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Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout
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Charles Krugels July 22, 2009 City of Chicago Department of Business Affairs Seminar Handout

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21 page labor & employment law & human resources seminar handout. Discusses a variety of substantive issues & summarizes most federal & state of IL labor & employment laws.

21 page labor & employment law & human resources seminar handout. Discusses a variety of substantive issues & summarizes most federal & state of IL labor & employment laws.

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  • 1. BY CHARLES A. KRUGEL HUMAN RESOURCES ATTORNEY & COUNSELOR LABOR & EMPLOYMENT LAW ON BEHALF OF MANAGEMENT WEDNESDAY, JULY 22, 2009, 2pm-3:30pm CITY HALL, CHICAGO PRESENTATION HANDOUT 1) WHAT IS HUMAN RESOURCES & WHY IT MATTERS 2) EMPLOYMENT AGREEMENTS–TO USE OR NOT TO USE? 3) HOW MUCH DOES AN EMPLOYMENT DISPUTE COST & WHAT’S YOUR LIKELIHOOD OF GETTING INTO AN EMPLOYMENT RELATED DISPUTE? 4) WHAT’S APPROPRIATE TO ASK JOB CANDIDATES? 5) JOB CANDIDATE APPLICATION & SELECTION SUMMARY 6) EMPLOYEE SCREENING & RISK ASSESSMENT 7) INDEPENDENT CONTRACTOR VS EMPLOYEE: CLASSIFICATION ISSUES 8) OVERTIME—EXEMPT VS NONEXEMPT CLASSIFICATIONS 9) UNEMPLOYMENT COMPENSATION 10) ILLINOIS EMPLOYMENT LAWS, Some Laws Likely to be Encountered by Businesses 11) FEDERAL EMPLOYMENT LAWS, Some Laws Likely to be Encountered by Businesses 12) SAMPLE DOCUMENTATION FORM—EMPLOYEE ACTION REPORT 13) FREE RESOURCES FOR RESEARCH 14) INFORMATION ABOUT CHARLES KRUGEL, Practice & Background Summary DISCLAIMER: THE CONTENT CONTAINED IN THIS DOCUMENT IS GENERAL & INSTRUCTIVE INFORMATION ONLY; IT’S NOT INTENDED AS LEGAL ADVICE. THIS INFORMATION ISN’T INTENDED TO CREATE & DOESN’T CREATE AN ATTORNEY-CLIENT RELATIONSHIP. READERS SHOULD NOT ACT UPON THIS INFORMATION WITHOUT FIRST CONSULTING WITH AN ATTORNEY. Charles A. Krugel www.charlesakrugel.com 312-804-3851 cak1@charlesakrugel.com
  • 2. What is Human Resources & Why It Matters Human resources (HR-also referred to as human capital) is the However, time, energy & money spent upfront, or proactively, management of employees as a capital asset. A business on HR related matters could help to reduce, & in certain acquires & manages employees in a manner similar to the instances eliminate, the loss of money out the "back door." acquisition & management of any other capital asset. Now Thus, HR becomes an investment in capital. Time, energy & what exactly does this entail? money are saved & increased productivity & profits result. The cost of employment related disputes & the savings associated Employees are obviously human & a business resource. with proactive & preventive practices are examined later. However, in the same way that machinery or equipment is capital that is acquired, utilized, appreciates or depreciates in Knowing which HR practices to adopt & which HR disciplines value, & which can be improved, sold or discarded, HR relates to focus on is crucial in resolving macro & micro HR issues. to the management of employees in a similar fashion. Effective HR helps transform business from just a place to Although this explanation may seem callous, when further work into a company that provides employees varied scrutinized it is evident that HR pays as much attention to the opportunities for meaningful contributions. Meaningful "human" half of its name as it does to the "resources" half. employee contributions lead to decreased operating costs, increased profits & innovation. Implicit in this explanation is HR concerns the approach & ideology a business adopts for its the fact that results are measurable via before & after analyses culture & its employee life cycle. It’s how a business enhances & time & expense audits. & protects its human assets, & ultimately how a business maximizes profits. Recruiting, selecting, compensating, Labor & Employment Law Defined motivating, maintaining & promoting employees are all part of Labor & employment law generally refers to the body of law HR. Consequently, to some extent, all businesses with more regulating the workplace & all HR/human capital related than one employee practice HR. Yet, an effective HR matters. However, labor law & employment law are two philosophy has to acknowledge that because employees affect distinct categories which are often confused with one another every facet of business, employees & HR affect profit. because they somewhat overlap. Therefore, in order to increase profit & decrease expenses, Labor law usually refers to the body of law regulating labor management must know how to treat employees in a way that unions & associations & their relationship with management. enhances their value. Ultimately, effective HR helps to Such laws include the National Labor Relations Act & other maximize profit by minimizing employment related expenses & similar federal, state & local labor laws. These laws permit maximizing employee performance. employee organizing, electing representation & entering into legally binding contracts with management. In U.S. industry, modern HR theories date back to the Industrial Revolution. Moreover, since the Industrial Generally, employment law concerns the body of law & rules Revolution, HR has evolved along with changes in production, regulating civil rights & workplace conduct. Civil rights include distribution, finance &, perhaps most importantly, legal & civil a workplace free from discrimination & harassment for all rights. HR poses problems for a business when it fails to people (not just employees, it could be customers or the understand how these changes influence macro & micro HR. public) who fit into one of the legally protected classes (e.g., race, gender, disability, national origin, religion, military status, Micro & Macro HR pregnancy, & in some instances sexual or gender orientation). Macro HR is the strategic function of HR in a particular Conduct laws refer to the employer’s treatment of its company. It encompasses the understanding of what HR employees. Like labor laws, these are federal, state & local means to a business; that is, how HR fits into the laws. organization’s structure, mission & planning. Macro HR further incorporates policy & practice development. It’s the “big Labor & Employee Relations Defined picture” stuff of HR. On the macro HR level, labor relations refers to the philosophy a business adopts for dealing with labor unions, union Micro HR is the actual execution of duties as delineated at the organizing & employee associations. On the micro level, this macro level. These duties include the administration of refers to practices & rules for dealing with individual employee policies regarding the usual core functions of HR (see above). issues concerning unions & associations. How Macro & Micro HR Impact the Bottom Line Employee relations refers to the ideology (macro) a business As stated above, a business will encounter difficulties when it adopts for dealing with harassment & discrimination & other fails to account for changes to macro & micro HR practices & employee issues. This is generally unrelated to labor unions or changes to our labor & employment laws. Such difficulties employee associations. This may include communication, include an unsafe workplace, attendance issues, employee discipline, recognition & payroll policies. On the micro level, it conflict, union organizing & litigation. Simply stated, when a generally refers to how laws & rules are applied to individual or business encounters HR related problems, money is lost. groups of employees. Businesses have money coming in through the "front door" via revenue, venture capital, grants, investors, etc. However, much of this money can exit through the "back door" because of poor HR practices. For instance, time & money is lost when a business realizes that it hired the wrong employee & may now have to discharge that employee. Consequently, that business will have to spend money & time finding & training a new employee & may even have to defend its treatment & discharge of the former employee. Recognizing & efficiently resolving these problems often costs a great deal of time, energy & money. Charles Krugel’s Seminar Handout, 7/22/09, Page 2/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 3. Employment Agreements–to Use or Not to Use? These agreements are used to protect employers Obviously, the most extreme action an employer can from a variety of problems: legally take is to sue the ex-employee for violating the • To discourage some sort of employee conduct agreement. But, a lawsuit costs a lot of time & (e.g., noncompete or nonsolicitation), or to money, even if damages, costs & expenses can be identify conditions & terms of employment; recovered from the employee. • During pre-hire to define wages, hours, benefits, A lawsuit or some other sort of complaint filed by the confidentiality, protection of business secrets & ex-employee might be easier to deal with. As long as other similar information; the terms of the agreement’s confidentiality, • Upon separation of employment as a sort of nondisclosure & other prohibitions are legally insurance to obtain a waiver of any legal or compliant, no court or other tribunal should statutory claims, provide unearned severance or adjudicate a lawsuit or complaint against the separation benefits; & employer, & costs, expenses & damages should be • During employment for promotions, demotions, awarded to the employer. wage deductions, garnishments, & waiver of any legal or statutory rights. Clients typically ask whether entering into an employment agreement creates a legal precedent When considering whether to use such an within their company or a feeling or belief of agreement, a business should determine the entitlement to such a benefit among employees. In following: short, it’s not likely that the company will be legally • What employee (or