Transcript Why is it important to be familiar with employment laws?

Patrick J. Lamparello
Proskauer Rose LLP
October 1, 2013
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Employers are responsible for knowing the laws, following and enforcing
employment policies, and insuring their employees follow the law
Failure to follow and enforce policies can lead to corporate and personal
liability
High number of employment claims, with significant monetary costs of
litigating
◦ Average cost of litigating a single-plaintiff employment case to conclusion
(excluding cost of settlement) exceeds $100,000
◦ Cost of class actions is significantly more
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Time spent litigating / burden on operations
Effect on business (e.g., publicity, boycotts, reputation of company,
recruiting issues)
Reputation of individuals negatively affected
Effect on employee morale
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Critical to correctly determine
whether individuals providing
services are employees or
independent contractors
Consider degree of control and
independence
◦ Does company control or have right
to control what the worker does and
how the worker does his or her job?
◦ Are business aspects of the worker’s
job controlled by the company? (how
worker is paid, who provides
tools/supplies, etc.)
◦ Are there written contracts or
employee type benefits (i.e. pension
plan, insurance, vacation pay, etc.)?
Generally, you must withhold
income taxes, withhold and
pay Social Security and
Medicare taxes, and pay
unemployment tax on wages
paid to an employee. You do
not generally have to
withhold or pay any taxes on
payments to independent
contractors.
The Basics:
 All time worked above 40 hours in a week
shall be compensated at a rate not less than
one and one-half times the employee’s regular
rate
 Certain employees are “exempted” from
overtime
• Exemptions are narrowly construed
• Title and salary are NOT determinative
• Burden is on the employer to prove each element of
the exemption
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Certain employees “exempted” from overtime and other
requirements:
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Executive
Administrative
Computer Professional
Outside Sales
Professional
Failure to properly classify exempt/non-exempt status
may lead to expensive claims:
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Overtime
Missed meal and rest periods
Penalties
Attorneys’ fees
Minimum Wage
 Currently $7.25/ hour, but set to rise incrementally over the next
3 years
◦ $8.00/hour effective December 31, 2013
◦ $8.75/hour effective December 31, 2014
◦ $9.00/hour effective December 31, 2015
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The minimum wage and overtime laws apply to employees even
if undocumented, paid in cash, or “off the books”
◦ Does not apply to independent contractors
Employers must post the provisions of the Minimum Wage Act
Overtime
 Employers must pay non-exempt employees overtime equal to
1.5 times the employee's regular rate for all hours worked in
excess of 40 hours in a work week
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Employees must be paid one extra hour in addition to his or
her hourly wages if:
◦ The beginning and end of an employee’s workday exceeds 10
hours
◦ The employee works a “split shift”
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Not applicable if employee is compensated sufficiently
above the minimum wage
“Split shift” not applicable for employees in restaurant
industry
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For an employee to be entitled to overtime,
work need not necessarily be authorized
So long as employer “permits” the work,
employees are entitled to be paid
Have a policy that specifically requires
supervisor approval before employees may
work overtime
Enforce the policy
Discipline employees who fail to abide by the
policy
Must ensure that unpaid internships meet certain criteria or
face liability for FLSA and other wage law violations:
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Internship must be similar to training which would be given in an
educational environment
Internship experience must be for the benefit of the intern
Intern must not displace regular employees, but work under close
supervision of existing staff
Employer must derive no immediate advantage from the activities of
the intern
Intern must not necessarily be entitled to a job at the conclusion of
the internship
Employer and the intern must understand that the intern is not
entitled to wages for the time spent in the internship
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Payroll taxes must be withheld from an employee's paycheck
Payroll tax deductions include:
◦ Social Security taxes (6.2% up to the annual maximum)
◦ Medicare taxes (1.45% of wages)
◦ Federal unemployment taxes (FUTA)
◦ State unemployment taxes (SUTA)
FICA Taxes (Federal Insurance Contributions Act)
◦ Consists of both Social Security and Medicare taxes
◦ Employees pay share (as above) and employers pay equivalent
share
Challenges/complications when paying employees in cash
◦ If you pay in cash, must keep full and accurate records and
provide employees with documentation about their pay and
withholdings just as you would for employees being paid by check
or direct deposit
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New York State recently expanded categories of wage deductions allowed (must be
authorized in writing by the employee). Permissible categories include:
Insurance premiums
Pension or health and welfare benefits
Contributions to charitable organizations
Dues or assessments to a labor organization
Discounted parking or discounted mass transit passes or fare cards
Fitness center, health club, and gym membership dues
Cafeteria, vending machine, and pharmacy purchases at employer’s place of business
Tuition and room & board and day care, before-school, and after-school care
expenses
 Similar payments for the benefit of the employee
