Should We Continue Health Insurance When an Employee is on Leave?

by Derek Ross

Recently, we have been receiving many questions about health insurance continuation for employees who are out on a leave of absence. For example, you might have an employee that was injured at work and is out on a medical leave while collecting workers’ compensation benefits. Another example is an employee that is out for a surgery not related to any work injury who may or may not be collecting short term disability (STD). Employers are asking us if they are required to carry the employee on their group health insurance plan while the employee is out on leave.

The answer is … maybe.

The answer is definitely “yes” if they are placed on leave under the Family and Medical Leave Act (FMLA). Of course, that means your organization would have to be covered by FMLA and the employee would have to be eligible. If you have any questions regarding FMLA, please see Nancy Owen’s previous blog, FMLA: What to Know BEFORE It Happens.

To simplify the answer to this question, there are only three reasons an employee should be on your group health insurance plan:

  1. The employee meets the eligibility requirements to be an active participant as defined by your carrier and your particular plan (among other things, they need to meet the requirements for minimum hours worked per week) and have elected to participate in the plan.
  2. You’re required to continue coverage under an applicable law (i.e., FMLA).
  3. The employee elected COBRA (or equivalent state law) after experiencing a qualifying event that caused their coverage to be terminated.

Other than FMLA, no federal leave law requires an employer to continue group medical insurance coverage for an employee who isn’t otherwise meeting your plan’s eligibility requirements. In addition, workers’ compensation laws and short-term disability plans do not require continuation either. Think of it this way. Medical plans can only be offered by employers as part of an employee’s compensation package. The plan carrier sets the costs and terms of payments of these plans. The carrier also sets eligibility requirements for the plans, meaning it is the plan that determines who is eligible to participate and who is not. The employer is simply an intermediary and cannot make any of these types of determinations. For that reason, employers should not leave employees on any medical plan where the carrier has said that employee is not eligible.

If you are unsure of the eligibility requirements of your medical plan, you can read the plan documents provided by the insurance carrier or simply contact the carrier or your agent directly. If an employee is out on leave for more than is allowed by the plan, this will act as a qualifying event because the employee is not working enough hours to be eligible for benefits. Employers then have the legal responsibility to comply with state and/or federal COBRA laws. For more information on COBRA, please read Renee Mielnicki’s blog, COBRA: A Poisonous Bite for Employers Who Fail to Comply.

The penalties for carrying an employee on your group medical plan after the plan considers them ineligible can be huge!

  • Your insurance carrier could deny the claims for that employee who was improperly on your insurance plan and then you, the company, can become liable for those claims. We all know how expensive medical costs can be.
  • Second, if you failed to give an employee the proper COBRA notices when they were entitled to them, you could be penalized up to $110 per day. (The plan administrator is required to notify the individual of his or her COBRA rights within 14 days of receiving notification that an employee has experienced a qualifying event. If the employer is the plan administrator and issues COBRA notices directly, the employer has the entire 44-day period in which to issue a COBRA election notice.)

If you are an employer who would like additional guidance on this or any other HR-related issues, please feel free to contact us at HRHelpline@eastcoastrm.com.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

Posted in Human Resources | Tagged , , , , ,

How to Have Less “Naughty” and More “Nice” at Your Office Holiday Party

by Derek Ross

It is that time of the year again when companies throw holiday parties to thank their employees for another year of hard work and to celebrate the season. Unfortunately, these happy holiday festivities can sometimes create a few legal pitfalls for employers.

If you are planning a holiday party, you may want to consider a few simple tips to help you keep the party fun and festive while reducing the likelihood of unwanted issues.

  1.  Avoid over-consumption of alcoholic beverages:
  • Remind and encourage your workforce to drink responsibly by sending out a company memo prior to the party.
  • Ditch the open bar! Having a “cash bar” will discourage overindulgence of some people.
  • If you prefer an open bar:
    • Simply limit the hours it is open, or
    • Hire a professional bartender that knows the signs of intoxication and knows what to do in certain situations, or
    • Provide a set number of “drink tickets” to each employee when they arrive. Two tickets are usually standard. After their tickets are gone, that’s it.
  • Have plenty of food and non-alcoholic beverage options available.
  • Have company-provided transportation where necessary. That could include taxi vouchers, shuttles or Uber & Lyft services in bigger cities.

2.  Avoid the dreaded office party harassment claim:

  • Avoid games or activities that might encourage inappropriate behavior that could give rise to a claim of sexual harassment.
  • “Christmas Party”? Respect the diversity of religious beliefs present in most workplaces.  Call the event a “Holiday Party”.
  • Remind employees of your discrimination and harassment policies prior to the party by sending out a company-wide memo.
  • Encourage spouses to attend. Doing so can decrease the risk of a sexual harassment claim.

3.  Comply with wage and hour requirements:

  • Remind employees that the event is “voluntary”.
  • Consider hosting the event outside of normal business hours.
  • Consider having the event off work premises.
  • It’s a party, not work! Do not conduct any trainings or bring up work-related topics.