ex-employee) conduct is obligated to offer the same benefit. However, if being encouraged or discouraged? others learn about such agreements, there’s a greater degree of possibility that complications like a • What’s being protected? What’s the value of the sense of entitlement will result. So, when deciding protected information or items? whether to use employment agreements, a business • What will it cost to enforce the agreement in case should consider the impact on employee morale & of violation? What are the actual & foreseeable the legal ramifications of using such an agreement. damages due to violation? • How much is lost vs. saved or gained by using The concerns regarding employee morale & feelings these agreements? It’s all about the money. of entitlement can be combated by using these • Should the language & format of the agreement agreements infrequently or in extreme circumstances reflect the business’ employment policies in tone (e.g., in order to protect company confidentiality, & language, or is it a completely isolated capital, etc.), & making it clear to employees that they document? are at-will employees (if applicable). No hard & fast rules exist for when & how to In other words, it’s relatively easy in an article like this incorporate employment agreements, & for the most to state in a generic & sterile manner what should or part, they’re not legally required unless certain shouldn’t be done. It’s a completely different matter circumstances exist such as to waive any legal or to actually draft & execute an agreement in a way statutory claims, or to legally bind the other party to that sufficiently communicates that this is an isolated some sort of obligation. & unique circumstance, & a serious & binding agreement with provisions that must be honored. Special attention must be paid to every aspect of wording, organization/layout & legal compliance. In short, how employment agreements are Conciseness, plain language & thoroughness cannot implemented is crucial. Issues with execution are be stressed enough. what lead to misunderstandings & disputes. But, many of these issues are avoidable & resolvable via However, all agreements should permit the employer a professionally drafted & executed agreements & to recover damages, costs & expenses from the the advice of competent legal counsel. employee or other party (assuming law permits such recovery). This won’t absolutely prevent a breach from occurring, but it’s a great preventive measure. Enforceability of agreements is often an issue because if a breach occurs, the employer still needs to take enforcement action. This does not necessarily mean that the employer has to sue. The employer can issue some type of warning (letter, phone call, etc.), or the employer can contact the opposing party. The latter action poses its own risks due to ethical concerns, antitrust, defamation, libel & slander concerns. Charles Krugel’s Seminar Handout, 7/22/09, Page 3/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 4. How Much Money Does an Employment Dispute Cost & What’s Your Likelihood of Getting Into an Employment Related Dispute or Being Sued? The Cost One approach to determining cost is past experience. I’ve still cost money to handle & resolve. From “Working Up a settled employment cases at the administrative level for as Suit” by Barbara Bowers, Best’s Review, Jan. 2005, Vol. 105, little as $1,000. However, past performance is neither a Issue 9. reliable predictor nor a guarantee of future performance. According to the EEOC, they filed: Here’s another way to compute the cost of a dispute: If a 403 in FY 2006 (FY 10/1–9/30), complaint is filed with an administrative agency such as the 362 in FY 2007; & oddly enough declined to Equal Employment Opportunity Commission (EEOC), a 325 in FY 2008, the lowest in 12 years. business should expect to pay a minimum of 5 hours for The monetary benefits paid over all of these suits averaged attorney’s fees to just negotiate a quick settlement. Thus, if $110k in 2006, $151k in 2007 & skyrocketed to $315k in attorney’s fees are $250/hour, miscellaneous costs are 2008. From www.eeoc.gov. $50, & the settlement reached is $1,000, that’s $2,300. This doesn’t even include the cost of employees spending Regarding money paid on all complaints, not including time away from work to deal with this matter, & any other lawsuits, from fiscal years 2000-2005 an average of $251.8 transportation, gas or lost sales, profits, etc. If the case million was paid by businesses. From www.eeoc.gov. isn’t quickly settled or if it proceeds to court, then we’re looking at additional expense. Interestingly, the number of actual charges filed with the EEOC by employees has increased. From FY Another cost is the employee’s damages. Damages may include back pay & benefits, front pay, punitive or 1997-FY 2001, an annual average of 79,690 charges exemplary damages, reinstatement or promotion. were filed. In FY 2002, the most charges in the last Furthermore, a court or agency may order training (e.g., 11 FYs were filed—84,442. The number dropped to diversity & harassment), affirmative action & monitoring. 81,293 in FY 2003; 79,432 in 2004; 75,428 in 2005; & Those are additional & substantial costs that the business 75,768 in 2006. But, in FY 2007, the number of may bear. charges filed increased to 82,792, & in FY 2008 According to Jury Verdict Research (JVR), which compiles jumped to 95,402. From http://www.eeoc.gov. samples of employment discrimination verdicts for analysis, The above numbers just relate to the EEOC. This the median compensatory award for employment related leaves out the courts, the Illinois Department of cases, among all economic sectors: Rose from $200k in 2006 to $252k in 2007; Human Rights, the Cook County Commission on Overall from 2001-2007 the median award rose Human Rights, the federal & state labor departments, from $147.5k to $252k or 70%. labor boards, Homeland Security, etc. There’s a lot From 2001-2007, the median verdict in federal of money at stake here. court discrimination cases was $175k, but it was $250k for state court verdicts; As I said before, it’s much cheaper to prevent these Among settlement of cases, 23 % resulted in problems from arising via proactive or preventive payments of $100,000 to $250,000; about 18% human resources. For example, according to JVR: were over $250,000; & It costs $5,000 to train 200 employees at $25 These above award and settlement amounts are each on employment issues such as exclusive of legal fees—both claimants and harassment & discrimination. defense fees. Cumulative legal fees sometimes If that same company is sued, the cost to exceed the cost of liability. litigate the case is approximately $155,000, & According to insurance industry research: the cost to settle is about $85,000. The general cost to settle a “frivolous employment Yet, the cost to litigate or settle an individual case is $30,000-$40,000 (per a March 2005 case, when no training occurs, is $960,750 to statement from a Senior Vice President of London litigate & $304,000 to settle. American General Agency; & From “Risk Management–Why Train?” 2006,www.emtrain.com, 550 employment related lawsuits are filed every citing JVR’s “Employment Practice Liability: Jury Award Trends & Statistics, 2005 Edition. day (per a March 2005 statement from a Vice President of the National Union Fire Insurance In short, it pays for almost any business of any size, Company). From: “Heads Up! Employees at Large,” in to have a basic understanding of human resources & www.insurancejournal.com. employment law, & to have access to a great labor & employment attorney. The Likelihood of Getting Into a Dispute Some statistics compiled by government & private industry might help to determine the probability of an employment related complaint or suit being filed, in addition to the cost to settle or litigate these complaints. According to a 2004 Chubb Insurance (www.chubb.com) survey, during the previous few years, 1 in 4 or 25% of privately held companies have been sued by an employee or former employee. However, it’s estimated that 75% of these claims are groundless. Nevertheless, these claims Charles Krugel’s Seminar Handout, 7/22/09, Page 4/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 5. What’s Appropriate to Ask Job Candidates? Although there are only a few explicitly illegal questions that Regarding military record, you cannot ask about discharge. an employer should never ask a job applicant, there are You can ask about the applicant’s education, training & work many other questions which might lead to the inference that experience while in the military. the employer is discriminating a member of a protected class. One way to help minimize liability for discrimination is to ask Relative to languages spoken, if the job requires language all applicants all of the same questions. fluency, other than English, then you can ask if the applicant has that ability. However, you shouldn’t ask what the Additionally, it’s crucial to focus on questions related to the applicant’s native language is. This could lead to an essential job functions. Or, put another way, are the inference of national origin or race discrimination. questions asked intended to solicit information connected to the applicant’s ability & willingness to perform the essential It used to be asked of applicants what clubs, organizations, job functions, or are they more indicative of illegal bias? In or societies they belonged to. Now, due to their association almost all cases, it’s not an essential job function to be of a with excluding members of protected classes, these certain race, age, sex, sexual orientation, etc. Exceptions questions are unadvisable. You can ask about membership are extremely limited. or associations only if they directly relate to the applicant’s ability to perform the essential job functions. E.g., “We Don’t ask questions to determine if the applicant has children expect you to become involved with local chambers of or dependents, or