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Deductions also allowed for: (1) recovery of overpayment of wages due to
mathematical/clerical error by employer, and (2) repayment of advances on
salary/wages
May NOT deduct for spoilage/breakage or cash register shortages
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Types of Benefits:
◦ Short Term Disability Insurance (required)
◦ Workers’ Compensation (required)
◦ Health Insurance (required by 2014 for employers with more
than 50 full-time employees or employer must pay assessment)
Life Insurance (optional)
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◦ Vacation (optional)
◦ Breaks (meal breaks required; rest periods are not)
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New York does not require employers to provide vacation
time or time-off for holidays
Employers that adopt a benefit policy can impose any
conditions they choose
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Compensates for lost wages due to disability resulting
from an off-the-job accident or illness
New York requires employers to provide STD coverage and
must use either an insurance carrier approved by the New
York State Workers' Compensation Board or receive
authorization for self-insurance
Generally, any for-profit business will need to provide
coverage
• Employers not required to offer coverage can elect to do so as
well
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Employers Must:
• Obtain and keep in effect workers' compensation
coverage for their employees without a lapse in
coverage
• Post a notice of workers' compensation coverage
• Keep accurate records of the number of employees,
classification, wages and accidents for four years
• Not discriminate against an employee or applicant
because of workers' compensation claims
• Report most injuries to the Board and the insurance
company within 10 days after an accident
• Report an injured worker's wages or other
compensation to the Board, as well as any wage or
work status changes
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Request that the insurance carrier contest the compensability
of a claim
Attend any hearings related to a claim filed by one of the
employer's workers
Electronically access the Board's case file for a claim filed by
the employer's worker
Report suspected workers' compensation fraud to the Fraud
Inspector General - Fraud Referral Hotline: 1-888-363-6001
Seek administrative review and/or appeal to the Appellate
Division
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Under the Patient Protection and Affordable Care Act,
employers with fewer than 50 full-time employees:
◦ No financial requirements to contribute toward workers’ health
insurance costs
◦ Must provide notification and certain information to employees
about the new Health Insurance Marketplace exchanges
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Small Business Health Care Tax Credit
◦ 25 or fewer full-time employees
◦ Potential tax credit to help offset costs of insurance
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Employers do not have to provide "rest periods" or "coffee breaks"
◦ But if break permitted (of up to 20 minutes), should pay as work time
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Employers must provide meal breaks for all employees:
◦ 30 to 60 minute (depending on industry) noonday meal break between 11 am
and 2 pm if at least a 6 hour shift that extends over this noonday meal period
◦ Additional meal periods required for employees working certain shifts
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Employers do not have to pay employees for meal breaks if:
◦ At least 30 minutes
◦ Employee must be completely relieved of his/her duties for the purpose of
eating a regular meal
◦ Employee must be allowed to leave his or her workstation (but not the
employer's premises or worksite)
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Applies to employers with at least 50 employees
Entitles an eligible employee to twelve weeks of unpaid leave
in a 12-month period (but employer must continue health
insurance coverage)
Upon return from leave, employee must be restored to the
same or equivalent position
Leave is permitted for:
◦ The birth, adoption or foster care placement of a child
◦ The employee’s serious health condition
◦ The serious health condition of a child, parent, or spouse
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Requires NYC-based businesses to provide up
to 5 days of paid sick leave annually
Permits employees to use paid time off for
their own physical or mental illness, injury, or
medical care, or for that of a spouse, domestic
partner, child, or parent
Companies with 20 or more employees in NYC
must begin complying in April 2014;
companies with 15 or more employees in NYC
must begin complying in October 2015
Records to retain 
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Hiring records:
◦ Eligibility to work in the US (I-9)
◦ Employee’s Social Security number
◦ Employee’s withholding
Other records:
◦ Employee payroll records and hours
◦ Employee health and safety logs
◦ Job descriptions
◦ Performance reviews
◦ Disciplinary notices
Records should be maintained for a minimum of 7 years
(longer, if possible)
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Employers must keep payroll records showing, for each week
worked by an employee:
• Total hours worked each day
• Total hours worked each week
• Rate or rates of pay and basis (by the hour, shift, day, week,
salary, piece, commission or other)
• If paid more than one hourly rate, the number of hours worked at
each rate
• If paid piece rates, the number of pieces completed at each piece
rate
• Gross wages
• Deductions
• Allowances or credits, if any, claimed as part of the minimum
wage
• Net wages
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Employers must notify employees in writing both (i) at the time of hiring and
(ii) on or before February 1st of each subsequent year of employment of:
◦ Rate of pay
◦ Basis of pay (i.e., by the hour, shift, day, week, salary, piece, commission,
etc.)
