Most roofing contractors pay little attention to their human-resources departments simply because they are unaware of the potential liabilities that can arise from employment-related claims. But one employment-related legal mistake can cost thousands of dollars in damages, not to mention the money spent for an attorney to defend against such claims. Following is a summary of some common employment-related legal traps in the workplace and what you can do to avoid them.
FMLA
Most roofing contractors with more than 50 employees are keenly aware they can be liable under the Family and Medical Leave Act (FMLA) for improperly denying an eligible employee FMLA leave or terminating an employee for taking FMLA leave. Family and medical leave may be taken by an employee for any of the following reasons: birth of a child; placement of a child with an employee for adoption or foster care; providing care for an employee's child, spouse or parent who has a "serious health condition," a term defined in the federal regulations; or a "serious health condition" of an employee that prevents him or her from working.
Many roofing contractors are unaware of their duties to designate an employee's leave as qualifying for FMLA and inform the employee of this designation. These duties arise when an employee gives sufficient notice of leave to allow his or her employer to determine whether the need for time off qualifies as FMLA leave. The law requires employers to determine whether to designate the leave as FMLA leave within two business days from the time an employee gives notice of the need for leave. In most situations, an employer cannot apply FMLA leave retroactively.
Suppose an employee suffers an employment-related injury covered by workers' compensation insurance. Assume the injury qualifies as a "serious health condition" under FMLA and will require the employee to miss 12 weeks of work. If you fail to notify the employee the leave will be designated as FMLA leave, the 12-week period provided by FMLA never begins to run, and you will be prohibited from terminating the injured employee after the employee's 12 weeks of leave expire. If you had notified the employee and the injury does not qualify as a disability under the Americans with Disabilities Act (ADA), you would be free to terminate the employee at the end of the 12 weeks.
Classification
Many roofing contractors are unaware the terms "employee" and "independent contractor" are legal terms with significant legal consequences. Many contractors mistakenly believe by treating employees as independent contractors, employers can save money on taxes, insurance premiums and benefit coverages. But whether an individual is an employee depends not on the title given to the individual but on a variety of factors set forth by the courts. Such factors include but are not limited to the extent of control the alleged employer exercises over the details of the work; whether the employer supplies the instruments, tools and place of work; length of time for which the person is employed; and whether the employee is paid by time worked or job completion.
To avoid this trap, make sure independent contractors perform work pursuant to agreements acknowledging their independent contractor status. Also, make sure independent contractors have business licenses, tax identification numbers, places of business and other clients.
Agreements
Roofing contractors often are surprised and disappointed to find out former employees who sign employment agreements with noncompete provisions can, in fact, compete against them. This is because most employment agreements are legally unenforceable.
For provisions that protect customers, trade secrets and proprietary information to be upheld in court, the provisions must be narrowly drawn to protect a company's legitimate business interests rather than prohibit competition. Provisions, referred to by law as "restrictive covenants," that prohibit a former employee from working in a market where the former employer does no business often will be found to be too broad and, therefore, unenforceable. Moreover, an employment agreement prohibiting an employee from contacting customers with whom the employee had no prior relations also is likely to be found too broad and unenforceable.
Employment agreements that prohibit employees (for a reasonable time period) from competing with a roofing contractor within specific geographic areas in which the contractor conducts business likely will be upheld as enforceable. Likewise, an agreement prohibiting an employee from contacting customers with whom the employee had contact while employed by the roofing contractor also will likely be upheld as enforceable.
With regard to trade secrets and proprietary information, it is important to identify the information that qualifies as a trade secret or proprietary information. It is more important to avoid unnecessary voluntary disclosures that may result in the loss of the protection provided under the law.
Obtaining releases
The safest way to avoid potential claims from former employees alleging discrimination-type claims, wrongful discharge claims or other employment-related claims is to obtain employees' releases of those claims at the time of termination. Many roofing contractors are reluctant to use releases because they fear releases may educate employees about rights and litigation possibilities of which employees might otherwise be unaware. But in light of the media attention given to employment discrimination verdicts, this concern may be unfounded.
The best way to avoid a potential claim is to obtain a signed release from a terminated employee. You will find the most success in obtaining an employee's release when a release is signed in exchange for severance pay. The Age Discrimination in Employment Act has specific requirements applicable to such releases.