We hope these simple recommendations help you throw a joyful company holiday party that is free of harassment. If you are an employer with questions about any of these issues, please reach out to one of our experienced Human Resources professionals.

East Coast Risk Management wishes you and your families a happy holiday season and a safe company holiday party.

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Are You Prepared to Handle a Sexual Harassment Claim?

by Jim Spencer

Recently, famous Hollywood actresses and actors have been speaking out as victims alleging serious sexual harassment claims against notable stars such as Charlie Sheen, Kevin Spacey, and, of course, executive film producer, Harvey Weinstein. These celebrity claims have encouraged women and men outside of Hollywood to speak up, as well. The “#metoo” campaign has impacted all of social media.

As more and more allegations come out, many employers are asking: “Are we prepared to defend a sexual harassment claim?” The bigger questions should be: “What do we need to do to protect our company and our employees against sexual harassment and how can we prevent it in the first place?”

Let’s be honest, not all workplaces are like Hollywood. By now, most employers in the U.S. have an anti-harassment policy in place that addresses sexual harassment. If you don’t, I would recommend that you do so immediately.

First of all, what is sexual harassment? A lot of people don’t know the answer to this question. Essentially, it’s defined as unwelcome sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature. Essentially, there are two forms of sexual harassment: hostile work environment (unwanted, unwelcome, or offensive conduct involving sex), or quid pro quo (something for something). A typical hostile work environment example would be one employee repeatedly asking another employee out on a date despite several refusals, or perhaps an employee giving another employee an unwanted neck massage. Don’t forget, sexual harassment can also come from a non-employee, such as a vendor or a customer. A notable example of quid pro quo would be a manager saying to a subordinate, “Hey, I’ll make sure you get that promotion and pay increase if you’ll sleep with me”.

I could spend all day listing the different scenarios you could face. They are, in fact, limitless. By now, most everyone who reads this blog should have either been through a training session or maybe even conducted training on this topic. If you haven’t done any training or it’s been a long time since you have, that’s a problem. Even if you have a good policy in place, you can’t just assume everyone will read it, understand it, and know what their roles are. Training has got to be a top priority and should be done annually. If you don’t know when the last time was that you had formal trainings, then I would highly recommend putting together a training program ASAP. If you simply don’t have the time or aren’t sure where to begin, the HR professionals at East Coast Risk Management will gladly help you. We can even coordinate and conduct your training efforts for you.

The following list details essential elements that your company should have in place in order to try to prevent sexual harassment and to defend the company if a lawsuit does happen:

1. A Sexual Harassment POLICY: A solid policy has to include reporting requirements. Make sure your policy is clear and concise on what to do for reporting a possible sexual harassment issue. I cannot stress enough the importance of reporting requirements. This needs to include clear instructions to employees on what to do if they are victims or witnesses of sexual harassment. To whom do they report the incident? Be sure not to limit that reporting to one person (i.e., “your supervisor”) in case that person is the problem. You also want to tell them how the investigation process will work. Let them know their statements must be truthful and in good faith and how the results of the findings will be reported.  Once you have the right policy in place, train your employees to ensure they understand it. Then follow it consistently. Do not deviate from that policy.

2. Annual TRAINING: You definitely want to train your supervisors and management team on an annual basis. This also holds true for the rest of your employees. Not only do they need to follow your policy, but they also need to be aware of what constitutes sexual harassment. I’m sure you’ve taken the time to review this during orientation, but like your supervisors and management team, your regular employees need training, too. I’ve had several instances when I was investigating sexual harassment allegations when the accused truly didn’t believe they were doing anything wrong. Some employees will feel it’s okay to touch other employees or to provide those mid-afternoon massages. The fact is they may not know they are doing any harm. By providing training you are informing them that their actions may be considered unwelcome or unwanted, and are inappropriate in the workplace, BEFORE they create a potential claim.

3. Proper INVESTIGATIONS: Chances are, not all the accusations that are flying around Hollywood right now will prove to be true. At some point, we’ll probably learn that some were either exaggerated or flat out lying. Why do I say this? Companies may see an increase of complaints simply because of the increased awareness of these allegations in the national news. It is extremely critical to make sure you do a complete, total, and thorough investigation into any claim that comes across your desk. Remember, just because an allegation is made doesn’t necessarily mean the accused is guilty. That is why the accused is called the “alleged” harasser. Make sure to be fair, thorough, and consistent when handling any sexual harassment allegation. It’s also important to instruct your supervisors and management teams how to handle the information gathered during an investigation.

Keep in mind, too, that the punishment should fit the crime. Just because harassment is found, it may not necessarily be a terminable offense. For example, an off-color joke might be corrected by counseling and progressive disciplinary actions. However, for those events that are egregious, immediate termination may be the best option. Depending on the details of the allegation, it may be prudent to suspend the accused harasser until the investigation is complete. Then, if the employee is found guilty, turn the suspension into a termination. If the determination is “not guilty”, reinstate the employee and pay them for the duration of the suspension.

