Employment Law Update – Summer 2012
EEOC Area Director Provides Helpful Insights at K&C Seminar
Thomas M. Colclough is both the Area Director of the Raleigh Office of the U.S. Equal Employment Opportunity Commission (EEOC) and the Acting Director of the Richmond EEOC Office. Drawing upon his 20+ years of EEOC experience, Mr. Colclough provided candid views on EEOC trends and avoidance tips to attendees of K&C’s March 22, 2012, showing of the 28th Annual Employment Law Update at the Greater Richmond Convention Center.
Mr. Colclough suggested that employers could expect an increasing number of EEOC Charges and more interaction with EEOC investigators assigned to those Charges. He cited that approximately 100,000 Charges were filed during the EEOC’s last fiscal year. During a workshop on handling Discrimination Charges, Mr. Colclough indicated that the employer representatives in attendance could expect more opportunities to resolve Charges and/or discuss facts expeditiously. He commented that employers may want to be proactive and contact investigators with pertinent information. Mr. Colclough indicated the investigators in his offices were approachable and anxious to work with employers to resolve pending Charges, but that anyone reacts more positively when treated with respect as opposed to being viewed as an adversary.
Even though the number of total Charges is on the rise, Mr. Colclough pointed out that the EEOC will still be pushing for more litigation of class cases alleging systemic discrimination. He also indicated that investigators will be more likely to schedule fact-finding conferences and on-site visits to gather information in the course of investigating Charges. He also highlighted a number of “easy fixes” that could reduce the risk of liability for employers. For example, he suggested that employers not keep medical information in personnel files and review personnel files periodically to make sure inappropriate information is not kept that might be an indicator of discrimination. Another “easy fix” was a recommendation that employers periodically check their restrooms to make sure there is no inappropriate graffiti that other employees or an EEOC investigator might view during an on-site visit. Making sure that employment applications don’t include inquiries that are prohibited under the Americans with Disabilities Act or that otherwise seek information not related to an individual’s ability to perform his or her job was cited as something employers should also do to protect against potential EEO liability.
Finally, Mr. Colclough suggested annual EEO training for frontline supervisors. He pointed out that even if upper-level management has all of the best intentions, the supervisors with the most direct communication with employees are the ones that create the most risk of discrimination. Supervisors who understand the legal risks, have good common sense and consistently document employment issues, can provide employers with the best protection against discrimination liability.
Mr. Colclough and a number of other employment agency representatives will be present at the final showing of the 28th Annual Employment Law Update on July 19, 2012, at the Hampton Roads Convention Center to provide this valuable perspective for attendees. To provide another interesting perspective, a lawyer who specializes in suing employers, James Shoemaker, will present his candid views on the reasons he chooses the employers he sues.
Virginia Supreme Court Decision Underscores Need to Review Non-Competition Agreements
The recent Supreme Court decision in Home Paramount Pest Control v. Shaffer brings home, in stark fashion, why prudent companies should not rely on possibly-obsolete language in existing contracts with key employees and executives. While properly drafted agreements can restrict post-employment competition by key employees, the Virginia Supreme Court’s decisions exhibit a continuing reluctance to give employers any latitude in enforcing overly-broad covenants not to compete that used to be typical in these contracts. Home Paramount gives us an extreme case of why employers should rely only on language crafted with the most recent decisions in mind.
In 1989, Home Paramount’s predecessor corporation found itself in the same situation: a valued employee had left the company and, in apparent violation of his written agreement, proceeded to compete with his former employer. That case made it all the way to the Virginia Supreme Court as well, and the Court upheld the covenant as reasonable, narrowly-tailored, and enforceable. This next time around, Home Paramount tried to enforce an agreement that was word-for-word identical to the agreement the Virginia Supreme Court held was enforceable in 1989. However, the Court – citing some of its intervening decisions disapproving covenants over the past decade – held that the same language that was enforceable in 1989 was not enforceable in 2011. What’s more, the Court held that the contract was unenforceable ‘on its face,’ regardless of the facts surrounding the violation.
What does this mean for employers? More than anything else, the Home Paramount decision signals the need for periodic review, and perhaps modification, of existing non-competition agreements. What was enforceable a few years ago may not be enforceable now, and the time to find out about the problem and fix it is before, not after, a key employee sets up a competing business next door. As a matter of good human resources practice, we recommend a thorough review of any non-competition agreements drafted more than five years ago, with a periodic review of all such agreements every five years. That way, the Home Paramount Pest Control decision will not end up, er, ‘bugging’ you.