plans to start a family. Such questions commerce, because this is how we develop new business & include asking about the number of children, having a alliances. Do you have problem with this?” babysitter or even if the applicant has a car (unless, the job requires that the applicant has their own transportation). If Relative to time off from work, work related injuries or the candidate indicates that they’re pregnant, then worker’s compensation, you should never ask if the applicant congratulate them, but don’t relate their pregnancy to the job has ever filed for worker’s compensation, unemployment unless they indicate a need for some sort of accommodation. compensation or if they have ever sued or filed a complaint against a prior employer. Also, you should never ask if the Questions to determine an applicant’s reliability are okay. applicant had any prior work related injuries. Again, you can Such questions include asking what hours & days the person ask if there are specific days or times that the applicant can’t can work, specific days or times they can’t work, or if they work, or if the applicant can do the essential job functions. have outside responsibilities that will interfere with work. You can ask behavior oriented questions such as how the Relative to an applicant’s national origin, don’t ask questions applicant handled prior workplace disruptions or disputes, or to determine where the candidate is from. It’s okay to ask if how they would handle job related issues or matters that are the applicant is legally eligible to work in the U.S., or if they related to the position. have ever worked under another name. Asking about religious & ideological beliefs, associations or With respect to arrest & conviction records, you can’t ask if affiliations is usually indicative of illegal bias. They rarely, if the applicant has ever been arrested. You can ask if they ever, relate to the essential job duties & will only serve as an have ever been convicted of a crime. If they’ve been invitation to lawsuits. An exception is if your organization or convicted, then you could also ask what, when & how the business is a religious organization. case was resolved. Essentially, you should only be concerned with a criminal conviction if such information Don’t ask about gender or sexuality, including bisexuality, relates to essential functions; e.g., handling money or being homosexuality or trasngenderism. Don’t ask about titles around kids. Moreover, the date of conviction may be such as Mr., Ms., Mrs. or Miss. relevant depending on the magnitude of the crime. For Previous addresses (residential) have traditionally been example, 5 years after conviction or completion of the asked on job applications & interviews. Such information is sentence or probation could be a good cut off date for lesser rarely related to job duties, skills, abilities or knowledge. So, felonies. Also, acquire an applicant’s written don’t make this inquiry. If such information is truly relevant, waiver/permission to do a criminal background check. then you can get this by doing a credit or background check. You can’t ask if a candidate has any physical or mental Also, asking someone when they graduated college or high disabilities. Also, don’t ask if the applicant has an alcohol or school may be indicative of age bias, so don’t ask this. You drug problem, or if they take any medications. Exceptions could ask what kind of education or degrees they have. include if the applicant explicitly & without your solicitation discloses any disability, impairment, drug or medication You can ask an applicant’s date of birth to determine usage. If this is the case, you can ask if they can work the employment eligibility. Use a disclaimer or indicate that the hours & days you specify, or if the applicant has nonwork applicant is being asked only to determine eligibility. related responsibilities which would interfere with their ability to perform the essential job functions. Moreover, you can Some of the information contained in this page was adapted from the ask if the applicant can perform the essential job functions following articles: Society of Human Resource Management with or without an accommodation. Whitepaper-Guidelines on Interview & Employment Application Questions” by Nail & Scharinger, 1998, 1999, 2002; Society of Relative to credit record & financial history, you cannot ask if Human Resource Management Whitepaper: “ADA Job Interview the applicant owns or rents a home, if they’ve ever had Checklist for Supervisors,” by Pritchard, 1992, 1999, 2002; & “333 wages garnished or if they’ve ever declared bankruptcy. You Interviewing Questions,” by Borgman Associates, 1993. can disclose that you’ll be conducting a pre or post job offer credit check in compliance with the Fair Credit Reporting Act & the Consumer Credit Reporting Reform Act (obtain candidate’s written permission to check). Charles Krugel’s Seminar Handout, 7/22/09, Page 5/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 6. Job Candidate Application & Selection Summary Focus on the essential functions of the job. Describe a situation where your Essential job functions usually defined by a valid employer asked you to do something job description. which you believe may have been unethical or unprofitable for the For all candidates: business? How did you handle this? Ask the same questions, What was the outcome? Use the same background checking processes, use the same tests; & Background Checking—Compliance with federal Score/assess the same way; i.e., don’t laws like the Fair Credit Reporting Act, Consumer adjust scoring/assessment system unless Credit Protection Act & state law like the Illinois for a valid &/or legal purpose. Uniform Conviction Information Act is contingent upon: Don’t discriminate in the hiring process on the disclosure of the background check; basis of any protected class (see below), unless: disclosure of the reason for mandated pursuant to a legally binding background check; order or agreement, or procurement of candidate or you’re doing so based on a “bona fide employee’s written release(s)—could occupational qualification.” be more than 1 release depending on the checks conducted. Can ask if candidate can perform the essential job Also: functions with or without a reasonable subsequent to the selection process, if accommodation. a candidate or employee is rejected as Reasonableness is generally a result of the check, then provide that contingent upon why needed, cost & person with the relevant part of the feasibility. report & summary of rights/ recourse options. Don’t ask questions intended to elicit, or which unintentionally elicit, information regarding: Per the Illinois Criminal Identification Act you can’t race ask job applicants to disclose criminal convictions gender which have been expunged or sealed, & you can’t religious beliefs ask if applicant has any expunged or sealed age convictions & records. sexual orientation disability Employment Testing: military status Make sure that the test is valid, reliable socioeconomic status-own home, rent & used for the purpose(s) intended. home, how will pay for home, education, etc. national origin. Currently, it’s popular to ask behavioral questions. These questions might be useful as they’re generally nondiscriminatory, & they elicit performance & conduct related information. Examples of such questions include: Describe a situation in which you & another coworker conflicted. What happened? How did you deal with the situation? How was the situation resolved? Charles Krugel’s Seminar Handout, 7/22/09, Page 6/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 7. Employee Screening & Risk Assessment Co-Authored by Tony Ramos & Charles Krugel Recent headlines of workplace violence, violence by home method, check all candidates & employees, conduct the service personnel, as well as convicted rapists working as search in a good faith & reasonable manner, & use the private security officers or childcare providers, have raised results of those checks in a good faith & reasonable fashion. serious questions regarding employee screening programs. As with all human resources related matters, in order to minimize expense & legal exposure, focus on prevention & What is negligent hiring? proaction--research your screener & work with them to best Should all companies be expected to have a screening determine what you need & why you need it. policy? Does every employee need to be screened? Vendor Selection - Tony Ramos What is considered an acceptable screening program? Selecting the wrong screening vendor can be equal to or How much should a company expect to pay for more devastating than hiring the wrong employee. The screening? wrong vendor can provide you with nothing more than a false What can it cost a company should they chose not to sense of security. have a screening program? Are all screening companies alike? Select a vendor who has the knowledge, experience & can clearly explain your screening options & their limitations. According to attorney Charles Krugel: Typical choices include state, county court, national criminal Negligent hiring & negligent retention lawsuits are increasing, databases & fingerprint searches. There are also choices of & so are employer expense & liability as a result of these supplemental screening options which include driving record, suits. Underlying the idea of negligent hiring & retention is an credit reports, workers compensation, employment history, employer's legal responsibility to provide employees, educational history & civil records as well. Your vendor can customers & the public a reasonably safe environment, & the assist you in developing the right plan to match your needs. liability imputed to employers when they fail to exercise Basic Program reasonable care in providing such an environment. It's when Vendor Selection this failure occurs that as an employer, your business, could o Select a vendor who can demonstrate a national be held liable for negligent hiring