the employee or employee’s spouse, parent or child.
Layoffs. When 100 people are employed, the federal law requiring advance notice of a plant shut down or major layoff applies, as do federal reports of the workforce by race and sex.
For the smaller employer in particular, the state laws in which the business operates will likely provide a greater degree of regulation than federal laws.
As a practical matter, state or federal laws regulate virtually every step of the employment process. Employers can minimize their legal liability by recognizing how laws impact each stage of the process. Here is an overview:
Employee or Independent Contractor? Some employers, particularly those concerned with unemployment compensation or workers’ compensation costs, will attempt to classify their relationships to individuals providing services as independent contractors rather than as employees. Federal laws, in particular, require the employer to examine many factors to determine if the individual is properly classified. For the most part, the laws favor the employee relationship rather than the independent-contractor relationship.
The Employment Application. The most important document in the employment process is the employment application. Every job applicant should be required to complete and sign an employment application before interviewing takes place.
It is critical that the employer use an up-to-date application. The Americans with Disabilities Act prohibits employers from asking about a person’s medical history or medical condition until after an offer of employment has been made. Medical questions on the employment application are prohibited. It is important to use updated forms because some older forms continue to list prohibited questions.
Also important is the application section where the applicant states that any false or misleading information he or she provides will result in termination regardless of when it is discovered, and the applicant acknowledges that the employment relationship is “at will.” This section is usually found above the applicant’s signature.
Interviewing. Stick to discussing the job requirements and the applicant’s employment history and job qualifications during an interview. As a practical matter, questions in an interview concerning an applicant’s age, sex, race, religion, country of origin or health status should not be asked unless there is clear justification.
For the most part, questions related to these characteristics are of little value in determining whether or not the applicant is qualified to perform work. Skillful interviewers will confine the interviewing questions to those about the individual’s work performance rather than background. “What would your boss change about the way you work?” is a more productive question than “When did you graduate from high school?”
References and Background Checks. Both state and federal laws impact the process of references and background checks. Some states enable the employer to release information to prospective employers with little restriction. Others, however, prohibit the employer from releasing all but the most basic information unless the employer has the former employee’s written authorization.
If employers are going to conduct a background check using an outside firm, the federal Fair Credit Reporting Act requires that the applicant is notified and gives permission. Most background-checking services provide these forms.
Drug Tests. Depending on the study, about 1-in-10 applicants who take a pre-employment drug test will fail. While most laws, whether state or federal, provide little protection for current users of illegal drugs, many require the employer to notify the applicant of the employer’s intention to test as part of the employment process.
Hiring and Forms. While state laws vary, many require that the newly hired employee be told of the pay rate of the job and the pay schedule in writing. Federal laws require that every employer prove that the person is identified and authorized to work through the completion of the I-9 immigration form. Both state and federal laws require the completion of tax withholding forms.
Paying People. Paying employees within the requirements of both state and federal laws is critical. The Fair Labor Standards Act is a federal law that requires employees be paid at least the minimum wage and time and one half for hours worked over 40 hours in a work week, although there is an exception for paying overtime to agricultural employees.
Aside from the agricultural exception, the federal law also allows for three classes of “white collar” exemptions. In order for a position to be exempted from the overtime requirement, the position must be paid a salary of $455 per week, and the duties of the position must fall into one of three categories: executive, administrative or professional. Each category has its own test, and the duties of the position must pass the test or the position is non-exempt, and the employee must be paid overtime.
Termination. Most employers approach the decision to terminate an employee with dread. Yet, unfortunately, not every employee is able Á or willing to do a job satisfactorily, and termination becomes the only recourse. Employers need to appreciate the structure of the law relating to termination and the hurdles employees face in challenging the employer’s decision to terminate. The first and most formidable is the At-Will Employ--ment Doctrine.
The doctrine holds that without a contract, an employee is “at-will,” which means that the employee can be terminated without any notice and for no reason whatsoever. In order to overcome the doctrine, the employee must allege either discrimination or breach of a promise made by the employer, or he or she must invoke a whistleblower act. Of these three exceptions, the most common is discrimination.
When an employee claims that the termination was based on race, sex, age, religion, national origin, disability or some other characteristic the law protects, the law expects the employer to provide a legitimate, non-discriminatory reason for the termination and to produce documentation to support the action. The burden then reverts to the employee to show that the employer’s reason is merely an excuse or pretext for discrimination.
Employees claiming discrimination have the benefit of the state service or federal anti-discrimination agencies for these claims. Other legal challenges require the employee to bring a lawsuit in court.
While an employer cannot be completely insulated from a claim that his or her business has violated a labor law, there are steps that every employer can take to reduce the risk.
For starters, get familiar with the labor law requirements of your state. Most states have departments that regulate employment, and they provide information about their state requirements.
Always use up-to-date forms to avoid some of the problems discussed above. There are a number of personnel-form publishing firms. Look to them first for application forms, orientation checklists, warning forms and personnel files. This will help to keep all necessary paperwork current.
Develop an employee handbook and have it reviewed by an employment attorney. Handbook models are abundant: There is no reason to make the handbook an original work. Though, whether the handbook is an original or based on a model, it is imperative that an experienced employment attorney reviews the handbook.
Document everything. Nothing assists the employer more than factual, contemporaneous documentation. Be clear, direct and factual. The general rule in employment is that every employment decision should be reasoned and documented. Nothing weakens an employer’s case more than the absence of documentation.
Finally, employers should recognize that it is the step-by-step management of the employment process that reduces the employer’s overall risk. Begin at the beginning — control the process from the start and it will pay off in the long run.