Government Sets Sights on Employee Misclassification
The temptation to misuse the ‘independent contractor’ label is not new. Indeed, an ‘independent contractor’ typically costs less by avoiding certain state and federal taxes and is not subject to the protections of laws such as the Fair Labor Standards Act, the Family and Medical Leave Act, and state unemployment laws, among others. Accordingly, businesses have been calling employees ‘independent contractors’ for years.
In fact, the U.S. Department of Labor estimates that up to 30 percent of businesses misclassify their workers. According to the Obama administration, these misclassifications cost the federal government billions in lost employment tax revenue each year. Not surprisingly, there are significant efforts to increase enforcement and capture that revenue. One such mechanism is the Federal Misclassification Initiative, which provides for the hiring and training of additional government investigators tasked with identifying organizations that misclassify workers.
Pursuant to this Initiative, the Department of Labor has entered into a Memorandum of Understanding (MOU) with the Internal Revenue Service, whereby ‘the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws.’ The DOL is in the process of expanding its information-sharing and enforcement efforts by entering into similar MOU’s with thirteen states (the DOL is ‘actively pursuing MOU’s with additional states as well’).
These enforcement efforts will serve to increase the risk associated with misclassifying workers. Not only will the chances of being caught increase, but the cost of being caught has also gone up, as multiple government agencies may be involved in any enforcement process. As such, it is increasingly important that businesses understand the risk of misclassifying workers and carefully review their classification practices and policies.
Recent Group Firings Create a Stir
We have all heard stories about snafus caused by the careless use of a company’s email system, including unintended use of the reply to all key and inattention when using autocomplete for email addresses. Now we can add an example of the pitfalls of company-wide email blasts. In late April, a financial firm accidentally fired its entire staff by email. To make matters worse, it took thirty minutes to send a second company-wide email specifically telling workers that no one was fired and apologizing for the mistake.
Another recent group firing really was with design – fourteen Florida office workers were fired in March simply for wearing orange shirts to work on the same day. Apparently their employer, a Florida law firm, did not approve of this group activity. However, since they were employees at-will, their employer knew it had the right to fire these employees – no matter how absurd its reason for doing so may seem.
These and other absurd and outrageous cases and the lessons we can learn from them will be reviewed at the upcoming 28th Annual Employment Law Update to be held on July 19th at the Hampton Roads Convention Center.
NLRB Posting Saga Continues – No Required Posting At This Time
The NLRB’s revised effective date for the required union rights poster (April 30, 2012) has been indefinitely postponed. The federal appeals court for the District of Columbia issued an injunction on April 17 that prevents the NLRB from requiring the posting until the legal challenges to the posting are resolved. The Court ruled that the NLRB overstepped its authority in requiring the poster. Unlike other required government postings, such as EEO and minimum wage postings, the NLRB’s proposed 11X17 summary of employees’ union rights is not required by act of Congress. Rather, it is required by the NLR’s own rule. Stay tuned for further updates.
28th Annual Employment Law Update – Putting the Pieces Together – July 19th
Knowing that companies are dealing with many pieces of the employment law puzzle, K&C is pleased to announce a program designed to help employers solve the employment law puzzle. The final showing of the 28th Annual Employment Law Update ‘Putting the Pieces Together’ will be held at the Hampton Roads Convention Center on Thursday, July 19th.
The K&C Employment Law Team will present a variety of educational workshops and will feature several representatives from a number of government agencies, as well as an intriguing lunchtime presentation by James Shoemaker, a lawyer who specializes in suing employers. Attendees will also have a chance to view an educational and entertaining mock filing of an EEOC charge by a “problem” employee against his former employer, as well as attend a number of timely topics including What Employers Should Know About Social Media; Avoiding Discrimination Claims; Handling Unemployment Claims; Current Wage-Hour Issues; Safe Interviewing/Hiring Practices; and more.
The 28th Annual Employment Law Update will provide employers with valuable tips to piece together their employment law puzzles and reduce potential liability. For more information, contact Julia Rhody at (757) 624-3232.
This program has been approved for 6 credit hours toward PHR and SPHR recertification through the Human Resource Certification Institute (HRCI). For more information about certification or recertification, please visit the HRCI homepage at www.hrci.org.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2022.