or retention. hit rate of at least 10%. Hit rate is the most Consequently, from a cost containment & legal liability effective way to determine the quality of the perspective, it's increasingly crucial that businesses conduct service. In short, for every 100 applicants criminal background checks, conduct such checks in a screened, the vendor should be finding at least 10 competent manner & take reasonable action as a result of with a criminal record. Don’t be surprised if a these inquiries. This means that if an employer undertakes vendor is hesitant or actually refuses to provide criminal background checking, in order to avoid legal liability, this information. Many operate with only a 6% or it should carefully choose who does the screening as well as less hit-rate. what’s searched. Social Security Trace o This will help validate the number & provide up to Although, Illinois doesn't require many businesses to screen ten-years of past residential history & names or job candidates (most education & social service aliases used. organizations are required to screen candidates), & the County-court Record Search Illinois Human Rights Act mandates that an employer cannot o Counties to be searched should be selected use a candidate's "arrest record" as the basis for denial of based on the results of the trace & never from the employment (narrow exceptions exist), the possible liability job application. This will also provide you with the resulting from a business' failure to screen can cripple that most accurate & current information available. business. According to a 2001 report by the Society of National Criminal Database Search Human Resources Management & American Background o For a more comprehensive program, include a Information Services, Inc., the average settlement for national criminal database search. Important negligent hiring lawsuits exceeds $1.6 million. note, database findings must be verified by court records before acting upon them. Also, databases Obviously, much of the burden falls on employers, with the searches should only be used to supplement an guidance of competent legal counsel & screening actual court record search & not in place of. professionals, to determine what constitutes a competent FCRA (Fair Credit Reporting Act) Compliant background search. Generally, such a search is based upon o Ensure your vendor is fully FCRA compliant, this the essential requirements of the position & the industry's will provide you with additional protective particular circumstances. immunity against some civil lawsuits. Usually, courts don't examine why screening is done. The Cost courts look at why the essential duties of the job, & the o While there are many factors such as volume & particulars of the business' industry, necessitate the need to types of screening options selected which screen out convicted criminals, & which types of crimes determine the actual cost, one can expect to pay prevent a candidate from being hired. Therefore, just $20 to $35 per person. knowing that a job candidate has been convicted of a crime Co-Author: Tony Ramos, tramos@intergasecurity.org, has also may not be enough to insulate your business from liability. authored “The Guide to Background Checks” which he developed for You’ll probably need to know the exact nature of the the Illinois Association of Chiefs of Police & is available for download conviction & connect it to the job. from his web-site at www.integrasecuirty.org In short, as a business, if you undertake criminal record checking, then choose a competent screener & screening Charles Krugel’s Seminar Handout, 7/22/09, Page 7/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 8. Independent Contractor vs. Employee: Summary of Classification Issues Advantage of the independent contractor classification: secondary schools), outside sales employees, Avoid federal & state withholding taxes. & certain skilled computer professionals; Disadvantage: Employees of certain seasonal amusement or If improperly classified (intent is irrelevant), recreational establishments; then penalty may include payment of taxes by Employees of certain small newspapers & employer & 5%−25% penalty for each month. switchboard operators of small telephone How to Distinguish Between the Two: companies; Degree of control & independence is the key. Employees in newspaper delivery; & Independent contractors have a great deal of Casual babysitters & persons employed as control over their working conditions, companions to the elderly or infirm. environment, & freedom to work for anyone. The following are examples of workers exempt Such control might include control over from overtime pay requirements: work schedule, when paid, work for other businesses, location of work, Certain commissioned employees of retail or able to maintain separate/distinct service establishments; identity. Auto, truck, trailer, farm implement, boat, or Commission pay might not matter. aircraft salespersons, clerks & mechanics Use own work methods; not trained by employed by non-manufacturing the principal; outside principal’s scope establishments primarily engaged in selling of expertise. these items to ultimate purchasers Use own tools, materials, etc. (consumers, businesses); Closed ended contract/agreement with Railroad & air line employees, taxi drivers, a start & finish date. some employees of motor carriers, & local Employees have little control over the above- delivery employees paid on approved trip rate mentioned factors. plans; Employees are subject to using the Announcers, news editors, & chief engineers employer’s materials, tools, processes, of certain non-metropolitan broadcasting property, etc. stations; Employees generally work within Domestic service workers who reside in their scope of principal’s core services. employers' residences; & Employees of motion picture theaters. See the following for additional information: www.irs.gov. Certain employees may be partially exempt from the overtime pay requirements. These include: Overtime—Exempt vs. Nonexempt Classifications Employees engaged in certain operations on Overtime at a minimum of 11/2 times the regular rate agricultural commodities & employees of of pay is required after 40 hours of work in a certain bulk petroleum distributors; workweek. Employees of hospitals & residential care establishments that have agreements with the Don’t arbitrarily classify. This will probably lead to an employees that they will work 14-day periods illegal classification. in lieu of 7-day workweeks (if the employees Most businesses are covered by the Fair Labor are paid overtime premium pay within the Standards Act. This is the federal law governing requirements of the Act for all hours worked minimum wage & overtime. over eight in a day or 80 in the 14-day work period, whichever is the greater number of Exclusions exists for businesses earning less than overtime hours); & $500k in annual revenue & not engaged in interstate Employees who lack a high school diploma, or commerce or hospitals; institutions primarily engaged who have not completed the eighth grade, who in the care of the sick, aged, mentally ill, or disabled spend part of their workweeks in remedial who reside on the premises; schools for children who reading or training in other basic skills that are are mentally, or physically disabled or gifted; not job-specific. Employers may require such preschools, elementary, & secondary schools & employees to engage in these activities up to institutions of higher education; & federal, state, & local 10 hours in a workweek. Employers must pay government agencies. normal wages for the hours spent in such training but need not pay overtime premium The following are examples of employees exempt from pay for training hours. both the minimum wage & overtime pay requirements: For additional information see: www.dol.gov. Executive, administrative, & professional employees (including teachers & academic administrative personnel in elementary & Charles Krugel’s Seminar Handout, 7/22/09, Page 8/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 9. The Costs of Unemployment Compensation (UC) Claims Co-Authored by David Prosnitz & Charles Krugel Generally, a company’s unemployment tax rate is misconduct standard, vague reasons for firing an experience rated: it goes up or down over time employee often lead to unemployment benefits. More depending on a company’s history with awarded specifically, a former employee will be disqualified from unemployment claims. receiving unemployment benefits if they were terminated for misconduct or they quit for reasons not In Illinois, for example, rates vary between 1.0% & attributable to the employer. 