4. No RETALIATION: Your policy must state that there will be no retaliation against any individual who comes forward with a good-faith claim. Should an employee make a good-faith claim of harassment, they need to know that they are safe from any possible repercussions such as a termination, reduction in pay, transfer to a lower position, not being considered for advancement opportunities, etc. More than that, such retaliation is illegal. Companies that are sued for harassment may pay out even larger sums of money in court if they are found to have retaliated against the employee who brought forth the claim. Make sure to address this not only with your supervisors and managers, but also with your regular employees so they know they can make a claim without fear of retaliation.

In case you need more convincing . . . in 2016, more than 91,000 charges were filed for various harassment claims. Of those, 26,000 claims were based upon sex discrimination. Retaliation made up 44.5% or 39,000 claims. This is serious business folks. What was the total payout of these claims? The Equal Employment Opportunity Commission recovered $545 million!

What I’ve provided to you in this article is a blueprint that will help you design and build a successful and meaningful anti-harassment policy, help prevent claims and defend them if one happens. Let us not forget, if you talk the talk by having a policy, you must also walk the walk by enforcing the policy as it is written.

If you are struggling with what to do next, whether it is putting together a policy or conducting training, the HR experts at ECRM can help you. Employers can contact our HR team by calling 724-864-8745.

Learn from the mistakes of Hollywood and be prepared to defend your company and more importantly, your employees, against sexual harassment.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

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If You are Asking the Salary Question — Beware.

by Nancy Owen, PHR

“What were you paid at your last job?” This is a question frequently asked by recruiters and hiring managers. The response is supposed to give the employer a clue as to whether or not a candidate will be satisfied with the pay in the open position. But this question is stirring debate among HR professionals and legislators. Some believe it can stifle diversity in your workforce, encourage pay inequity, and lead to a perpetuation of past discrimination.

If you are asking candidates about their salary history, either on job applications, during an interview, or when negotiating, be careful. A few states and municipalities have actually made it illegal to ask. You should review your state or local laws before assuming it is okay to ask.

Fifty years ago, in an effort to abolish wage discrimination based on gender, President John Kennedy signed the Equal Pay Act. All workers are covered by this Act which regulates the conduct of state, local, and federal governments and most private employers. The law was passed to help rectify the wage inconsistencies that were being experienced by women in the work place. The law is almost always applied to situations involving women who are paid less than men for doing the same jobs.

Oregon, Massachusetts, Delaware and California have become the latest states to address pay equity by prohibiting employers from asking job applicants how much they earned in previous jobs. Laws that prohibit asking about salary history in these states either took effect in 2017 or will take effect in 2018. New York State has banned such questions in the screening process for employees in state agencies and the legislature is considering a ban for private employers in that state as well.

New York City, New Orleans, Pittsburgh, and San Francisco have all passed similar laws prohibiting employer questions about salary history.

If you operate in any of the states or municipalities noted, you should remove any questions about salary history from your job applications and instruct your hiring managers, or the responsible interviewers, not to ask applicants about salary history.

No matter where you operate, here are suggestions for the best way to establish pay for any one particular job:

  1. First consider evaluating the position itself. What is the job worth to the company? Don’t think about any one person. Just concentrate on the job and what it is worth to your organization. Then do some research to learn what other employees in similar jobs are getting paid. Be sure to look at similar industries and consider location when researching.
  2. This process will be a lot easier if you have an accurate job description prepared for the open position. As we have mentioned in previous blog articles, no matter how big or how small your business is, written job descriptions are an essential piece to any organization.

Here are some things you may want to consider before setting a pay grade for your job title:

  • Does your organization have a pay philosophy when it comes to salary?
  • What is the set budget for the job?
  • Is there a need for a degree, certifications, license or extensive experience that could cause the salary to increase?
  • Consider a salary range. This will give you room to hire experienced candidates that are entry level as well as candidates that are expert level.
  • Consider the results of the salary market analysis. Is there a demand for the job? This may cause the salary to escalate. Is the job market saturated with the skill set? This may cause a lesser salary.
  • What is the cost of living in your area? What is standard for your industry? Some areas and industries are simply known as being higher-paying and that typically affects overall pay scales.

If you are an employer with questions, please contact our HR team by calling 724-864-8745.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

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Tracking Time: The Methods, the Risks and When You Can Change Time Cards

by Nancy Owen, PHR

As Ben Franklin once stated, “Time is Money”. Entrepreneur Brian Tracy says, “Your greatest resource is your time.”

So how do you keep track of your employee’s time?

Keeping track of non-exempt employees’ time is not an option for employers – regardless of whether you pay them on a salary or hourly basis and regardless of whether or not they ever actually work overtime. Federal and state laws require employers to keep records of all hours worked, all wages paid, and other conditions of employment.

