Maintaining an effective employee handbook is no easy task. Because handbooks often delve into a wide breadth of issues affecting the day-to-day lives of an employer's employees, crafting an effective handbook requires buy-in from myriad agency stakeholders, including Human Resources, Legal, and Management. Furthermore, handbook policies are shaped by ever-changing federal, state, and local laws, so they must contain timely, precise, and unambiguous language. Consequently, it is no wonder that employers often balk at maintaining an employee handbook. The common question employers ask is "Why bother?" It is paramount that employers understand why the benefits of having a handbook so often outweigh the detriments.
First and foremost, handbooks create clarity. They set expectations between an employer and its employees so those employees know what is expected of them and how they should perform their job responsibilities. To this end, handbooks can advise employees (administrative, employer, or both) of their legal rights, as well as the privileges and benefits of their employment. At the same time, handbooks can minimize employers liability exposure by setting forth a structure to deal with issues as they arise and by ensuring that employees are not surprised by discipline they receive. As a consequence of having a defined process for dealing with issues in the workplace, handbooks ensure that all employees are treated fairly and consistently by giving managers clear guidelines. Finally, as a practical matter, handbooks can save managers time by avoiding the need to answer the same employee question over and over again.
Laws requiring handbooks have any particular components are minimal. However, as a best practice, there are basic policies that no employer handbook should be without. Every handbook should contain a statement clarifying that employment with the agency is "at-will" and that the handbook does not create a contract of any sort. Moreover, handbooks should contain an Equal Employment Opportunity Policy setting forth the agency's commitment not to discriminate against applicants or employees on the basis of any applicable protected classification. Similarly, handbooks should contain an anti-harassment/discrimination policy that explains what these terms are, gives examples of unacceptable behavior, sets forth the complaint procedure for reporting sexual harassment as well as the investigation procedure, and guarantees employees that they will not be retaliated against for reporting harassment. If employer agencies have fifty or more employees, their handbook should contain a policy advising eligible employee how to request leave pursuant to the Family and Medical Leave Act (FMLA). Finally, all handbooks should contain a "safe harbor" provision -- a statement that addresses Fair Labor Standard Act (FLSA) classifications of employees and how to report paycheck mistakes.
Best Practice Recommendation: Work with counsel to create and maintain an employee handbook. Does your handbook clearly set forth the terms, conditions, and privileges of employment at your agency? Does it contain at least the basic policies referenced above? Has counsel reviewed it recently to ensure it complies with current federal, state, and local laws? Reviewing your handbook now can reduce your exposure to liability later.
Top 5 Tips for Department of Labor Audits
Every year, the Wage and Hour Division of the U.S. Department of Labor and its state counterparts (which we will collectively refer to here as the “DOL”) amplify their efforts to enforce wage and hour laws, such as the Fair Labor Standards Act, the Davis-Bacon and Related Acts, the McNamara-O’Hara Service Contract Act, and corresponding state laws and regulations (e.g., Articles 8 and 9 of the New York Labor Law). These agencies typically commence their enforcement efforts by sending written notices to employers requesting that they produce payroll and other business records. In addition, agency investigators often visit the employer’s place of business for inspection of the premises, to interview employees, and to review payroll and other business records that the employer has on site.
An investigation by the DOL can be a protracted process that can cause even the most prepared team to be pulling its hair out. If not navigated carefully, an investigation by the DOL may result in a determination that the company has violated the law and a finding that may result in complete financial devastation to the employer and its principals. Here are five tips that an employer can use to lessen the aggravation and frustration when dealing with a DOL investigation.
Tip No. 1:
Never underestimate the seriousness of the investigation and always be cognizant of the possibility of a problem with the employer’s payroll practices.
Employers’ attitudes towards DOL audits generally fall on the spectrum somewhere between “helpless panic” and a “head in the sand.” Regardless of this reaction, employers must take all DOL investigations seriously. Unlike the Internal Revenue Service (IRS), the DOL has the discretion to reinvestigate an employer as frequently as it chooses. The finding of a wage and hour violation often requires an employer to pay wage restitution, interest, and liquidated damages (which may be as high as 100 percent of the principal underpayment amount). Moreover, the DOL may not only impose an underpayment liability on the business; under the Second Circuit case, Irizarry v. Catsimatidis, it may also impose personal liability on its management staff and owners. Individual owners and managers who are found to have violated wage and hour laws are also exposed to criminal liability under both federal and some state laws (for example, New York Labor Law §§ 198-a & 662(1)).