◦ Allowances, if any (i.e., tip, meal, or lodging allowances)
◦ Regular pay day
◦ Name of employer and d/b/a/, if any
◦ Physical address of main office of principal place of business (and
mailing address, if different) and telephone number of employer
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An Employer CANNOT refuse to hire, discharge, or otherwise
discriminate with respect to compensation, terms, conditions
or privileges of employment because of an employee’s
protected characteristic
Laws governing employment discrimination include:
 Title VII of the Civil Rights Act of 1964 (Title VII)
 Age Discrimination in Employment Act (ADEA)
 Equal Pay Act of 1963 (EPA)
 Americans with Disabilities Act (ADA)
 Genetic Information Nondiscrimination Act of 2008 (GINA)
 New York State and City Human Rights Laws
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Disparate Treatment
◦ Taking an adverse employment action based on an
individual’s membership in a protected class
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Disparate Impact
◦ Using neutral policies or practices that have a
disproportionate, adverse impact on any protected
class
 E.g., layoffs, certain tests
◦ Circumstantial proof of employment discrimination
because no discriminatory animus
Federal:
Race, color, sex (including pregnancy, childbirth, and
related medical conditions), religion, national origin, age
(40 years or older), citizenship, disability, certain veterans,
genetic information
NY State:
Age (18 and older); marital status; sexual orientation;
AIDS/HIV; lawful use of any product or lawful recreational
activities when not at work; military status or service;
observance of Sabbath; political activities; use of service
dog; criminal accusation; domestic violence victim status
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Transgendered status; broad gender-based discrimination
(e.g. based on an individual’s actual or perceived sex,
gender identity, self-image, appearance, behavior or
expression); arrest or conviction record; status as a victim
of domestic violence, stalking, and sex offenses
Age
Do:
Are you over the age of 18?
Don't: How old are you? When did you graduate from college?
What is your birthday? Other questions that indirectly
ask for age.
National Origin
Do:
Are you authorized to work in the United States? What
languages do you read, speak or write fluently? (if job
relevant) Which (job related) professional associations
do participate in?
Don't: Are you a U.S. citizen? Where were you/your parents
born/grow up? What is your "native tongue”? What clubs
or social organizations do you belong to? (could apply to
other characteristics)
Marital Status
Do:
Would you be willing to relocate if necessary? Would you be
willing to travel as needed by the job? Would you be able
and willing to work overtime as necessary?
Don't: What's your marital status? Who do you live with? Do you
plan to have a family? When? How many kids do you have?
What are your child care arrangements?
Religion
Do:
Can you work on evenings and weekends if necessary?
Don't: What is your religion? What religious holidays do you
observe? What are your plans for the upcoming holiday (i.e.,
Christmas, Easter)?
Disability
Do:
Ask about: (a) applicant's ability to perform a specific job
function; (b) non-medical qualifications such as education,
work history, and certificates or licenses; (c) how the
applicant would perform job tasks or ask to demonstrate
such tasks; (d) whether applicant can meet attendance
requirements; (e) current use of illegal drugs.