Certain records, such as those containing wage dates, hours worked and pay dates, must be kept for at least three years. Records on which wage computations are based should be retained for two years, such as time cards, wage rate tables and work time schedules. These records must be open for inspection by the Department of Labor’s Wage and Hour Division representatives in the event of an audit or a complaint. The records may be kept at the place of employment or in a central records office.

The law does not specify how an employer keeps track of an employee’s time, only that it must be done.  Employers have a variety of options when it comes to the method used to keep track of time worked.  Here are some of those options.

  1. Manually with a paper form: Many smaller employers still use paper forms, usually customized to their specifics. The information is written on the form by hand by the employee each day or week and then handed in to their supervisor for approval. This method of calculating time creates much more work for all parties involved, as the numbers will need to be manually entered into a payroll or HRIS system and the risk of human error is therefore much higher.
  2. On Line Portal: This method is widely used today. The employees go into a website and punch in and out through a computer. One disadvantage of this system is that supervisors have no way of verifying accuracy if employees miscalculate their hours worked.
  3. Time Clock: This is used quite often today. The cost to employers is less than other systems. Employees either use a pass code or a badge to punch into the time clock. This type of system has a high percentage of time fraud associated with it because employees can piggy back into the site behind other employees and it is easy for one employee to punch in or out for another employee.
  4. Mobile Devices: Many companies that have a large offsite workforce allow their employees to clock in and out using an app on their mobile device. These employees need to be trusted that they are where they say they are when using this method.
  5. Biometric Clocks: Biometric time clocks work by identifying employees based on their unique traits such as fingerprints or the iris. Biometric clocks cost more than the other methods, but they are still often the most cost-efficient option. The clocks work seamlessly with the employer’s time and attendance software, leaving little room for human error and minimal chances for missed punches which cost additional time to fix manually. The percentage of time theft is also very small which adds considerable savings for employers.
  6. Fixed Schedules: Many employees work on fixed schedules that seldom change. The employer may keep a record showing the exact schedule of daily and weekly hours worked and merely indicate that the worker did follow the schedule. When a worker is on a job for a longer or shorter period than the schedule shows, the employer must record the number of hours the worker actually worked on an exception basis.

Whichever method you choose, you will want to have a policy that prohibits falsification of time cards or time clocks. When an employee deliberately records time incorrectly, or punches in or out for another employee, most employers consider this type of action to be a terminable offense. If you are one of these employers, you must inform employees of this standard and enforce the rule across the board.  If discipline for this offense is not enforced consistently, it may be used to support a discrimination claim.

Most employers do not require exempt workers to keep track of hours because it’s not required by the law. If you do not require exempt employees to keep a record of hours worked, make sure that there is no question about your employee’s status as exempt from overtime pay. If you have incorrectly classified an employee as exempt, but it is later determined that the employee was non-exempt, that employee might make a legal claim for overtime pay. If there are no records of the employee’s work hours, the employer will have great difficulty countering the employee’s claim as to the number of hours he or she worked. Time sheets for exempt employees should record sick days, floating holidays, vacation time, jury duty, bereavement, and other absences.

The risk to an employer for not keeping time records or for keeping incorrect time records can be high.

The Department of Labor (DOL) sees federal wage and hour claims pour in every day. They come from disgruntled employees, former employees and whistle-blowers. Bad payroll and timekeeping records lead many of these claims to be resolved in favor of the employee, costing employers thousands of dollars.

Regarding wage and hour violations, the stakes are getting higher. In several recent cases, the government has penalized company owners and officers for failing to pay overtime – imposing stiff fines and even imprisonment since wage and hour violations can also lead to personal liability.

In one case, the president of a Minnesota sheetrock company was sentenced to two years in jail and a potential fine of $3.3 million for intentionally underpaying employee overtime and union pension and benefit contributions.

In another recent case, the owners and officers of an Illinois security company were fined over $200,000.00 in back wages and liquidated damages for violating overtime and record keeping provisions.

Walt Disney will pay 16,339 employees back wages that total 3.8 million dollars. The DOL officials found that Disney violated employment law regarding minimum wage, overtime and timekeeping requirements.

Often federal and individual state labor laws are written with a clause that assumes employer guilt in the absence of adequate records. In other words, unless an employer has detailed enough records to prove that a violation did not occur, the employer will usually be found guilty of violating labor laws. To learn more about the timekeeping requirements of the federal Fair Labor Standard Act, read the DOL’s fact sheet about record keeping.

Please remember that in the event of a wage and hour claim, the burden of proof is on the employer to show there was no violation.  Proper timekeeping practices and good recordkeeping could save employers thousands of dollars. So why take a chance? Make sure you have a fool proof method for your time keeping.

We have had a lot of questions recently about an employer’s ability to change an employee’s time card.  Most of the time, the reason time cards are changed is to correct some type of error made by the employee when documenting hours worked.

Employers can modify a time card without an employee’s knowledge as long as the change is a legal one. Some legal reasons include:

  • the employee forgot to punch in or out;
  • the employee took paid vacation;
  • the employee accidentally double-punched a time; or
  • there was some type of glitch in the system and the time had to be manually added in later.