To fully appreciate the seriousness of the investigation, the employer must come to grips with the fact that it has likely violated wage and hour laws. It should then engage the DOL in earnest discussions to resolve the investigation before the matter is referred for an administrative hearing or escalates into an enforcement proceeding in court. Administrative law judges and courts generally defer to the DOL’s findings against employers absent any proof of arbitrariness, capriciousness, or a complete lack of rational basis substantiating the DOL’s finding. Thus, employers are less likely to achieve a more favorable result in a judicial or quasi-judicial proceeding, and in fact, in many instances, the underlying liability escalates as a result of the matter being referred to an administrative law judge or a court.
Employers should also be aware that their seemingly most loyal employees may be the ones who file claims with the DOL. During the investigation process, employers must exercise the utmost caution in their day-to-day dealings with employees, particularly when it comes to enforcing workplace rules and policies and applying disciplinary measures.
Tip No. 2:
Employers must fully cooperate in the investigation.
DOL investigators possess a tremendous amount of discretion and authority over the investigative process. Employers must be mindful that being uncooperative in the investigation will only aggravate the investigators and render the entire investigation process a costly nightmare for the employer. Therefore, if the investigator perceives the business as failing or refusing to cooperate, severe consequences will ensue. An uncooperative business should expect to be served with subpoenas from the DOL requiring the production of documents or appearances for questioning. Failure to cooperate may further invite court proceedings seeking to compel the business’s cooperation with the investigation. Finally, in response to an uncooperative employer, the DOL is authorized to take the claimants’ allegations alone at their face value for purposes of determining the employer’s underpayment liability.
Employers must engage the DOL with the full intention of cooperating with the investigation. The DOL will be more willing to negotiate with an employer that is fully cooperative—not just on ultimate liability issues, but also in the agency’s willingness to limit the scope of the investigation and in its requests for payroll documents. In the end, employers may find that they will save a lot of money in costs, attorneys’ fees, and restitution payments if they cooperate with the DOL.
Tip No. 3:
Employers should retain counsel.
When it comes to responding to a DOL investigation, the target business should always engage counsel. An employer should never attempt to respond to a government investigation by itself, and a DOL investigation is no exception.
Experienced practitioners can assist the employer in determining its exposure to liability, in assessing the quality of its existing payroll records, and in determining which of its payroll records are responsive to the DOL’s request. Counsel can also assist the employer in negotiating with the DOL on the scope of the DOL’s inquiry and guide the employer in complying with the wage and hour laws at issue. More importantly, able counsel can serve as the employer’s line of defense in the face of the DOL investigation. This is particularly important for employers that are less than fully compliant in their payroll practices.
While we love certified public accountants (CPAs) and accountants and appreciate their expertise, a DOL investigation is not an IRS audit, so they should only play a supporting role in an employer’s investigation defense. Since CPAs and accounting staff are typically entrusted with preparing or maintaining payroll records in the first place, circumstances of the investigation may compel the CPA or accountant to produce documents or information that may expose the employer to further and unanticipated liability. We have encountered too many situations in which a company’s CPAs or accounting staff were designated as the primary representative in a DOL investigation, and their lack of experience in handling DOL investigations often deprived the company of a meaningful opportunity to rebut the DOL’s allegations of underpayment.
Tip No. 4:
Use the investigation as an opportunity to come into compliance.
Employers should do their best to view the DOL as a resource for compliance and to view the investigation as an opportunity to wipe clean all their underpayment liability exposure. Resisting the investigation or continuing to maintain an attitude of denial (that the company did not commit a violation or that compliance is too expensive) will only expose the employer to escalating liability. Coming into compliance is a way to mitigate the employer’s damages: the day that the employer ceases its non-compliant practices is the day its liability is cut off. Moreover, the DOL is more willing to negotiate a settlement with an employer that has demonstrated its willingness to come into compliance.
Tip No. 5:
To the extent possible, gain control over the audit process.
Gaining control over the DOL’s underpayment audit process—to the extent that it’s possible—will increase employers’ chances of resolving the investigation. One way to gain control over the investigation is to limit the scope of payroll records that the employer must provide to the DOL. Since the employer bears the burden of proving compliance in a DOL wage and hour investigation, a finding of violation is largely dependent on the quality of its payroll records. If an employer cooperates in an investigation process, the DOL will generally be willing to negotiate on the scope of production of documents.