Don’t: Ask about: (a) applicant's general or specific health, medical
condition, or mental/physical disability; (b) how many days
applicant was absent last year due to illness; (c) workers’
compensation history; (d) legal drug use.
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Prohibits discrimination on the basis of disability
against any “qualified person” with a “disability”
who can perform the “essential functions” of the
job, with or without a “reasonable accommodation”
Protects individuals “regarded as” disabled
Recently amended to broaden the definition of
“disability” and focus on accommodating
disabilities
Requires accommodation unless “undue hardship”
Applies to employers with at least 15 employees
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Discrimination or harassment claims
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Tort claims
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Retaliation
Aiding and abetting
Coercing, threatening, intimidating, interfering
Failure to act; “deliberate indifference”
Assault and battery
Defamation
Invasion of privacy
False imprisonment
FLSA violations
• Broad definition of “employer”
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Under the “employment-at-will” doctrine, an
employee or employer may end the relationship
at any time, for any lawful reason or for no
reason, provided that there is no contract or
agreement to the contrary
However, there are some exceptions to the atwill doctrine:
• Statutes (e.g., wage and discrimination laws)
• Whistleblower protection (federal and state laws)
• Public policy
• Asserting a legal right (e.g., filing a workers compensation
claim)
• Doing what the law requires (e.g., serving on a jury)
• Refusing to do what the law forbids (e.g., committing
perjury)
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Protected Concerted Activity
◦ When two or more employees take action for their mutual aid
or protection regarding terms and conditions of employment
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Even non-union employees have the legal right to engage in
protected concerted activity
Cannot fire an employee or take other negative employment
action for engaging in certain protected activities
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Forming, or attempting to form, a union
Joining a union whether recognized by the employer or not
Assisting a union in organizing fellow employees
Refusing to do any or all of these things
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Set clear expectations
Address problems promptly
Provide accurate, timely feedback, including
performance evaluations
Be clear about policies and work rules (e.g.,
employee handbook)
Apply policies and rules firmly, consistently, and
fairly
Provide the necessary training and tools to do the
job properly and safely
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No final decisions when emotions are high
Progressive discipline unless very serious offense
Consult with a professional before terminating
anyone
Review prior discipline in similar cases
Compare procedures prior to termination
Consider whether accommodation is indicated
Investigate employee’s complaints so no
appearance of retaliation for complaints
Check compliance with policies and practices
Check for recent exercise of protected right
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Determine whether progressive discipline has
been followed
Obtain appropriate review and approval (e.g.,
human resources, senior management, legal
counsel)
Document basis for termination for internal use
(e.g., performance, discipline, reduction-in-force)
Assess possible claims against company
Avoid retaliation or appearance of retaliation
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Final pay and accrued vacation
◦ Termination v. resignation
◦ No deductions
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Reimburse the employee for outstanding business
expenses
Employee return of company property
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If it isn't documented, it didn't happen!
To mount a defense to a wrongful termination claim, employer will need to
produce documents including signed performance evaluations, signed
written warnings/notices, and recorded verbal corrections
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“Just the facts”
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Include prior supervisory actions
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Include effects on company
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Document third-party statements
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Document employee responses
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Progressive discipline
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Employers have access to employees’ confidential
information - medical, financial, family, etc.
Employees expect that confidential information
disclosed in the course of employment will be
kept confidential
Important not to disclose information (especially
medical and health information) unless (i) there is
a business need to do so and (ii) disclosure has
been authorized
Establish and follow clear guidelines concerning
maintenance of and access to employees’
confidential information
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Issues to consider:
◦ Privacy Laws – is information private or access
authorized?
◦ State Lawful Outside Activities Laws – protect
lawful activities outside of the workplace (e.g.,
political, recreational activities)
◦ Title VII and Related Laws – require employers to
investigate claims of discrimination and
harassment and take appropriate remedial
measures
 What if an employee is being harassed via social
media?
Patrick J. Lamparello
Proskauer Rose LLP
October 1, 2013
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