There are times when it would be illegal for a supervisor to modify an employee’s time card. Those instances would include:

  • a supervisor reducing the hours on a time card as a form of punishment (including removing overtime hours worked); or
  • clocking an employee out for a break or a lunch they did not take or during which they were not freed of all work responsibilities.

Legally, time cards must accurately reflect all hours actually worked.  Any change to a time card that fails to do so would be illegal.

If you are an employer with questions, please contact our HR team by calling 724-864-8745.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

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Social Media: A Cautionary Tale Courtesy of ESPN

by Derek Ross

The recent news regarding ESPN sports anchor Jemele Hill is a reminder to employers to be cautious when disciplining employees for voicing opinions outside of the workplace.

Last week Ms. Hill made controversial tweets about President Trump, calling him a “white supremacist” on Twitter. Ms. Hill later issued a statement expressing regret that her personal beliefs had painted ESPN in an unfair light and that she continues to respect her colleagues and her company.

ESPN received backlash for not suspending or firing the sports anchor for her comments given the fact that the company has fired sports personalities in the past over social media comments. For instance, former ESPN employee Curt Schilling was terminated after sharing a lewd picture criticizing the controversial North Carolina “Bathroom Bill” barring transgender people from bathrooms and locker rooms that do not match the gender on their birth certificates. This was not the only violation that Schilling had committed and was the justification for his dismissal. After terminating Mr. Schilling, ESPN assured fans that “ESPN is an inclusive company”. This was Jemele Hill’s first offense.

Late last week, ESPN’s President John Skipper issued a statement that said, “We have social media policies which require people to understand that social platforms are public and their comments on them will reflect on ESPN. At a minimum, comments should not be inflammatory or personal.” Mr. Skipper also said it was a “violation of standards” and that the matter was dealt with privately.

It is yet to be seen if the social media uproar will affect ESPN’s business or ratings but this is likely not the coverage that ESPN would like to see at the forefront of many news casts.

Social media outlets are becoming more and more popular for employees as a place to say whatever they like, whenever they like — with or without consequences looming. From a business standpoint, social media can be one of the most powerful marketing tools in your arsenal. To protect your business, you should establish a social media policy. A carefully written, clearly communicated and consistently enforced social media policy will not only help you steer away from trouble, but it will help you navigate through a firestorm.

Here are a few steps I first shared in my February blog post “How to Help Your Company Avoid Social Media Messes”:

  1. First, employees need to know that they could be putting their jobs on the line if they post anything to social media, including pictures or videos of the workplace, if those postings are unlawful, include discriminatory or abusive language, are maliciously false, or violate company policies such as Anti-Harassment or Confidential Information.
  2. You can also require that your employees make it clear in their social media activity that they are speaking on their own behalf and not on behalf of the Company and that any statements made about the Company or any other employees must be truthful and accurate.
  3. Supervisors need to be trained to proceed with caution when dealing with social media issues. If confronted with a public relations nightmare created by an employee using social media, make sure the company’s response is appropriate. Organizations may be ordered to provide back pay and reinstatement if it is determined that the employee was wrongfully terminated. It is best to check with an HR professional to assess whether a specific posting is protected by law.

Remember that the National Labor Relations Board (NLRB) is very particular about these policies. Avoid any language that could be interpreted as an attempt to limit an employee’s protected right to “concerted activity”. In other words, avoid broad language that is too restrictive. It also helps to include a disclaimer stating that the policy is not intended to restrict communications or actions protected or required by state or federal law.

Be extremely careful when you consider firing an employee over social media post. Courts have found that social media violations constituted a legitimate, nondiscriminatory reason for firing an employee. Past decisions by the NLRB hold employers liable for terminating employees related to social media if the actions are related to protected concerted activity under the National Labor Relations Act. The NLRB has made a point of protecting employees who discuss their working conditions, complaints and terms of their employment with other employees through social media. So before you consider disciplinary action or termination of an employee for a social media posting you may want to check with your legal counsel regarding the following concerns:

  • Did the employee make complaints or threats against customers?
  • Was there harassing speech against a co-worker?
  • Was confidential information discussed or information about the company or client relationships or other information that may harm the company’s reputation in the marketplace?

One more caveat regarding social media. Employers who use social media in hiring process decisions must be aware of the risk involved. Federal and state laws generally prohibit discriminatory hiring decisions based on protected categories such as race, color, religion and sex. The danger of conducting background checks of applicants using social media is that you may discover the applicant belongs to a protected category—information you probably wouldn’t learn through your general application process.

The Fair Credit Reporting Act (FCRA) governs “employment background checks for the purposes of hiring” and applies if “an employer uses a third-party screening company to prepare the check.” Under the law, if you use an outside service to view social networking sites and provide information, the applicant must be informed of the investigation, given an opportunity to consent and notified if the report is used to make an adverse decision. If you decide to use social networking information in your hiring decision, you may want to think about conducting that yourself, not through a third party. That avoids claims under the FCRA.