8.2%. The first $12,000 of each employee’s wages will be taxed in 2008. So, a million dollar taxable payroll While many factors are beyond the employer’s control, can have unemployment taxes between $10,000 & the main reason for a company’s unemployment tax $82,000. Obviously, lower tax rates make a difference rate increase or decrease is the eligibility or ineligibility to the bottom line. of former employees who file for UC. If fewer people collect against a company, over time, the company will The actual cost of a claim may vary, since claimants have a lower tax rate. If more people collect against a may collect just 2 weeks or 26. The average claim company, the rate will go higher. If an employer costs an employer $4,200 but claims can cost a successfully contests its unemployment claims, it can company in excess of $10,000. gain control of its unemployment tax rate. Each claim can affect 3 years of unemployment tax Terminating for Misconduct (Including Conduct, rates since state formulas used to assign rates Excessive Absenteeism & Tardiness) ordinarily use a 3 year moving period to assign a tax rate. This is one reason why employers don’t realize Employers should have a UC cost control program & it the expense involved in a single claim. The expense is should consist of three parts. spread over a 3 or 4 year period. First, the employer should discipline & terminate Smaller employers are hit harder by single claims than employees in light of the misconduct standard used by larger ones, though the different impact of a claim on a many UC agencies. Basically, misconduct is an tax rate does not change the actual cost to the intentional or willful act of wrongdoing that does harm employer significantly. The average cost, big firm or or potential harm to the employer & that violates a small, of an unemployment claim is $4,200. known or reasonable rule. Additionally, it’s something Employers can contest the cost of these claims by for which the person had been warned, or the action is fighting unwarranted applications for benefits. of such magnitude that no warning is necessary (e.g., Employees terminated for misconduct or employees theft or violence). who quit for reasons not attributable to the employer Second, the employer should warn appropriately are legally not entitled to unemployment benefits. because prior warnings help prove the willful nature of If employers do not fight unemployment claims, they the last wrongdoing. The UC administration ordinarily are meekly acquiescing to their costs. This permits wants one warning in the year prior to discharge. claimants who behaved badly at work to collect a Generally, it's best if the employer has a progressive reward for their bad behavior & it insures that the warning system though, depending on the nature of an employer pays an unreasonable tax expense. offense, the employer may warn, suspend or terminate at any time. The life of a disciplinary action, from the Eligibility for UC standpoint of the UC system, is a year. So, if after a suspension, the employee has no related incidents for Because UC is a government administered a year, on the next occurrence, progressive discipline bureaucracy, like much of government, it’s not starts over at the warning level. administered in a cost effective, logical or exacting manner. Many factors play a role as to whether & how It helps if the employer behaves as a reasonable an employee will be eligible or ineligible for UC. person might. That is, employees should be terminated only when there is proof of wrongdoing. Usually, if an employee is fired due to intentional The infraction should be serious in the sense that there wrongdoing, refuses reasonable employment & then was harm or potential harm to the employer, the becomes separated, quits for reasons not attributable infraction should violate a known or reasonable rule, & to the employer, or is not able & available for work, the employee should have had an appropriate warning. they’re not eligible for UC. If the employee is A reasonable person will discuss the wrongdoing with separated from employment through no fault of their the employee. This is a check on the employer’s own, whether for lay off, furlough, reduced hours, or reasonableness; & should the employee admit to there appears to be mixed or uncertain causes for wrongdoing, this also is good evidence for the separation (e.g., poor performance, undocumented employer. problems, constructive discharge), then they’ll be eligible for UC. Since an employee must do something Third, employers should document all infractions, discernibly wrong to be denied benefits under the especially ones that lead to termination. This shows Charles Krugel’s Seminar Handout, 7/22/09, Page 9/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 10. that the employer fired the employee for what occurred isn’t proper, unless it’s to document what the at that time, since the form should have been employee or a witness indicated & if it’s completed when the wrongdoing happened. relevant to the incident being documented Recording disciplinary actions in writing may also help the employer remember details they would otherwise When to Contest or Not Contest an UC Claim forget. & the proof of a wrongdoing is often in the details. Documentation is further discussed in the next All unwarranted UC claims should be contested, & they section. should be contested as soon as the claim is received (not after it advances to the appellate levels) & within Also, remember that if an employer discharges an the mandated time period. It’s always cheaper & employee within the first 30 days of employment, easier to contest a claim at the lowest administrative Illinois doesn’t find that business chargeable for UC. level of the claims process. However, employers need to understand that problems When or If to Appeal a Claim such as employee incompetence or performance issues do not usually constitute misconduct. Whenever it’s either cost effective, the employer didn’t Moreover, personality issues or failure to fit into the properly represent itself or wasn’t properly represented workplace aren't sufficient reasons to negate the at the lower level of claims processing. awarding of UC. Attitude, personality, incompetence & performance issues have to be tied to some sort of Following UC Guidelines in Making Terminations willful misconduct by the employee in order for the Relates to Labor & Employment Laws employee to be denied UC. The fact is that in almost all circumstances employers The What, When, Why & How of Documentation can’t take any employment action on the basis of race, sex, national origin, ethnicity, religion, socio economic Documentation is a key to winning UC claims because status, military status, disability, age (40 & older), government bureaucrats are looking for the most marital status, family status, union activity, & in an efficient & professional way to decide claims. The increasing number of jurisdictions—sexual orientation, quality & quantity of information available makes the & any other legally protected class or category. These government official’s job easier. If an employer makes prohibitions equally apply to unemployment the bureaucrat’s job easier, the employer’s effort will be compensation. rewarded. Here’s what the UC administration typically looks for: However, if an employer utilizes the concepts of equal employment opportunity & the misconduct standard, & • Easy to read & understand creates a workplace free from legally prohibited • Consistent—using the same forms, filled out in harassment & discrimination, it’s much easier to the same way, consistent language maintain a legally compliant workplace. Moreover, the employer will be able to minimize their unemployment • Details: Date, time of day, names/signatures, compensation expenses. job titles • Indicate the level of discipline; i.e., 1st warning, Employers need to remember that when documenting incidents or when reporting to a state’s UC agency final warning, probation, etc. they should not make any references to the protected • Quotations or paraphrasing/summarizing of classes unless for the purposes of quoting or employee statements are useful summarizing what another employee said & for • Indicating whether the employee signed or clarifying the record. An employer’s failure to do so received any documentation; or if employee may not just result in the awarding of unemployment refused to sign or receive the same compensation, but may also result in an agency complaint or a lawsuit. • Employment policies/practices that are easy to read & understand Just remember to act without regard to the protected Documentation should be created classes, train the entire workforce & follow company contemporaneously with or ASAP after employment policies. the event to be documented occurs; doing so increases the credibility of the David Prosnitz is the founder & president of documentation Personnel Planners, www.unemployment • Impressions are okay; personal judgments claims.com, a Chicago based unemployment about the employee aren’t compensation cost control company that Indicating that the employee is lying, services more than 800 businesses. nervous, upset, angry is okay Calling the employee a “scumbag,” “piece of *&$@” or any other profanity or name isn’t okay • Any of the documenter’s personal opinions or observations referencing any protected class Charles Krugel’s Seminar Handout, 7/22/09, Page 10/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 11. ILLINOIS LABOR & EMPLOYMENT LAWS Some Laws Likely to Be Encountered by Businesses Act/Law Coverage Basic Requirements Damages/Penalties Attorneys Fees in Must pay all wages owed to an Employer liable for reasonable All employers Wage Action Act employee once separated. attorney’s fees & costs. Fines up to $100 for 1st violation; up to $500 for 2nd violation w/in 1 year; Chicago Clean Smoking banned in enclosed up to $2500 for each additional Indoor Air All employers workplaces. Post appropriate violation w/in 1-year & a 60-day Ordinance signs/notices. suspension or revocation of any permit or license. Can’t discriminate on basis of race, color, sex, age, religion, disability, national origin, Fine of $100 to $500 per violation. Chicago Human ancestry, sexual orientation, All employers Each day a violation continues is a Rights Ordinance marital status, parental status, separate offense. military service, source of income or social status. There are narrowly construed exceptions. Pertains to children under 16; Each violation is a Class A children 14 & 15 years old can misdemeanor. Each day out of work, but employer must obtain Child Labor Law All employers compliance is a separate violation. certification. Limits work to 3 Violations are subject to a fine up to hours on a school day or 18 $5k for each violation. hours in a school week. Can’t discriminate on basis of race, color, sex, age, religion, Actual damages, back pay, disability, national origin, attorney’s fees & costs, fine of $100 Cook County ancestry, sexual orientation, to $500 per violation. Each day a Human Rights All employers marital status, parental status, violation continues is a separate Ordinance military service, source of income offense. Remedial action; e.g., or social status. There are hiring, reinstatement, promotion. narrowly construed exceptions. Expunged