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Top 10 hot topics in employment law

Top 10 hot topics in employment law by Hutchison PLLC and RPG Solutions

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Top 10 hot topics in employment law

  1. 1. Top Ten Hot Topics in Employment Law May 6, 2014
  2. 2. Speakers RPG Solutions www.rpg-solutions.com Erin Spencer, erin@rpg-solutions.com Susan Barbee, susan@rpg-solutions.com Rachel Trunkey, rachel@rpg-solutions.com Sarah Whitehurst sarah@rpg-solutions 7780 Brier Creek Parkway, Ste. 410 | Raleigh, NC Hutchison PLLC www.hutchlaw.com Holly Hammer, hhammer@hutchlaw.com Hallie Miller hmiller@hutchlaw.com 3110 Edwards Mill Rd, Ste. 300 | Raleigh, NC 2
  3. 3. Top 10 Hot Topics 1. Employee v. Independent Contractor 2. Exempt v. Non-Exempt Employee 3. Use of Interns 4. Dept. of Labor (DOL) & Affordable Care Act (ACA) Impacts 5. State of Residence Implications 6. Leave Polices 7. PTO and Financial Implications 8. Life Cycle of an Employee 9. Employment Documentation 10. Compliance 3
  4. 4. Employment Status  Regular (never “permanent”) Full-Time: hired indefinitely and works a full work week (often 40 hours)  Regular Part-Time – hired indefinitely; works less than a full workweek  Temporary/Seasonal – Hired for a specified, limited period (full or part time)  Independent Contractor 4
  5. 5. Employee v. Independent Contractor – Determining Status  3 Main Considerations  Behavioral Control  Direction, Control, Training  Financial Control  Independent Basis for Profit and Loss, Investment, Method of Payment  Relationship of the Parties  Contracts, Duration, Inclusion in Benefits  Services as key to business 5
  6. 6. Employee v. Independent Contractor – Determining Status  Operational Aspects  Employees sign offer letters; independent contractors or consultants sign contracts  Taxes are withheld from employee pay (W-2); contractors are provided a 1099 and required to pay taxes on their own behalf  Employees are eligible for benefits; contractors are not  REGARDLESS of how the employer defines the relationship, governmental agencies use their own tests to determine how to classify the relationship! 6
  7. 7. Results of Misclassification  Fines  Back taxes  Back pay and Overtime  Law suits include Past Benefits (Stock)  Exclusion from State/Federal Contracts  Scenarios: Audit from regulatory agency (e.g., IRS, DOL, NCDOL, NCESC); wage claim by disgruntled contractor; required disclosure against the reps & warranties in a corporate transaction 7
  8. 8. Exempt v. Non-Exempt Compensation Risks of Misclassification DOL Fact Sheets 8
  9. 9. Compensation  Compensation – (FLSA) Fair Labor Standards Act  Non-Exempt: Minimum wage $7.25 (currently) plus overtime (1 ½ regular rate of pay) must be paid to all workers unless exemptions apply  Exempt Employees: (paid a set salary regardless of hours worked)  Executive  Administrative  Learned Professional  Creative Professional  Outside Sales 9
  10. 10. Risks of Misclassification  Legal Risks of Misclassifying Exemption/Not Paying Wages:  Possibility of personal liability  Liquidated damages equal to unpaid wages  Penalties  Interest (3% annually)  Attorneys’ fees  Business risks too!  Cost & Delay to clean up  Transaction Impediments 10
  11. 11. Use of Interns Unpaid v. Paid Internships 11
  12. 12. Unpaid Internships  Similar to training in an educational environment  For the benefit of the intern  No wages received  Does not displace regular employees  Works under close supervision of existing staff  No job entitlement at conclusion  Application Process for School Credit 12
  13. 13. Paid Internships Less likely to have legal ramifications Offer letter with defined language  Part time or temporary  Start and end dates (3 months/semester) Pay minimum wage Be aware of implications of extending the relationship due to ACA and DOL regulations  Hours  Time Frame 13
  14. 14. DOL & ACA Impacts  Determine proper classification of employees  DOL Definition: vague and not clearly outlined  ACA Definition: A full-time employee is defined as an employee working on average 30 hours or more per week for a consecutive time period  RPG advises 3 consecutive months or 90 consecutive days  Variable hour employees – measurement and lookback period is determined by the Employer and can be any increment between 3 – 12 months  Currently all employer mandates have been delayed 14
  15. 15. State of Residence Impacts State-Specific Leave Policies Out-of-State Employees 15
  16. 16. State-Specific Leave Policies  State Specific Leave Polices: Medical, Maternity, Paternity, Sabbatical, Paid Sick Leave - Company size is a factor!  CA, NJ, RI offer paid family and medical leave  CT requires 40 hours of paid sick leave (50+ employees)  NYC Paid Sick Leave, 04/01/14  NC leave policy - 4 hours/year for children’s educational activity (all employers) – N.C. Gen. Stat. § 95-28.3  When to Think About State of Residence Implications  Out-of-State Employees  Remote workers in another state (taxed in state of residence/laws apply as well)  California!!! 16