If you are an employer in need assistance, East Coast Risk Management can help with creating a social media policy or revising your current policy. Please contact our HR team by calling 724-864-8745.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

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Employee or Independent? A Word of Warning for All Employers (Especially in North Carolina)

by Nancy Owen, PHR and Laura Pokrzywa

Though the issue is one of concern for all organizations, employers in North Carolina should be especially concerned regarding misclassification of an employee as an independent contractor.

According to the Internal Revenue Service (IRS), millions of workers across the country are currently misclassified as independent contractors. Some employers are careless with classifications because treating the employee as an independent contractor allows the employer to escape paying social security, medicare, unemployment and payroll taxes. In fact, the IRS estimates that some employers save more than $43,000 per year in taxes by misclassifying employees.

When it comes to misclassifications, the employer’s gain is the government’s loss. In addition, employees who are improperly classified stand to lose important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation. In their continuing efforts to stem the tide of misclassifications, the IRS teamed up with the Department of Labor (DOL) to share information. But the teamwork doesn’t stop there. Last month, North Carolina’s governor signed into law the North Carolina Employee Fair Classification Act. A portion of this law addresses worker classifications and will take effect at the end of this year.

The definition of “employee” and “independent contractor” remain unchanged under North Carolina’s new state law, but it creates a new section of the North Carolina Industrial Commission. The Employee Classification Section makes it easier for the state to pursue employers who misclassify their employees by providing for the sharing of information among various state agencies.

State Licensing boards will also be required to ask applicants to disclose any investigations for state employee misclassification along with the outcome of the investigation. Failure to comply will result in denial of the license or permit.

North Carolina’s posting requirements will also change as of the end of 2017. North Carolina employers subject to the Wage and Hour Act will be required to post amended posters that address provisions related to independent contractors. The new language includes instructions for employees who believe they have been misclassified as an independent contractor to report the suspected misclassification to the state Employee Classification Section within the Industrial Commission. The poster offers further instructions for the employee to include the physical location, mailing address, telephone number, and e-mail address where alleged incidents of employee misclassification occurred.

As ECRM’s Renee Mielnicki, Esq. explains in a December 2013 blog post, “Employers are left to decide whether or not it’s worth it to misclassify an employee given the consequences. Even if misclassification is unintentional, the penalties remain the same. Some estimate that if an employer gets hit in an audit for misclassification, the penalty may be as much as 40% of the Form 1099 gross amount. For small business owners, this may force them to close their doors. The best practice is then to first determine proper classification as an employee or an independent contractor.” She also explained that employers who are audited by the IRS and found to have misclassified an employee will be forced to pay back taxes, with interest, and a penalty.

In an effort to help employers do the right thing, in 2015 the DOL’s Wage and Hour Division issued an Administrative Interpretation that sought to clarify the definition of “independent contractor”. The DOL’s 15-page Interpretation of the Fair Labor Standard Act (FLSA) referred employers to the multi-factor “economic realities” test developed by the Supreme Court and Circuit Courts of Appeals to determine whether a worker is an employee or an independent contractor under the FLSA. Please note that the DOL warns these factors should not be applied as a checklist but should be considered in total, as they relate to each other. No one factor should be over-emphasized. The factors typically include:

A.  the extent to which the work performed is an integral part of the employer’s business;
B.  the worker’s opportunity for profit or loss depending on his or her managerial skill;
C.  the extent of the relative investments of the employer and the worker;
D.  whether the work performed requires special skills and initiative;
E.  the permanency of the relationship; and
F.  the degree of control exercised or retained by the employer.

Employers who believe that they have misclassified workers as independent contractors may be able to correct the issue courtesy of the IRS’ Voluntary Classification Settlement Program (VCSP). If they qualify for the program, the employer may voluntarily reclassify a worker as an employee and pay a penalty of only 10% of the employer’s tax liability. No other interest or penalties will be charged. The employer also must agree to treat the worker as an employee in the future and pay the proper taxes.

In her 2013 article, Mielnicki offered a warning to employers who might be considering this program. “Before deciding to voluntary enter the VCSP program, employers should be aware of its potential downfalls. Misclassification could expose the employer to wage and hour violation claims by a worker now classified as an employee which could impose further liabilities for benefit or compensation claims. This is especially true in light of the IRS’s partnership with the DOL to share misclassification information. Then what should an employer do? Employers should first analyze whether their current classifications are correct. If they are not, before applying for the VCSP, the employer should weigh the potential costs of entering into the VCSP and the potential for exposure to other liabilities in litigation as compared to the costs of continued non-compliance and the potential of a future IRS audit.”

If you are an employer with questions, please contact East Coast Risk Management at 724-864-8745.

Disclaimer: The information provided on this website is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this website do not create an attorney-client relationship between East Coast Risk Management or our employment law attorney and the user or browser.