or sealed criminal records may not be considered by any private or public entity in employment matters, certification All employers or licensing matters. Applications (except many law for employment must contain Not specified. Probably actual Criminal enforcement or specific language stating damages & equitable relief. Case Identification Act prosecutorial applicant isn’t obligated to decisions may provide explanation. agencies) disclose sealed or expunged records of conviction or arrest. Employers can’t ask if an applicant has had records expunged or sealed. Employer that knowingly fails to comply is subject to a fine of $15 per employee not reported within 21 Directory of New Must report identifying days after being notified by IDES. Hires (part of the information on all new employees All employers An employer conspiring with the Unemployment within 20 days of first workday to new employee to avoid the law is Insurance Act) Illinois Directory of New Hires. guilty of a class B misdemeanor & eligible for a fine no greater than $500 per unreported employee. Charles Krugel’s Seminar Handout, 7/22/09, Page 11/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 12. Act/Law Coverage Basic Requirements Damages/Penalties Employer must publish a notice that drugs (e.g., controlled Employers of 25 or substances) are prohibited in the Suspension of payment, termination Drug Free more & with state of workplace, that actions will be or debarment, ineligibility for any Workplace Act IL contracts or grants taken for policy violations, & that state contract/grant for at least 1 of $5k or more employees must notify employer year, but not more than 5 years. within 5 days of any criminal drug conviction. Up to $1,500 civil penalty per All construction, violation; up to $2,500/violation for Employee trucking, Can’t misclassify “employees” as repeat violations; debarment from Classification Act landscaping, building “independent contractors.” state contracts. Individuals have a & related trades private right of action for $ damages, including fees & costs. Employer providing a job Employment reference to a prospective None specified (but perhaps an Record All employers employer will have civil immunity employer can be held liable for libel, Disclosure Act if it provides truthful & only job slander or defamation?). performance information. Pay equal wages for equal work. Employers of 6 or Exceptions permissible due to Fine of $25 to $100 for each Equal Wage Act more engaged in any differences in skills, abilities, violation. manufacturing training, education, tenure, etc. Illinois Insurance Upon employee separation, Act--Continuation employer must provide Law, Spousal COVERED employee who has All employers with Continuation Law, been enrolled in the plan for at group health None specified although payment of & Dependent least 3 months, prior to insurance & HMO premiums is possible. Child separation, the option to continue contracts in Illinois Continuation Law hospital, surgical & major (state equivalent medical coverage for 9 months of fed. COBRA) for self & dependants. Employers of 15 or Damages include: Cease & desist Can’t discriminate against more working during order, actual damages, emotional employees on basis of race, 20 or more weeks in distress, hiring, reinstatement, color, national origin, sex, age, IL Human Rights the calendar year. promotion, back pay & benefits; marital status, military status, Act But, if disability or attorney’s fees & costs; compliance religion, arrest record or sexual harassment reports; posting of notices; penalty handicap. Maintain records for 1 alleged, then Act payments to the state; loss of state year; indefinitely for complaints. covers all employers contracts for up to 3 years. Employers are required to Illinois Income withhold $100/per day with no limitation. Withholding for All employers pay/salary/compensation Each day in violation is a distinct Support Act pursuant to court ordered child violation. support or spousal maintenance. Charles Krugel’s Seminar Handout, 7/22/09, Page 12/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 13. Act/Law Coverage Basic Requirements Damages/Penalties If conducting criminal Up to $1k for willful violation, plus background checks for IL Uniform All employers actual & general compensatory employment purposes, must Conviction conducting criminal damages, attorney’s fees & costs. obtain applicant’s signature for Information Act background checks Criminal penalties in certain release & maintain on file for at circumstances. least 2 years. Employer’s refusal may be grounds for court action to recover entire amount of the debt from the IL Wage Employer obligated to honor a All private employers employer. Employer can’t fire or Assignment Act valid wage assignment. suspend employee due to wage demands; may be a Class A misdemeanor. Employer must pay all wages at least semi-monthly & within 13 Employer liable for penalty if the IL days of when earned. Must pay Dept. of Labor determines wages wages & unused vacation time owed, & employer doesn’t pay. IL Wage Payment All employers upon end of employment, but not Penalties are 1% per calendar day & Collection Act later than next payday. up to double the amount of the Exclusions for certain exempt award; may be found guilty of a employees & per Class C misdemeanor. contract/agreement. Employer must allow time off for jury duty. Can’t retaliate for time off. FLSA exempt employees Employer may be charged with Jury Act (Right to must be paid (offset for nominal contempt of court & any damages Time Off for Jury All employers jury duty pay permitted). for lost wages & benefits. Also, if Duty) Employee must provide employer employee fired then reinstatement. a copy of the summons within 10 days of the date of issuance of the summons to the employee. Employer must pay for Medical prescreening or post offer Violations are a petty offense & Examination of All employers medical exam, if exam is a carry a fine of up to $100 for each Employees Act condition of hiring or offense. employment. Workers 18 & older; Payment of back wages, legal Minimum Wage 4 or more costs, attorneys’ fees. Other Starting 7/1/09 $8.00/hour; & Law employees, penalties including punitive 7/1/10 $8.25/hour. (Illinois) excluding family damages (up to 20% of back members wages) may apply. Employer must provide non- executive & non-professional employees 24 consecutive hours off in every calendar week. Most employers Exceptions include part-time Each violation incurs potential fine One Day Rest in (exclusions for employee working less than 20 of $25 to $100. Also may be found Seven Act emergency, safety & hours, emergencies, security guilty of a petty offense. security workers) guards. A 20 minute minimum break/meal period is required for each 7 ½ hours of consecutive work. Charles Krugel’s Seminar Handout, 7/22/09, Page 13/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 14. Act/Law Coverage Basic Requirements Damages/Penalties Each violation is a petty offense. At least 2-times/year, let Failure to comply may be contempt employees inspect their files & Personnel Record of court. Actual damages, costs & 5 or more employees add own statements or rebuttals. Review Act fees may be awarded. Willful & Records are documents used for knowing violations are fineable at hiring or other personnel actions. $200/violation. Guilty of Class A misdemeanor. Many employers with Employer must pay the state’s Back pay (pay the variance), Prevailing Wage public works stipulated minimum wage for subject to minimum 20% penalties Act contracts or work. The wage is set by a & 2% punitive damages. Multiple subcontracts board. violations may lead to 2-year debarment. Can’t discriminate for lawful activities outside of work. No Right to Privacy in All employers, inquiry of employee or prior Actual damages, costs & fees the Workplace except some employers whether employee awardable. If willful violation, then a Act nonprofits has previously filed a worker’s $200 fine. compensation claim or occupational disease claim. All employers who Employer must pay sales contract with sales representative according to terms Sales Up to 3-times the amount owed people on a of contract, past practice or Representative (exemplary damages), attorney’s commission basis; industry custom. Commission Act fees & court costs. only covers most must be paid within 13 days of goods (not services) separation/last day. Must allow employees who are elected officials of local Time Off for government or school board time Official Meetings All employers off for official meetings None specified Act (employee must provide advance notice). No retaliation attending. Time off can be unpaid. Upon advance notice, employer must allow employees to leave Time-Off for All employers work for 2-hour period between None specified Voting opening & closing of polls to vote. Can be nonpaid. Must inform Dept. of Labor & employees of potential hazards, safety precautions & emergency procedures concerning exposure $1k/violation & not more than $10k 5 or more full-time to toxic substances in the for each willful or repetitive violation. Toxic Substances employees or at workplace which pose known Punitive damages up to 10-times Disclosure to least 20 full & part suspected health hazards & the total penalty or $20k (whichever Employees Act time employees which may cause death or is larger). Back pay, attorney fees more employees serious physical harm. Must & costs. Reinstate employee. label all toxic substances & train Institute training programs. all routinely exposed. Exemptions based on industry, substances faced & other factors. Charles Krugel’s Seminar Handout, 7/22/09, Page 14/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 15. Act/Law Coverage Basic Requirements Damages/Penalties Failing to report hires may result in a penalty equal to the lesser of (a) $5 for each $10k of the total wages Must pay unemployment paid by employer during the period insurance contributions to