  17. 17. Out-of-State Employees  Things to Think About with Out-of-State Employees  Minimum Wage  Overtime Calculation (daily or weekly threshold?)  Hiring New employees in another state  Issuing Final Paycheck and Allowed Deductions  Payment of Vacation/Paid Time Off upon Termination  CA: considered a form of earned wages and cannot be forfeited  NC: can disclaim payment on termination in advance of when earned, e.g., in employee handbook provisions  Employee Handbook Provisions 17
  18. 18. Leave Policies Types of Leave Things to Think About 18
  19. 19. Types of Leave  Medical – Family Medical Leave Act (FMLA)  Maternity/Paternity  Sabbatical/Leave of Absence (LOA)  American with Disabilities Act (ADA)  Short Term Disability (STD)  Long Term Disability (LTD)  Paid Time Off (PTO) v. Vacation/Sick Leave 19
  20. 20. Things to Think About  How do all types of Leave work in conjunction with each other?  For example  Maternity with PTO  Maternity with STD  STD and FMLA overlap  ADA Leaves of Absence  LTD and impact on FMLA/ADA  Worker’s Comp 20
  21. 21. Time Away from Work Tracking PTO/Traditional Leave Financial Impacts 21
  22. 22. Tracking Leave  PTO encompasses all type of leave including vacation, sick and personal days  Easy to track due to all being in “one bucket”  Can’t be “broken out” upon termination  Traditional Leave: Vacation and Sick  When are employees required to take leave?  Elimination periods  Inclement weather  Following State Regulations? If unsure, CONSULT YOUR ATTORNEY! 22
  23. 23. Implications of PTO Award Method Accrued  Each Pay period  Liability on the books  May carry over from year to year  Cap for rollover? Granting  Lump sum  Can be granted annually, on Anniversary or calendar schedule  Usually does not carry over from year to year 23 Be consistent & follow your policy! Fringe Benefits in Most States
  24. 24. Financial Implications of Leave  73% of CFO’s surveyed did not know what their company’s PTO liability was  Number of unreported days away from work is very difficult to track  Lack of adequate checks and balances can cost firms 3 to 15 percent of total operating costs - Business Journal Magazine 24
  25. 25. Life Cycle of an Employee Beginning & Maintaining the Relationship and sometimes…. Ending the Relationship 25
  26. 26. Beginning the Relationship  Hiring & Selecting  Start-Up Trend = Too Quick to Hire, Too Long to Fire  Responsibilities for the role & goals to accomplish  Don’t hire just because someone will work for Equity!  Get the right person for the job 26
  27. 27. Hiring & Selecting – Best Practices  Importance of using a Structured Interview  Developing Solid Job Descriptions/Postings  Resume and Phone Screening  Documentation, Interviewing Styles & Scoring  Utilizing HR, Manager and Team Members  Reference Checking What is your company process? 27
  28. 28. Selecting a Candidate: Making an Offer  Offer Letters – should concisely define the employment relationship:  Key business terms  Employment contingencies  Employment Agreement  Business Protection Agreement Employment At-Will!!! 28
  29. 29. Business Protection Agreements (BPAs)  a.k.a. Intellectual Property Protection Agreements  Confidentiality  Ownership of Intellectual Property  Non-solicitation (customers and employees)  Non-competition  Non-disparagement 29
  30. 30. Financial Implications of the Wrong Hire  On average at least ½ of all new hires don’t work out. (Fortune Magazine)  Direct/Indirect turnover costs an average of 5 to 15x’s an EE’s base salary. (Topgrading & Harvard Business)  30% of business failures are due to poor hiring practices. (Department of Commerce)  40%-70% of applicants embellish or falsify information on their resume which places critical value on profiling the real person during the interview. 30
  31. 31. Disciplining an Employee  Discipline policy should be clear and in writing! Understood by EE & Managers  Employee signed Handbook  Reserve the right to skip or repeat steps depending on the circumstances  Goals of Disciplining:  Use behavior modification rather than punishment (demotion, termination)  Encourage managers to coach employees to improve performance  Avoid litigation & Decrease turnover 31
  32. 32. Performance Improvement Plans Define the problem:  What is the inappropriate behavior or skill?  What must change? By when?  What are the employer’s expectations? Set Attainable Goals:  Start and end dates  Short-term and/or long-term goals  Must be reasonable/don’t “set up to fail”  Explain consequences of failure to meet goals  (i.e. suspension, termination, etc…) Follow up 32