 

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Safety Reminders for the Eclipse

A SPECIAL BULLETIN from ECRM’s SAFETY TEAM

Most of North America will witness today’s solar eclipse in one form or another. The eclipse will begin its sweep across the United States at 10:15 a.m. Pacific time. According to NASA, the fully eclipsed Sun will be visible along a 70-mile-wide path arching from Oregon to South Carolina. Observers outside this path will still see a partial solar eclipse with the moon covering part of the sun.

With all the excitement of this monumental event, many companies have planned special activities including eclipse parties and special breaks to allow employees to stop their work, step outside, and experience this amazing phenomenon.

If your employees are planning to view the eclipse, whether you are in the “path of totality” or not, here are a few important reminders from NASA to keep those eyes safe:

  • Homemade filters or ordinary sunglasses, even very dark ones, are not safe for looking at the sun; they transmit thousands of times too much sunlight.
  • The only safe way to look directly at the uneclipsed or partially eclipsed sun is through special-purpose solar filters, such as “eclipse glasses” or hand-held solar viewers that are compliant with the ISO 12312-2.
  • Always inspect your solar filter before use; if scratched or damaged, discard it. Read and follow any instructions printed on or packaged with the filter.
  • Stand still and cover your eyes with your eclipse glasses or solar viewer before looking up at the bright sun. After looking at the sun, turn away and remove your filter — do not remove it while looking at the sun.
  • Do not look at the uneclipsed or partially eclipsed sun through an unfiltered camera, telescope, binoculars, or other optical device.
  • Similarly, do not look at the sun through a camera, a telescope, binoculars, or any other optical device while using your eclipse glasses or hand-held solar viewer — the concentrated solar rays will damage the filter and enter your eye(s), causing serious injury.
  • If you are within the path of totality, remove your solar filter only when the moon completely covers the sun’s bright face and it suddenly gets quite dark. Experience totality, then, as soon as the bright sun begins to reappear, replace your solar viewer to look at the remaining partial phases.
  • Outside the path of totality, you must always use a safe solar filter to view the sun directly.
  • If you normally wear eyeglasses, keep them on. Put your eclipse glasses on over them, or hold your handheld viewer in front of them.

If you don’t have a proper solar filter, consider the following suggestion from NASA:

“An alternative method for safe viewing of the partially eclipsed sun is pinhole projection. For example, cross the outstretched, slightly open fingers of one hand over the outstretched, slightly open fingers of the other, creating a waffle pattern. With your back to the sun, look at your hands’ shadow on the ground. The little spaces between your fingers will project a grid of small images on the ground, showing the sun as a crescent during the partial phases of the eclipse. Or just look at the shadow of a leafy tree during the partial eclipse; you’ll see the ground dappled with crescent Suns projected by the tiny spaces between the leaves.”

Perhaps the safest way to view the event is to watch NASA’s live stream of the eclipse!

If your employees will be driving, make sure they remember a few basic safety rules:

  • Do not stop in the middle of the road to view the eclipse. Move your car off the road, to a safe location.
  • Take care not to trespass on the personal property of others.
  • Keep your headlights on, and don’t rely on automatic headlights.
  • Do not wear your eclipse glasses, while driving.
  • Do not try and photograph the eclipse while driving.
  • Be mindful, that pedestrians will be walking around looking in the sky, and not watching for cars.
  • Plan your trip accordingly to allow for extra congestion on the roads during the eclipse period.

By keeping these safety tips in mind, you and your employees can safely enjoy this amazing spectacle.

ECRM’s team of safety professionals provides full-service safety consulting and safety training. For more information, contact us today by calling 724-864-8745 or emailing us at info@eastcoastrm.com.

Posted in Uncategorized |

How Off Duty Conduct Can Cost You Your Job

by Renee Mielnicki, Esquire

By now we are all familiar with the tragedy that happened in Charlottesville, Virginia over the weekend. As a recap, white nationalists assembled in Charlottesville to protest the city’s plan to remove a statue of Confederate General Robert E. Lee from a local park. What started as a protest turned into a firestorm of hatred and violence leaving one dead and many injured.

Many of us were shocked at the images we saw on television. You would think that in 2017, we, as a nation, were far past this type of thinking and behavior, but this weekend has proven we are not. In fact, one could argue that this display of hatred has set us back decades. I know I, myself, started wondering, who are these people? Where does someone who belongs to such extreme racist organizations even work today? I mean, who would hire them? Does the employer even know they belong to such organizations? Probably not. As I listened to the radio and watched television coverage of this story, I learned that these extremists could be working right alongside of you and me and we would have never known it. I think a lot of people were probably shocked to learn that those involved were people they would never have expected.