IL, (quarter), or (b) $2,500 for each Unemployment must file a quarterly Employer’s All employers month failing to report. Employer Insurance Act Contribution & Wage Report, & who willfully fails to pay any report all new hires within 30 required contribution shall be days. required to pay those contributions plus a penalty equal to 60% of the amount of the unpaid contributions. Pay damages equal to the amount of wages, salary, employment benefits, public assistance, or other 50 or more Victims of domestic violence, or compensation denied or lost with Victims’ employees (private household member who is a interest; reinstatement, promotion & Economic employers); all state victim, can take up to 12 weeks reasonable accommodations; Security & Safety & local public sector of leave during 12-month period. attorney’s fees, expert witness fees, Act employers Can be unpaid. Post notice. & other costs of the action; penalty of 1% per day to the employee for each day of delay in paying the damages to the employee. If employer refuses or neglects to honor a judicial order, the creditor Employer must notify employee may be able to collect the total Wage Deductions of any withholding/deductions re amount of the debt, plus fees & for Benefit of All employers garnishments. Employer must costs from employer. Employer can Creditors honor court orders for be convicted for Class A garnishments. misdemeanor for retaliating against employee due to deductions. Employers can’t pay minors under age 18 or women an Can be convicted of a Class B Wages of Women oppressive & unreasonable wage All employers misdemeanor, pay back wages, & Minors Act (i.e., less than fair & reasonable attorney’s fees & costs. for the value of the work & less than a living wage). Many federal & state laws Whistle Blower prohibit discriminatory or punitive Criminal & civil penalties, including Statutes (Federal All employers actions against employees who fines & imprisonment. & State) report illegal activities. All employers who Employers must insure or self elect coverage. insure. Pay disability benefits & Workers’ Failure to elect (i.e., Any willful neglect or violation is a expenses for work related Compensation no insurance) petty criminal offense. Monetary injuries. Refrain from retaliating Act exposes employers penalties vary on basis of offense. against employees for pursuing to common law rights under this Act. liability DISCLAIMER: THE CONTENT CONTAINED IN THIS DOCUMENT IS GENERAL & INSTRUCTIVE INFORMATION ONLY; IT’S NOT INTENDED AS LEGAL ADVICE. THIS INFORMATION ISN’T INTENDED TO CREATE & DOESN’T CREATE AN ATTORNEY-CLIENT RELATIONSHIP. READERS SHOULD NOT ACT UPON THIS INFORMATION WITHOUT FIRST CONSULTING WITH AN ATTORNEY. Charles Krugel’s Seminar Handout, 7/22/09, Page 15/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 16. FEDERAL LABOR & EMPLOYMENT LAWS Some Laws Likely to Be Encountered by Small Businesses Act/Law Coverage Basic Requirements Damages/Penalties Discrimination against persons Age 40 years of age or older Back pay, front pay, attorney’s fees & Discrimination in 20 or more prohibited. Includes all terms & costs, equitable relief, liquidated Employment Act employees conditions of employment. Keep damages. (ADEA) records for 3 years. Discrimination in terms or conditions of employment prohibited against qualified individuals with physical or mental disabilities. Reasonable Equitable relief; i.e., reinstatement, Americans with 15 or more accommodation must be promotion, etc.). Back pay, front pay, Disabilities Act employees provided for known disabilities. lost benefits, attorney’s fees & costs, (ADA) Pre-employment physical & compensatory & punitive damages. examinations are limited & disability related inquiries prohibited. Keep records for 1-2 years; indefinitely if charge filed. Compensatory damages, punitive Civil Rights Act of Covers most Prohibits race discrimination; damages, back pay, front pay, 1866 (AKA employers keep records indefinitely. attorney’s fees & costs, & equitable Section 1981) relief (e.g., reinstatement, promotion). Employer who Within 30 days post separation, Consolidated provides group must offer qualified beneficiaries Omnibus Benefits health plans & has the opportunity to purchase $100-$200/day fine per employee Reconciliation Act 20 or more continued coverage. Keep (COBRA) employees records for 6 years. Reinstatement, back pay, restitution Can’t discharge an employee Consumer Credit for garnishments/deductions, civil All employers due to garnishments/wage Protection Act penalties including fines up to $1k deductions for debt. &/or imprisonment up to 1 year. At least 25 Drug Free employees & federal Must have a drug free policy & Suspension of payments, contract Workplace Act contracts of $25k or program. termination, debarment up to 5 years. more All employers except Can’t use lie detectors for pre- government & Employee employment screening or during Hiring, reinstatement, promotion, lost businesses handling Polygraph employment. Can’t take adverse pay, benefits & civil penalties up to controlled Protection Act personnel action for refusing $10k. substances or polygraph. security companies Must fund an insurance system to protect certain kinds of Penalty of up to $1,110/day for retirement benefits; premium noncompliance. Penalty from 5%- Employee Employers that offer payments to the U.S. Pension 100% of the amount concerned for Retirement pension or welfare Benefit Guaranty Corp.; file plans certain violations, mandatory Income Security benefit plans for with the U.S. Dept. of Labor & penalties of up to 20% for violations Act (ERISA) employees follow funding rules requiring all of fiduciary duties. funds held in trust for employees. Keep records for 6 years. Charles Krugel’s Seminar Handout, 7/22/09, Page 16/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 17. Act/Law Coverage Basic Requirements Damages/Penalties Must equally pay men & women for same work. Differences may Back pay, attorney’s fees & costs, Equal Pay Act All employers be based on seniority or bona liquidated damages. fide merit system. All federal Can’t discriminate on basis of contractors & race, color, religion, sex or Executive Order subcontractors with Barred from future contracts, back national origin. Affirmative action #11246 50 or more pay, promotions, seniority credit. plan required. Keep records for employees & $50k or 2 years. more of contracts Fair & Accurate Undoes some of the more Credit onerous employment Same as Fair Credit Reporting Act All employers Transactions Act investigation aspects of the Fair below. of 2003 Credit Reporting Act. Limited use of consumer/credit reports for employment Actual/compensatory damages, decisions. Must make written attorney’s fees & costs, punitive disclosure to the employee & Fair Credit damages, $2.5k fine per violation, All employers obtain written authorization from Reporting Act criminal penalties, for willful & employee. Before adverse knowing violations, including action is taken, employer must imprisonment up to 2 years. provide candidate/employee with the report & summary of rights. Employers must pay all non- Compensatory damages, liquidated exempt employees at least damages, equitable relief, & Fair Labor Covers most federal minimum wage & attorney’s fees & costs. Criminal Standards Act employers overtime for any hours worked in prosecution is possible along with (FLSA) excess of 40 hours in a penalty up to $10k for willful workweek. Narrow exclusions. violations. Must permit employees up to 12 weeks of unpaid leave in any 12- 50 or more Reinstatement &/or promotion, back Family Medical month period for many family employees within 75 pay, benefits, compensatory Leave Act of 1993 related matters. Job is mile radius damages, fees & expenses. protected; health care continued. Keep records for 3 years. Group health plan must have coverage for pre-existing conditions of new employees, Health Insurance Employer who certifications of coverage to $100/day per individual/employee. Portability & provides a group former employees, enrollment Criminal fines up to $250k & Accountability Act health plan & has 2 periods to employees, & imprisonment (limited circumstances). (HIPAA) or more employees protection for mothers & newborns. Restrictions on dissemination of plan participant medical info. & records. Record keeping Can’t hire any person not legally provisions apply to authorized to work in the U.S. Back pay, equitable remedies, fines all employers. So, employers must verify Immigration up to $10k per violation, criminal Employers of 4 or employment eligibility. Can’t Reform & Control sanctions-up to 6 months in prison more may not discriminate in hiring or Act of 1986 &/or $3k fine for each unauthorized discriminate due to discharge due to national employee. national origin/citizenship. Keep records origin/citizenship for 3 years. Charles Krugel’s Seminar Handout, 7/22/09, Page 17/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 18. Act/Law Coverage Basic Requirements Damages/Penalties Can’t threaten or discriminate National Labor against employees engaged in Injunctive/equitable relief. Criminal Relations Act All employers union or concerted activities, fines up to $5k &/or imprisonment up (Employee Free involving a labor organization. to 1 year. Choice Act???) Keep records indefinitely. Must keep workplace free from Penalties up to $7k per violation, recognized hazards likely to penalties up to $7k per day for failure Occupational cause death or serious harm. to control violations, penalties from Safety & Health All employers Maintain records of work related $5k to $70k per willful violation, & Act injuries & illnesses. Keep criminal penalties with a fine up to records for 5 years. $250k & 1 year prison term. Covers all businesses with Can’t discriminate on basis of a federal contracts, disability in terms or conditions of Compensatory damages, back pay, Rehabilitation Act subcontracting employment. Must have an attorney’s fees & costs, equitable of 1973 