From Hire to Fire Avoiding the Top 10 Legal Mistakes

1. From Hire to FireAvoiding the Top 10 Legal Mistakes Thomas R. Revnew

2. Our Employer • Name: Askin’ For a Suit • Product: Professional Business Attire • Position Available: Sales Associate • HR Department: Non-Existent • Lawsuits: Imminent

3. Before Hire

4. Mistake No. 1 FAILING TO INCLUDE IMPORTANT PRE-HIRE POLICIES IN THE EMPLOYEE HANDBOOK

6. Employee Handbook Hiring Policies • Your Handbook should include all company policies related to the hiring process. • What type of policies? Here are the top five: • Equal Employment Opportunity Policy; • At-Will Employment Policy (Unless unionized); • Anti-Harassment Policy; • Drug and Alcohol Testing Policy; and • Background Check Policy.

7. Employee Handbook Hiring Policies • Condition employment on: • Truthful & complete application information; • Willingness to accept job assignment; and • At-will employment status. • Provide applicants and employees with notice of policies.

8. Mistake No. 2 FAILING TO ESTABLISH ACCURATE JOB DESCRIPTIONS

9. Our Job Description • Title: Sales Associate • Hours: 40/week • Education: 2 year degree from an accredited university • Skills: Sales experience and a good attitude • Position Description: The Sales Associate will sell clothing to our customers.

10. Why This Could be an Issue • Accurate, complete and consistent job descriptions provide a baseline defense for discrimination claims. Inaccurate and incomplete descriptions invite complaints, claims and lawsuits. • The Hiring Manager/Supervisor should establish qualifications for a specific job opening. • These qualifications will set expectations from the beginning. • HR should carefully analyze each job description (keeping in mind the duty to accommodate).

11. Mistake No. 3 ASKING INAPPROPRIATE INTERVIEW QUESTIONS* (*OR WHEN THE HIRING MANAGER/SUPERVISOR DOES THE ASKING)

12. The Applicant: Imma Sue Yue • Work History • Imma has 20 years of experience as a Sales Associate selling high-end fashion in a retail store; • Imma speaks multiple languages; and • Imma has numerous references. The hiring manager has called Imma for an interview because she looks great on paper, but . . .

13. What Could Happen… • If we do not hire Imma, she may claim it is because of her: • Gender; • Age; • Disability; • Religious beliefs.

14. Questions NOT to ask: • Aren’t you too old for this job? • Are you disabled in any way, shape or form? • Have you ever been arrested? • Do you have children? • Are you a U.S. citizen or an alien who is legally permitted to work in the U.S.? • Can you perform the essential functions of the job with or without accommodation? • Can you work the hours required for this position? Questions you SHOULD ask:

15. Why We Should be Concerned • Abercrombie & Fitch: Failure/Refusal to hire based on race and national origin=$50 Million Awarded. • Voices of America: Failure/Refusal to hire or promote women=$543 Million Settlement. • Winn-Dixie: Failure/Refusal to hire or promote women=$33 Million Settlement.

16. Mistake No. 4 INAPPROPRIATELY CONDUCTING PRE-EMPLOYMENT SCREENING

17. Imma is Required to Undergo Medical Testing • You require Imma to get a medical evaluation: • Before offering her a position; • The hiring manager tells Imma it is because of her SAD; and • No other employee or applicant in the history of the company has ever been required to undergo a medical evaluation.

18. What the Law Says • Minnesota law requires that an employer must do the following before requiring an applicant to undergo medical testing: • Provide a conditional offer of employment; • Test only for essential job related abilities; and • Test all persons conditionally offered employment for the same position.

19. Imma’s Background Checks • You run the following background checks on Imma • You “investigate” her employment history; • The Hiring Manager calls her “references”; • You hire a third-party to run a credit report; and • You check her criminal/civil litigation history.

20. What the Law Says • Fair Credit Reporting Act (FCRA): • All pre-employment reports by third parties are probably covered by FCRA. • Four basic compliance steps under FCRA: • Disclosure & written consent; • Certification to Consumer Reporting Agency; • Provide documents prior to adverse action; and • Provide notice after adverse action. • Minnesota Access to Consumer Report Act • Must notify applicant in writing if subject of consumer report by agency; • Include a box on disclosure form to indicate request for copy; and • If screening, must include disclosure & box on application form.

21. Why We Should be Concerned • USPS: Asking inappropriate medical history questions to disabled veterans=$95 Million Settlement. • Lawrence Berkley: Pre-employment blood test=$2.2 Million Settlement. • First Transit and First Student: FRCA violation for conducting unauthorized background checks=$43 Million Settlement.

22. The Time Between Hire & Fire

23. Mistake No. 5 FLSA VIOLATIONS

24. Imma is Hired • Terms of Employment • Salary of $41,600.00 to work at least 40 hours/week (approximately $20/hour or $800.00/week); • Because Imma is paid a salary, Askin’ for a Suit concludes that she does not need to be paid overtime; and • To be safe, Askin’ for a Suit requires Imma to sign an Agreement stating that she is not entitled to overtime.