Submitting a self-assessment of underpayment to the DOL will also help in guiding the DOL’s audit process. DOL investigators are generally receptive to considering an employer’s own underpayment assessment that is substantiated by its payroll records. In many instances, having such an underpayment assessment may shift the dynamics of the investigation, and move the burden to the DOL, to prove that the employer violated wage and hour laws.
Employers that follow these five tips are much more likely to minimize their wage and hour liability and, perhaps more importantly, to use the audit as an opportunity to reassess their payroll practices. A well-positioned employer may have no reason to fear a DOL investigator’s visit to its workplace.
P. Kramer Rice is a 2013 graduate of the Notre Dame Law School and is currently awaiting admission to the state bar of New York.
Oxana Matveeva is a fraud examiner in the New York City office of Ogletree Deakins
Intellectual Disability Discrimination - What Is It, What Is The Risk?
A federal court jury found in favor of the Equal Employment Opportunity Commission (EEOC), which filed a lawsuit on behalf of employees against their employer, who allowed a hostile working environment to persist for years. The jury awarded the employees, who have intellectual disabilities, $240 million in punitive and compensatory damages under the Americans with Disabilities Act (ADA).
The employees worked in a turkey processing plant. The employees were housed in a poorly-constructed bunkhouse with fire hazards, a leaky roof, and rodent infestation. City officials closed down the bunkhouse in 2009 because of the health and safety issues.
Social workers, who assisted the employees when they needed help finding alternative caretakers or medical treatment, heard stories from the employees about the abusive conduct from their supervisors. The employees stated they were not given time off for illness or injuries, often not allowed to go to the bathroom, were locked in their rooms and, at times, experienced cruel treatment, such as being forced to eat hot peppers as a joke.
Earlier in the year, a judge ordered the employer to pay back wages totaling $1.3 million to settle the fair wage violations. The employer is no longer in business, so payment is uncertain, but the EEOC plans to pursue any assets available to use to satisfy the judgment the court entered on the jury verdict. "Mentally disabled turkey plant workers awarded $240M for years of abuse," www.nbcnews.com (May 1, 2013).
Commentary and Checklist
The ADA prohibits employers from denying equal employment opportunities to qualified applicants and employees on the basis of disability. Not only does the ADA require employers to provide reasonable accommodations for applicants and employees with disabilities, the ADA also prohibits harassment.
Employees with intellectual disabilities, as in the source article, may be unaware of their legal rights, leaving them particularly vulnerable to abuse. Educating all employees on their rights is crucial. Employers who work with those people with intellectual disabilities must take extra steps when needed to make certain that those employees fully understand their rights.
Employers should understand that not only is harassment prohibited by the ADA, abusive behavior that violates the ADA can also be criminal in nature, leading to additional liability.
One of the most important ways employers can prevent harassment is through training. Training of supervisors and managers should include outlining federal and state laws with regard to those with disabilities and information on how to report misconduct. This will enable the employer to take swift action that may prevent a hostile work environment.
Reduce your risk of ADA discrimination risk by considering these steps:
· Review existing discrimination policies, and make sure they cover ADA guidelines
· Train managers and supervisors in preventing disability discrimination and harassment.
· Convey employee communications and training information using both verbal and written communication for employees with intellectual disabilities.
· Monitor working relationships that involve employees with disabilities, and step in immediately if harassment is witnessed or reported.
· Have several reporting avenues employees can access to report harassment or discrimination.
This informational piece was published on June 3, 2013 by Chubb Insurance Company
EEOC Releases 2012 Statistics - The Numbers, A Prediction, And Proof Terminations Are Risky
The Equal Employment Opportunity Commission (EEOC) has released its fiscal year 2012 charge statistics. The Commission's fiscal year runs from October 1 through September 30, but charge statistics were not released to the public until January 28, 2013.
The EEOC received a total of 99,412 charges last year, substantially similar to the 2011 total with only 535 fewer claims-reflecting about a half percent point decrease. Retaliation, race, and gender discrimination charges topped the chart for the most commonly filed claims.
The Commission boasts a second consecutive year of reducing its charge inventory by 10 percent. According to the EEOC, this has not occurred since fiscal year 2002. EEOC Chair Jacqueline A. Berrien commented that, "these remarkable achievements are a credit to the commitment of the EEOC's staff and the product of strategic and efficient investment of critical budget resources in recent years."
The EEOC fielded 122 lawsuits in 2012, including 10 systemic suits, 26 multiple-victim lawsuits with less than 20 victims, and 86 individual lawsuits. With systemic patterns of discrimination high on the Commission's priority list, it conducted 240 systemic investigations last year.