Given the nature of my profession, I started thinking about the types of consequences this could have on the careers of the people involved. If one of my clients called to tell me that one of their employees was seen on television carrying a torch or white supremacist materials, wearing extremist garbs, involved in an act of violence or spewing racial slurs, I already know the advice I would give. It’s true that this conduct did not occur at work. However, this event was covered nationwide on television for the whole world to see. These images are not going to go away anytime soon, especially those on the internet. Continuing to employ a person that has such hatred, rage and violent tendencies carries several risks for an employer. First and foremast is the threat to the reputation of the employer. All employers are in the business of selling something that they want someone to buy. A continued association with such an employee could cause consumers to not want to buy from the employer anymore. Business would ultimately be lost and a reputation permanently damaged. Second, one could also argue that such behavior might suggest that the employee is a potential danger to the safety of other employees in the workplace. Third, bringing such an employee back to work after engaging in this type of behavior is likely to cause conflict with other employees, including the potential for workplace harassment.

I often counsel clients on terminating employees for off-duty conduct and their question to me is always the same. “Am I allowed to do that?” In most cases, yes you can. This past weekend highlights the type of circumstances where such would be appropriate. Of course, before I made any final decisions I would investigate the matter. I would make sure the video or photos that I was relying upon were in fact the employee in question. In addition, I would make sure that state law did not prohibit me from firing an employee for off-duty conduct (and most don’t, by the way). As long as my investigation confirmed that the person in the video or picture was actually the employee in question, I would advise them to immediately move to sever the employment relationship (of course, I’d still double-check state law on off-duty conduct — but remember in most instances there aren’t any).

I would also give the same type of advice to an employer who was in the midst of hiring one of the participants and stumbled across a photo or video of the person from this past weekend. The same issues would be at hand. Hiring this type of person could tarnish the company’s reputation, lead to potential workplace violence and create huge conflicts within the organization. Denying employment for these reasons would also be legal.

As both an American and a human being, I feel sad that this happened. I wondered if these people gave any thought beforehand to the repercussions that this type of conduct could have on their lives and jobs. Too late now because the damage is already done, not only to them (not that there is any empathy for that) but also to the people they hurt in the process. But on a positive note, employers do not have to, nor should they, put up with this type of behavior, even if it didn’t occur on the job.

Employees need to beware that what you do off duty can have serious implications in your career and can ultimately cost you your job.

If you are an employer with questions, please contact East Coast Risk Management at 724-864-8745.

Disclaimer: The information provided on this website is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this website do not create an attorney-client relationship between East Coast Risk Management or our employment law attorney and the user or browser.

Posted in Human Resources | Tagged , , ,

Cell Phone Use: Hands-free is not Liability-free for Employers

by Laura Pokrzywa

The driver in front of you is all over the road — making hard stops, cutting corners, and even crossing the center line. The problem isn’t drugs, alcohol or fatigue. The problem is distracted driving. The distraction is the driver’s cell phone.

According to the National Highway Traffic Safety Administration, 3,477 people were killed and 391,000 were injured in motor vehicle crashes involving distracted drivers in 2015. Texting and talking on cell phone are leading causes of distracted driving. Since just about everyone has a cell phone these days, the problem seems to get worse every year. In response to the rising risks, in 2010 and 2011 Federal law banned commercial truck drivers, bus drivers, and drivers transporting hazardous materials from using hand-held cell phones and messaging on electronic devices. Many states and municipalities have also taken action to try to reduce the statistics. Today every state but one (Montana) has some kind of law restricting cell phone use by drivers. For example: text messaging is banned for all drivers in 47 states (up from 35 states just 2 years ago). The use of handheld cell phones has been banned for drivers in 15 states (up from 9 states 2 years ago) and more states are considering similar bans.

None of these state laws specifically define an employer’s responsibility concerning company-owned vehicles, cell phones or an employee using a personal phone to conduct company business while operating a vehicle. Though the use of hands-free devices remains legal in all states, the laws do little to limit an employer’s liability.

Hands-free or not, if one of your employees is involved in an accident while using a cell phone to conduct company business, you may be liable. According to the National Safety Council (NSC), employers can and have been held liable for actions that are actually allowed by federal regulation and individual state laws. In fact, the NSC says employers are being held liable up to $25 million for employee crashes, even when employees use hands-free devices.

Establishing a company policy that prohibits drivers from using a hand-held device will not remove liability completely, nor will it guarantee that your drivers won’t have other distractions, but it will go a long way in protecting you and your employees.

In their publication, Employer Liability and the Case for Comprehensive Cell Phone Policies, the NSC says, “Employers who expect employees to use cell phones while driving as part of their business must recognize that doing so exposes their employees to preventable crash risk.” In fact, the NSC recommends that employers go further than state laws and prohibit the use of hands-free devices while driving.  It goes on to recommend, “The best action for employers is to implement a total ban policy that includes handheld and hands-free devices and prohibits all employees from using cell phones while driving.”

Whatever your company’s policy, it must, at a minimum, clearly require compliance with applicable state laws. You can find more information about specific state’s laws by visiting the Insurance Institute for Highway Safety website or by contacting your state’s office of highway safety.

If you need assistance with your cell phone or safety policies, please contact East Coast Risk Management at 724-864-8745. We have safety and human resources professionals ready to help.

Disclaimer: The information provided on this website is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this website do not create an attorney-client relationship between East Coast Risk Management or our employment law attorney and the user or browser.

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