25. What the Law Says • Requirements for Overtime Exemption: To be exempt from paying overtime under the FLSA, generally a position must satisfy the following requirements: • Pay more than $455.00/week ($23,660/year); • Paid on a salary basis; and • Performs exempt job duties. • It does not matter that Imma signed an Agreement.

26. Exempt Job Duties • Executive Exemption; • Professional Exemption; • Administrative Duty Exemption; • Outside Sales Exemption; and • Computer Employee Exemption.

27. The Exemptions • Outside Sales Exemption • Primary duty must be making sales or obtaining orders or contracts for services for the use of facilities for which a consideration will be paid for by the client or customer; and • The employee must be customarily and regularly engaged away from the employer’s place or places of business.

28. Why We Should be Concerned • Wells Fargo: improper classification as Computer Analysts=$12.5 Million Settlement. • Auto Club: misclassification of insurance sales persons as “outside sales” representatives=$19.5 Million Settlement. • Family Dollar Stores: improper classification of employees as managers=$35.5 Million Award.

29. Mistake No. 6 NOT IMPLEMENTING A SOCIAL MEDIA POLICY

30. Imma Posts This on Her Facebook Page Imma -Founder of the Religion of Imma -Immaism Immas My job at Askin’ for a Suit stinks. I hate my boss. I would like to slap her silly. Imma All followers of Imma, I had a premonition=our god has instructed us to take communion (i.e. drink an entire bottle of wine). Praise be to God!

31. Askin' for a Suit's Issues • Askin’ for a Suit doesn’t have a social media policy and Imma’s manager uses this information as the sole basis to terminate her employment. • During the termination “meeting”, Imma’s manager tells her she is being fired because of the content of her Facebook page.

32. What the Law Says • “Mere Gripes” are not protected. • The National Labor Relation Board will likely protect charges where the Charging Party relied on social media to: • (1) act with or by the authority of other employees; • (2) initiate, induce or prepare for concerted group action; or • (3) bring group complaints to management’s attention. • Stored Communications Act requires that employers have permission to access private social media pages. • Cannot discriminate based upon religion.

33. Why We Should be Concerned • American Medical Response: employee terminated for stating concerns about boss on Facebook=Confidential Settlement . • Hillstone Restaurant: management reviewed a private, password-protected, invitation-only group the servers had created on MySpace=Confidential Settlement.

34. Mistake Nos. 7 & 8 IGNORING AND FAILING TO DOCUMENT PERFORMANCE ISSUES

36. Progressive Discipline • A written record of verbal and written warnings. • Clearly explain specific problems, tied to production or standards. • Give employee notice of the standards and apply the standards consistently. • Before termination, consider: • Discipline short of discharge. • Reassignment, transfer or removal of duties. • Resignation in lieu of termination. • Issue a last chance warning. • Whatever the issue, document, document, document (and apply your policies consistently).

37. Disciplinary Checklist • An excellent tool for managers! • Include items such as: • Does the employee know the rule? • Is the rule reasonable? • Did you interview other employees and/or third parties (if necessary)? • Are your notes accurate? • Did you confront the employee (and, if so, did you document the conversation)? • Have you disciplined (or not disciplined) others in the same way for the same behavior? • Did you discuss the discipline with HR prior to issuing the warning? • Did you send the paperwork to HR?

38. Termination & Beyond

39. Mistake No. 9 NOT TRAINING MANAGERS ON PROPER TERMINATION PROCEDURES

40. At-Will Employment Doctrine At-will employment means the employer or employee can terminate the employment relationship for any lawful reason.

41. Exceptions to “At-Will” Employment A/K/A How You’ll Be Sued Contract Theories • Oral or Implied Contract; and • Employee Handbooks. Tort Theories • Intentional/Negligent Infliction of Emotional Distress; • Tortuous Interference with Contract; • Defamation; and • Negligent Supervision, Hiring and Retention. Statutory Wrongful Termination • Violation of Public Policy (i.e. MHRA, Title VII, etc.); • Whistleblower; and • Retaliation.

42. Termination Checklist • An excellent tool for managers! • Include items such as: • Manager and HR in termination meeting. • Retrieve company property (keys, swipe card, laptops, passwords). • Eliminate remote access, cut off email and voicemail. • Cancel any company credit cards. • Notify appropriate people (employees, customers, clients, etc.). • Review benefits (COBRA notice). • Last paycheck.

43. Mistake No. 10 NOT FOLLOWING PROPER POST-TERMINATION PROCEDURES

44. Post-Termination Procedures • Last Paycheck: In Minnesota, an employee’s last paycheck must be issued with 24 hours (upon demand). • Reference Checks: generally an employer may provide the following information about an employee or ex-employee without liability: dates of employment, pay history, job description/duties, training and education provided by the employer and facts related to acts of violence, theft , harassment, illegal conduct. • COBRA Paperwork: Employer must notify plan administrator within 30 days after termination (plan administrator has 14 days from date of notice of the qualifying event to notify each participant and beneficiary of the right to elect coverage).

45. QUESTIONS?

46. Thank You! Thomas R. Revnew | (952)921-4622 | trevnew@seatonlaw.com