Payroll deductions
Roofing contractors often wonder whether they are permitted to deduct an employee's pay for money the employee owes a contractor. Roofing contractors often are surprised to hear that even though the debt running from an employee to an employer is undisputed, the employer cannot recoup that debt by deducting from the employee's pay unless the employee consents to the deduction.
The safest way to ensure paycheck deductions are legal is to obtain an employee's consent to future deductions from pay at the time you loan money to the employee. Or if you seek to hold an employee liable for damages to tools or equipment, obtain the employee's consent to deductions from future pay when the employee signs out tools and equipment.
Documentation
Documentation sometimes seems like needless busy work, but it allows roofing contractors to defend themselves against frivolous and overreaching claims from former employees. Personnel files that do not document poor records leave a contractor without grounds on which to justify a termination and open to lawsuits alleging discrimination. This trap easily can be avoided by putting all discipline, including oral warnings, in writing and placing a copy of the record in an employee's personnel file. Documentation of disciplinary action should detail the action that led to the discipline.
Harassment policies
Now, more than ever, it is important roofing contractors publish policies addressing sexual and racial harassment. This is because a recent U.S. Supreme Court decision allows employers to avoid strict liability for harassment by supervisors that results in a constructive discharge; this is provided there was no "official act" by the employer that led to the constructive discharge.
Constructive discharge is found when an employee works in an environment so hostile he or she has no choice but to quit. Until the Supreme Court's recent decision, a constructive discharge always resulted in employers being held strictly liable for the harassment. In other words, until recently, employers were not allowed to defend against claims of harassment by supervisors that resulted in a constructive discharge.
With the Supreme Court's decision, employers now can present such defenses unless the employee quit in reasonable response to a tangible employment action that officially changed his or her employment status or situation. A tangible employment action can be a humiliating demotion, extreme cut in pay or transfer to a position in which an employee would face unbearable working conditions.
To avoid liability for harassment by a supervisor, prove the supervisor's conduct did not involve a tangible employment action; you exercised reasonable care to prevent and promptly correct any harassing behavior; and the employee unreasonably failed to take advantage of any preventive or corrective opportunities you provided.
The second and third elements of this defense often are met through the use of an effective harassment policy. Such a policy should inform employees whom to contact if they believe they are victims of harassment; advise employees the company will conduct a thorough investigation into all reports of harassment; and advise employees of potential disciplinary actions that will be taken against violators of company policy.
Job descriptions
A thorough, detailed job description can be the best defense to a number of labor- and employment-related claims. Written job descriptions help roofing contractors control whom they hire and establish enforceable performance and conduct standards. Moreover, job descriptions help courts determine whether a particular individual qualifies as a "supervisor" under the law.
Written job descriptions also are useful in identifying a particular job's "essential functions" to determine whether a disabled individual can perform those essential functions with or without reasonable accommodation and entitle the employee to ADA protection.
Safety rules
Roofing contractors may find themselves caught in a trap if they are subjects of Occupational Safety and Health Administration (OSHA) citations because one of the most common defenses to an OSHA citation is the unforeseeable employee misconduct defense. To prevail on this defense, you must prove you have established work rules to prevent the violation; the rules are adequately communicated to employees; you took steps to discover infractions; and you effectively enforced rules when infractions were discovered.
The defense most often fails the third and fourth elements. Roofing contractors must ensure steps are taken to ensure employees comply with company safety rules, discipline guilty employees and note the disciplinary action taken against employees.
Union issues
Although you are permitted to communicate to employees your views concerning labor unions, be careful about what you say and the circumstances in which you say it. The acronym TIPS (Threaten, Interrogate, Promise, Surveillance) can help you remember prohibited conduct in the context of a union organizing drive.
First, you must not threaten employees with harm or reprisals (economic or otherwise) if they decide to sign a union card, join a union or vote for the union. You should not interrogate any employee regarding whether he or she favors the union, has signed a union card or has gone to a union meeting. You must not directly or indirectly promise any benefits or rewards to employees who refuse to sign a union card, stay out of the union or vote against the union. Finally, you may not conduct unlawful surveillance of employees.
In addition, the National Labor Relations Board has held in a number of cases that supervisors who review authorization card signatures and express their belief the signature cards are genuine can constitute union recognition without the necessity of an election.
Stay aware
By knowing the various legal traps surrounding employment-related issues, you will be better prepared to avoid—or defend—any lawsuits filed by employees.
Philip J. Siegel is an attorney with the Atlanta-based law firm Hendrick, Phillips, Salzman & Flatt.
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