  33. 33. Performance Management Documentation  JUST THE FACTS JACK! Appropriate details only  Timely and dated  Kept in a secure location  Established discipline policies were followed  Clear performance or behavioral issues and errors exist  Be careful: Chat Rooms & Emails  Confidentiality with the right people  HIPAA 33
  34. 34. Ending the Relationship  Separations  “Things will get worse before they get better.”  Get More Complicated with More Time  Severance Agreement?  Things to Consider  Final Pay (when, how)  Deductions from Pay  Return of Company Property  Exit Interview  Release & Severance Agreements  Reference Policy 34
  35. 35. Employment Documentation Document Retention HR Best Documentation Practices 35
  36. 36. Employment Documentation  Document Retention-See handout  Current v. Inactive Files  Personnel, Medical, I-9 (3 separate files)  I-9s  1st day, employee must complete/sign Section 1  Employer must physically examine the original documents and record the information in Section 2 within 3 business days  Retain for the longer of 3 years or 1 year after employment ends  E-Verify mandatory for certain federal contractors and for NC employers with 25 or more employees  New hire reporting  Payroll taxes: W-4/NC-4 36
  37. 37. File 1: Personnel/HR  Application and/or resume and references  Executed Offer letter signed  Confidentiality/Non-compete agreement  Handbook Acknowledgement/latest revision  Drug testing policy acknowledgment & consent form  Background check consent form  Performance Evaluation & Self Evaluations  Relevant disciplinary warnings & Performance Improvement Plans  Investigations  Safety training checklist and certified trainings  W4 federal tax form & State tax form (By State of residence)  Direct Deposit Form  401K Forms  Garnishment notices  Salary increases (tracking via personnel change form) 37
  38. 38. File 2: Medical File  Benefit Enrollment Forms, Beneficiary Forms  Medical Excuses and Information  Results of Drug and Background Checks  Managers don’t have access to this file  Medical or confidential records, including anything that has protected information  Worker’s Compensation  Leave of absence documentation (FMLA/non-FMLA) & Disability 38
  39. 39. File 3: I-9’s 1 Company folder with Active I-9 files  File by alphabetical order 1 Company folder with Inactive I-9 files  Make sure to purge based on federal guidelines  Reduces risk 39
  40. 40. Compliance Credit & Background Checks and Best Practices Drug & Alcohol Testing and Best Practices 40
  41. 41. Credit & Background Checks  Governed by Fair Credit Reporting Act (FCRA)  Also state-specific “mini-FCRA” laws and disclosure/authorization requirements  Credit Checks  Must be 100% voluntary by the applicant  Only perform after authorization is accepted and signed  Maintain authorization 41
  42. 42. More on Background Checks  VERY state-specific!!  State FCRA laws restrict information requested in Background Checks:  Ex: NC Senate Bill 91 (eff. Dec. 1, 2013): employers prohibited from requiring disclosure/questioning regarding expunged arrests, charges, convictions. Applicants may omit from referencing.  Increased scrutiny by EEOC - disparate impact/ treatment claims under Title VII 42
  43. 43. Credit & Background Checks – Best Practices  Apply consistently  Must have executed disclosure and authorization form  Keep it separate  List and describe background-checks  Release from Liability will invalidate consent  If Negative Information Disclosed, Proceed with Caution!  FCRA Pre-Adverse Employment Action Letter  After Adverse Action Taken = Additional Requirements  Joint Publication by EEOC and FTC (Mar. 2014) http://www.eeoc.gov/eeoc/publications/upload/eeoc_ftc_ background_checks_employers.pdf 43
  44. 44. Drug & Alcohol Testing Policies  Drug Testing = VERY state specific  Stage Regulations apply  Mandatory v. Permissive  Commercial motor vehicle operators = mandatory federal testing  Generally permissive  NC regulates method of testing (N.C.G.S. § 95-230, et seq.)  Payment for testing time (applicant v. employee) 44
  45. 45. Drug & Alcohol Testing Policies – Best Practices  Have a Written Policy signed by Employee/Applicant  Identify Required Testing: 4 main “triggers”  Pre-employment  “Reasonable suspicion”  Post-accident  Follow-up testing  Cannot be arbitrarily/discretion of employer  Outline Collection & Testing Procedures  Consequences of Failed Test  Confidentiality  Misc: Right to Inspect premises for drug, alcohol, contraband 45
  46. 46. Q&A 46

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  • CharityTolman

    Sep. 28, 2016

Top 10 hot topics in employment law by Hutchison PLLC and RPG Solutions

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