Small businesses and nonprofits are increasingly faced with a laundry list of local, state and federal laws that regulate how they hire employees, how they treat employees after they are hired and how they discipline employees. Because these laws and the interpretations given to these laws by the courts frequently change, businesses and nonprofits should engage an attorney to “audit” their employment practices to ensure they are compliant. Such audits will decrease the likelihood of employment claims and lawsuits and, if such claims and lawsuits do occur, will increase the likelihood of a successful result.
At a minimum any employment audit by counsel should examine the following subjects:
- Background Checks. Do your hiring practices comply with federal laws such as the Fair Credit Reporting Act (FCRA) and the Genetic Information Nondiscrimination Act (GINA), state laws such as Pennsylvania’s Criminal History Record Information Act (CHRIA) and the Medical Marijuana Act, and local “ban the box” statutes, all of which may limit the use of a prospective employee’s criminal, medical and credit history?
- Social Media. What limits exist on your ability to examine a prospective employee’s social media accounts when making hiring decisions?
EMPLOYEE HANDBOOKS. Handbooks should be updated by counsel at least every 2 years to ensure that the Handbook reflects changes in the laws relating to discrimination, retaliation, sexual harassment, use of personal cell phones, electronic monitoring and discipline for off-duty activities, including social media.
SEXUAL HARASSMENT POLICIES AND TRAINING. Despite a 10% overall drop in employment discrimination charges, the EEOC recently reported that sexual harassment claims jumped by 13.6% from the previous year and the Agency obtained a record $56.6 million in settlements and awards for victims of sexual harassment. These figures demonstrate the lasting impact of the #MeToo movement on the workplace. To avoid harassment claims from occurring and to best defend such claims if they do arise, counsel should audit your practices to determine:
- Whether your Handbook unequivocally explains that harassment in the workplace will not be tolerated and whether it includes concrete examples of the types of behavior that will considered harassment;
- Whether your harassment policy is disseminated to all employees;
- Whether you consistently enforce your harassment policy;
- Whether your policy provides a clear method for reporting harassment;
- Whether you promptly investigate all harassment claims and your policy clearly states that no retaliation will result from reporting harassment; and
- Whether you conduct annual sexual harassment training for managers and supervisors, along with separate training sessions for all other employees.
WAGE AND HOUR ISSUES. Any audit of your wage and hour practices should address the following issues:
- Do your exempt employees meet both the salary basis and job duties tests?
- Are the exemptions you are relying on recognized under both federal and state wage and hour laws?
- Do your practices relating to unpaid interns and volunteers comply with federal and state regulations governing the legality of such practices?
- Do your time-keeping practices for non-exempt employees, including rounding, meal breaks and travel time, comply with federal and state laws?
- Are your non-exempt employees compensated when they provide services from home?
- Are any persons you classify as independent contractors really employees due to the control you exert over such persons?
- Do you retain payroll records for the period of time required by law?
NONDISCLOSURE, NONCOMPETES AND NO-SOLICITATION AGREEMENTS. If employees are required to execute nondisclosure, noncompete and no-solicitation agreements as a condition of their employment, any audit should examine a number of issues, including:
- Are your Agreements enforceable under the applicable state law, some of which severely restrict an employer’s ability to enforce such Agreements?
- Do you include the language required by the Defend Trade Secrets Act?
- Are your Agreements used with all employees, even lower-level workers?
The topics and issues highlighted above are just some of the employment law compliance matters that should be the subject of any legal audit. As small businesses and nonprofits consider whether to expend the legal resources needed for such an audit, the old adage that an “ounce of prevention is worth a pound of cure” must always be part of the decision-making process, since the cost of even a single lawsuit is likely to exceed the legal cost of engaging counsel to review and revise your employment policies and assist in the training of your employees.
Larry Silverman, Esq.