agreements or affirmative action plan. Keep relief; e.g., reinstatement, promotion. receiving any federal records for 1 year. financial aid Discrimination on basis of race, color, religion, sex & national Title VII of the origin & pregnancy/maternity. Civil Rights Act of Equitable relief; e.g., reinstatement, Covers all employment actions, 1964, Amended 15 or more promotion). Back pay, front pay, lost including hiring, firing, promotion, 1991, 2009 employees benefits, attorney’s fees & costs, & pay, practices & all other terms & (Leadbetter Equal compensatory & punitive damages. conditions of employment. Keep Pay) records for 1 year; indefinite if charge is filed. Uniformed Can’t discriminate against Services applicants or employees on basis Equitable relief, e.g., reinstatement, Employment & of military obligations or promotion, back pay, benefits, All employers Reemployment connection. Allows for attorney’s fees & costs, penalties for Rights Act continuation of benefits during willful violations. (USERRA) military duty. Federal contractors Vietnam Era & subcontractors Must have an affirmative action Reinstatement, hiring, back pay, Veteran’s with contracts or program. Keep records for 2 benefits, debarment, cancellation of Readjustment subcontracts of $25k years. contract. Assistance Act or more Many federal & state laws Whistle Blower prohibit discriminatory or punitive Criminal & civil penalties, including Statutes (Federal All employers actions against employees who fines & imprisonment. & State) report illegal activities. Keep records of complaint indefinitely. Worker Notice of at least 60 days prior to Back pay & benefits, up to 60 days; Adjustment 100 or more closing or layoff of 50 or more $500/day civil penalty, up to 60 days; Retraining & employees employees. attorneys’ fees. Notification Act DISCLAIMER: THE CONTENT CONTAINED IN THIS DOCUMENT IS GENERAL & INSTRUCTIVE INFORMATION ONLY; IT’S NOT INTENDED AS LEGAL ADVICE. THIS INFORMATION ISN’T INTENDED TO CREATE & DOESN’T CREATE AN ATTORNEY-CLIENT RELATIONSHIP. READERS SHOULD NOT ACT UPON THIS INFORMATION WITHOUT FIRST CONSULTING WITH AN ATTORNEY. Charles Krugel’s Seminar Handout, 7/22/09, Page 18/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 19. SAMPLE–EMPLOYEE ACTION REPORT (EAR) Employee’s Name Employee’s S.S./I.D. # (if available) Employee’s Position Title, Department/Division Describe in detail the reason(s) for EAR (e.g., recognition, advisement, discipline–warning, demotion, termination, other/etc.). Be specific, include date(s), time(s), place(s), witnesses, impressions (continue on reverse side or additional sheets). If any further action is needed or to be taken, describe in detail. Employee’s Comments Employee Signature (Signature does not mean employee agrees or disagrees Date with EAR; signature only means that EAR as been discussed with employee). Supervisor’s &/or Preparer’s Signature Date Was EAR discussed with employee? Yes No When?/Date Who discussed EAR w/employee?/Signature & Title When?/Date Use reverse side or additional sheets for additional comments/information Charles Krugel’s Seminar Handout, 7/22/09, Page 19/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 20. FREE RESOURCES FOR RESEARCHING LABOR & EMPLOYMENT LAW There’s a great deal of free high quality information available on the Internet. Many companies, universities, & professional organizations post their HR related policies & related information on the Web. When using search engines such as Google or Yahoo it may be helpful to know what search terms to use. When using the following terms, use quotation marks as they help to reduce the number of frivolous hits. Also, combine terms to reduce excessive & irrelevant hits. The following terms are not all-inclusive & are only suggestive. However, I’ve personally found them to be useful, especially when combined with one another or in conjunction with the name of a statute or regulatory agency, also in quotation marks. Search terms: “workplace behavior,” workplace harassment,” “occupational safety,” “discipline policies,” “discipline procedures,” “human resources policies,” “human resources procedures”, “human resources practices,” “free download,” “free downloads,” “sample policy,” “sample policies,” free, “labor law,” “labor relations,” “employment law,” “employee relations,” “employment relations,” & “labor & employee relations.” All links checked & working as of June 15, 2008. Chuck Krugel’s Website www.charlesakrugel.com The Human Resource Store www.hrstore.com Free Workplace Legal Compliance Posters (all of them) www.ides.state.il.us/employer/pubs/fastfax.asp#posters & http://www.state.il.us/agency/idol/Posters/poster.htm Integra Security Alliance www.integrasecurity.org Under some of the links, there’s useful information regarding screening, security & investigations Personnel Planners, www.unemploymentclaims.com Free information about unemployment compensation Equal Employment Opportunity Commission www.eeoc.gov/employers/overview.html Business & Legal Reports www.blr.com Updates concerning labor & employment law & HR Commerce Clearing House http://hr.cch.com/ Updates concerning labor & employment law & HR 19th Judicial Circuit Court of Illinois www.19thcircuitcourt.state.il.us Excellent starting point for researching federal, state & local law. Well organized & easy to use. Illinois Society for Human Resources Management www.illinoisshrm.org General HR legal & policy information Human Resources Management Association of Chicago www.hrmac.org General HR legal & policy information Illinois Department of Labor www.state.il.us/Agency/idol/ Privacy Rights Clearinghouse (background checking) www.privacyrights.org/workplace.htm Internal Revenue Service www.irs.gov U.S. Department of Labor www.dol.gov Charles Krugel’s Seminar Handout, 7/22/09, Page 20/21 © 2006-2009 Charles A. Krugel; All Rights Reserved
  • 21. A PERSONAL STATEMENT FROM CHARLES KRUGEL – Practice & Background Summary); www.charlesakrugel.com; As a management side labor & employment I was a graduate student representative for each attorney & human resources (HR) consultant, I school’s university senate. During college, I was a have more than 15 years of experience in the field rush chairman & executive board member for my & have been running my own practice for 8-plus fraternity. years; www.charlesakrugel.com. Regarding to civic & association involvement, I'm In my own practice, my clients are small to medium on the following boards of directors: sized companies in a • Member of the Board of Directors of the variety of industries. Greater O'Hare Association (GOA), Besides providing www.greater-ohare.com, & member of traditional labor & the Government Affairs Team. One of employment law Chicagoland's largest business services, I represent associations & one of our most important companies desiring advocates on behalf of business; to institute • Board Chairman for the YMCA Alliance, preventive & the workforce development arm of the proactive HR YMCA’s of Metropolitan Chicago; functions. These functions include • Member of the Young Professionals Board policies & of the Chicago Bar Foundation, the procedures, which charitable arm of the Chicago Bar help to efficiently & Association; & discreetly resolve • Member of the Board of Directors for issues in-house & ChildServ (www.childserv.org), a 100- prevent lawsuits & plus year old child & family advocacy, complaints; they also help to reduce costs & act as housing & adoption organization. catalysts for increasing productivity & profits. Also, I have been legal counsel for the Chicago Relative to results, I have negotiated more than chapter of Bikers Against Child Abuse (BACA); & 100 labor & employment agreements & contracts, I’m a volunteer "big brother"/mentor via the Jewish including noncompete & severance/separation Children's Bureau. &, I’m an active member of the agreements, collective bargaining & related labor Chicago chapter of the Labor & Employment agreements. Also, I have argued more than 11 Relations Association, the Chicagoland Chamber of arbitrations, 13 mediations & 39 agency Commerce (member of the Employment Law & cases/complaints & have resolved 100-plus labor Workforce Quality Committees). grievances & similar in-house complaints & Finally, some personal background information. I'm completed over 100 in-house investigations. a native Chicagoan. Born & raised in West Rogers Moreover, I'm a published author in my field & am Park. I graduated from Rogers Public School. For frequently the subject labor & employment law high school, I graduated from Niles North in Skokie. related TV, radio & newspaper interviews. My It was during childhood that I was indoctrinated website contains most of these interviews. into the ways of business, self-employment & My career choice is the result of a long running entrepreneurship. My father owned & ran his own fascination with workplace behavior, management chain of pharmacies in Chicago for 35 years. My styles, & how & why people pursue particular grandfather was an immigrant businessman who vocations. While in college, I advanced my interest owned his own grocery stores in Chicago. Family by majoring in psychology. After college, I pursued taught me the value of hard work & how to graduate study in industrial/organizational (I/O) compete & succeed in business. psychology with the thought of being an I/O consultant. During my first year of graduate school, I realized that the practice of I/O psychology was too "touchy feely" for me. Consequently, I decided that once I earned my masters degree in I/O psychology, I would attend law school. I earned my law degree (Juris Doctorate) from Ohio Northern University. My MA degree in I/O psychology is from the University of North Carolina at Charlotte. My BS degree in psychology is from Bradley University. During law & graduate schools, Charles Krugel’s Seminar Handout, 7/22/09, Page 21/21 © 2006-2009 Charles A. Krugel; All Rights Reserved

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