The Commission also reports that the number of charges resolved through successful conciliation increased by 18 percent from 2011. Conciliation is the last step in the EEOC's administrative process prior to litigation.
The EEOC claims several improvements to its resources this past year. Now, its data tables report sexual harassment, harassment generally and pregnancy discrimination filed exclusively with the EEOC. They were formerly combined with charges filed with the EEOC's state agency partners. The change reflects consistency with the reporting of other types of charges.
The EEOC has added the resource of providing Americans with Disabilities Act (ADA) claims by charges received, resolution, and merit factor resolution for each of the different types of impairments reported.
Another feature the Commission added is a table that reveals the types of discriminatory action alleged. For example, in 2012, discharge was the most frequent discriminatory action reported, followed by "terms and conditions" of employment, and next by disciplinary action. "EEOC Reports Nearly 100,000 Job Bias Charges in fiscal year 2012," www.eeoc.gov (Jan. 28, 2013).
Commentary and Checklist
Despite the nominal decrease in EEOC charges, charges have remained well over the 99,000 mark since 2009.
With GDP low, unemployment high, and employer confidence flat to low, EEOC charge numbers for 2013 should remain at or a bit higher than 2012.
Keeping with a trend, retaliation led the way with more than 38 percent of all charges filed. Race charges also topped the chart, despite a 5.3 percent decrease from 2011. Almost 34 percent of complaints alleged race discrimination. Race was followed by gender-based charges with 30.5 percent of all charges, and disability charges came in fourth at 26.5 percent.
Gender discrimination, disability discrimination, and retaliation claims filed under all statutes increased from 2011. Claims filed under the Equal Pay Act and GINA claims also saw an increase.
It is no surprise that the EEOC reports that discharge is the most frequently reported discriminatory action. There were 36,408 Title VII claims alone based on discharge in 2012. Comparably, there were 18,686 Title VII claims alleging that terms and conditions of employment were affected by discrimination, and 10,117 claimants cited discipline as the basis for their Title VII claims.
In a bad economy, employers are at their highest risk of charges of discrimination because discharged employees are less likely to find like employment when terminated or laid off. With the new Congressional Budget Office report predicting that unemployment will remain above 7.5 percent in the near future, employers should not expect this to change in 2013. See Related Link below.
There are ways employers can avoid risk in terminating employees. First, always receive a second opinion before termination. Make certain that behavior or wrongful conduct is not linked to a behavior that cannot be changed such as a person's religious beliefs or a physical disability, for example.
On a personal level, the person performing the termination should remain professional during the process. No one should ever threaten or shame a worker at any time during the process even if the same is done to you. The employee responsible for the termination should keep the termination meeting succinct. The more time allowed, the more time for anger and frustration to build. Finally, no one should perform a termination without having a neutral witness present to observe the process. Neutral witnesses help keep the process civil and lower the chance of charges that the termination process itself was discriminatory or threatening.
Given the challenging economic times, businesses are faced with tough decisions in order to maintain their operations. As represented by a Federal Unemployment Rate hovering at 9%, many American businesses have included employees in their cost cutting measures. While these staff reductions may be necessary and often imperative, they open those businesses to increased Employment Liability.
With the obvious rise in unemployment, it should be no surprise that Employment Practice claims are on the rise. In addition to the frequency of EPLI claims, 2009 saw the highest Discrimination Compensatory Awards ever with Median Damages coming in at $317,032 (as reported by EPLI: Jury Award Trends and Statistics 2010 Edition).
Compounding the liability exposure for businesses are recent activities of both Federal and State governments. The Labor Department recently hired 250 new investigators with the sole function to enforce wage and hour laws. Also, Tennessee’s Supreme Court recently issued two rulings, the effects of which will likely make it more difficult to have a case dismissed with a summary judgment (Kinsler v. Berkline and Gossett v. Tractor Supply Co).
Given the exposures faced by employers today, it is hard to imagine going without EPLI coverage.
When you combine the protection provided by an EPLI policy with the benefit of the HR Tools that most carriers provide it should make for a much easier sell to your clients. Having access to web-based and hotline services will help your insured’s minimize their exposure to loss while providing the comfort of knowing that they are protected should a loss occur.
We multiple carriers that can provide coverage on both a monoline basis and packaged with D&O and Fiduciary coverage based on the needs of your business.
For more information on this or any of our other products, please contact us soon.
EEOC Investigations - What every employer should know
Private employers must abide by federal and state laws to protect their employees and potential employees from discrimination on many bases. Race, color, religion, sex, and national origin are just a few. Other discrimination issues can include, disability, age, genetics, retaliation, and Fair Labor Standards Act Violations.
Current and former employees or even job applicants that feel they have been discriminated against on the aforementioned bases can file a complaint with either the EEOC (Equal Employment Opportunity Commission) or their state’s Human Rights Commission. These government entities enforce federal and state laws that apply to businesses that have as few as 1 employee depending on the law.
EEOC investigations generally requiring the employer to provide the following:
Submit a statement of position Respond to requests for information Permit an on site visit Provide contact information for or have employees available for witness interviews This process typically averages 10 months and insurance carrier on average pay $17,000 in attorney fees.
After the investigation is completed one or more of the following will be determined by the agency:
Letter of Determination stating the reasons the discrimination is believed to have occurred Invite both parties to join the agency to resolve the matter through conciliation Notice of Right to Sue if conciliation fails, the EEOC or HRC can file a lawsuit in federal court or allow the plaintiff to file their own suit within 90 days from the date of receipt Dismissal and Notice of Rights Letter is given to the plaintiff who then has the right to file a lawsuit in federal court within 90 days Statistics show that 55% of discrimination jury verdicts favor the plaintiffs!
Purchasing an EPL policy with broad coverage can help assist and defend employers during this process. -------------------------------------------------------
The Real Life Pain Of Wage And Hour Violations - Every Employer Has Something To Lose
A state agency cites a warehouse operator for wage violations affecting its 865 employees. Workers will receive $1.3 million in overtime, penalties, and meal period violations.
The California citation, which included two warehouses, provided for $1.1 million (overtime and back pay) and $200,000 (penalties).
A labor commission investigation found the warehouse operator "had established restrictive procedures that shorted workers their wages." The warehouse used only three time clocks, resulting in delays as employees arrived at work. Many workers were unable to punch in on time. Long lines were also a problem when employees punched in and out for lunch breaks. The state found the employer altered its time records "to reflect that employees had had a full meal break" when the employees did not have a full meal break.
The employer also penalized workers who complained about their unpaid wages, resulting in disciplinary actions and suspensions of employees who filed complaints.
The employer plans to appeal the ruling and denies any wrongdoing. Albert Sabaté, "Wage Violations at Warehouse Amount to $1.3 Million," abcnews.go.com (Jan. 31, 2013).
According to Federal Judicial Caseload Statistics, the number of FLSA cases filed in federal court between 2010 and 2011 increased more than 15 percent. These case numbers include both single-plaintiff and class action lawsuits and represent a trend that spans 10 years.
Misclassification of employees, inadequate time and pay records, and failure to pay workers for time worked are leading causes for wage and hour lawsuits. Compliance involves keeping good records, letting employees know the rules, including rules for break periods, and knowing both federal and state wage and hour laws.
Employers should make certain that their non-exempt employees receive proper credit for all time spent working on their behalf. Employers who hedge on employee time, or restrict or limit employees when they are on unpaid breaks, create risk.
Employers also should make sure that non-exempt employees receive breaks and other compensated time as required by federal and state laws. State laws may differ from federal law, and many state laws require mandatory paid breaks during the day.
This informational piece was published on March 5, 2013.
Please review carefully!
Information is not an offer to sell insurance. Insurance coverage cannot be bound or changed via submission of this online form/application, email, voice mail or facsimile. No binder, insurance change, addition, and/or deletion to any insurance policy coverage goes into effect unless and until confirmed directly with a licensed agent. Note any proposal of insurance we may present to you will be based upon the values developed and exposures to loss disclosed to us on this online form/application and/or in communications with us. All coverage is subject to the terms, conditions and exclusions of the actual policy issued. Not all policies or coverage is available in every state.
Please contact our office at 918-346-6973 or 918-660-0090 to discuss specific coverage details and your insurance needs. In order to protect your privacy, p/ease do not send us your confidential personal information by unprotected email. Instead, discuss that personal information with us by phone or send by fax.
Statements on this website as to policies and coverage and other content provide general information only and we provide no warranty as to their accuracy. Clients should consult with their licensed agent as to how coverage pertains to their individual situation. Any hypertext links to other sites or vendors are provided as a convenience only. We have no control over those sites or vendors and cannot, therefore, endorse nor guarantee the accuracy of any information provided by those sites or the services provided by those vendors.
Information provided on this website does not constitute professional advice. If you have legal, tax or financial planning questions, you need to contact a qualified professional.