What Constitutes Gross Misconduct When it Comes to COBRA?

by Nancy Owen, PHR

First, let’s first look at what COBRA is and which employers must provide it.

The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA is a law that was passed in 1985 by the United States Congress and signed by President Ronald Reagan. This law makes it mandatory for covered employers to give eligible employees the ability to continue health insurance coverage for a limited time when coverage under the plan would otherwise end due to certain qualifying events, including termination of employment.

COBRA administration is shared by three federal agencies. The U.S. Department of Labor (DOL) handles questions about notification rights under COBRA for private-sector employees. The Department of Health and Human Services handles questions relating to state and local government workers. And finally, the Internal Revenue Service, Department of the Treasury, has issued regulations on COBRA provisions and shares jurisdiction for enforcement of these provisions with the DOL.

COBRA compliance applies to almost every business that has 20 or more employees and offers a group health care plan. However, COBRA does not apply to group health plans maintained by small employers (fewer than 20 employees) or churches. There are also special coverage rules for governmental employers, although, most governmental group health plans are required to offer continuation coverage.

There may be an exception to this rule for many small employers. Many states have their own laws that are similar to COBRA that apply to fully insured group health plans; however, unlike the federal law, these state laws may include plans maintained by churches and by employers with fewer than 20 employees. These are usually referred to as “mini-COBRA” laws. That means even though an employer may not be subject to federal COBRA, it may nevertheless be required to provide continuation coverage under their state insurance law. Self-insured health plans maintained by private-sector employers are typically not subject to state continuation coverage requirements. A group health plan is not subject to COBRA for a calendar year if the employer maintaining the plan normally employed fewer than 20 employees on typical business days during the preceding calendar year.

Now that we know what COBRA is, do you also know that you don’t ALWAYS have to extend COBRA to a terminating employee? One exception would be when the employee is terminated for gross misconduct. When that happens, the termination is not considered a COBRA-qualifying event and the employer does not have to offer COBRA continuation coverage to the ex-employee, or the ex-employee’s covered spouse or  dependent child(ren).

The COBRA statute does not specifically define the term gross misconduct, so the courts have taken the lead on deciding whether to apply it on a case by case basis. That means it’s up to employers to determine whether their gross misconduct definition meets the standards that were previously ruled on from past court cases as well as regulatory and legal developments.

Courts that have faced the gross misconduct case generally refer to the two questions below when deciding if the conduct is truly gross misconduct.

  1. Was the conduct intentional, willful, deliberate or reckless, and was that conduct performed with a conscious or reckless disregard of the consequences of one’s acts for the very purpose of causing harm or with knowledge that harm would result in the employer’s best interest?
  2. Did the conduct have a connection or series of connections or physical presence linking the gross misconduct or performance directly to the employer, a co-worker or a current or former client or customer?

To minimize their risk, many employers have decided not to apply the gross misconduct exception at all, but, instead, to extend COBRA to all terminated employees regardless of the reason for the termination. Another way employers can limit their risk is to clearly communicate to employees the type of behavior the company considers to be gross misconduct. This can be done by adding your policy to your your employee handbook or to the employee’s contract of employment. When you identify gross misconduct in advance, you are informing your employees what you consider to be significant and this will assist you later should you find you have a claim against you for not providing COBRA to an employee who was terminated for this cause.

Here is a list of conduct that most employers would consider to be gross misconduct:

  • Fighting, physical assault, abuse, or threatening behavior
  • Blatant disregard for the safety of others or serious breaches of health and safety rules
  • Deliberate acts of vandalism or sabotage
  • Any attempts to financially defraud the company or theft
  • Significant levels of insubordination
  • Dishonesty, falsification of documents, or other forms of misrepresentation
  • Offensive or unlawful behavior (such as discrimination, harassment, or bullying)
  • Working under the influence of illegal drugs or alcohol

Should you decide to deny COBRA to an ex-employee on the basis of gross misconduct, be sure you keep detailed records of the process used to determine the gross misconduct along with any notices or correspondence to the ex-employee.

Just remember, COBRA mistakes can be costly whether they were intentional or not. Employers may be liable for a penalty of up to $110 per employee or family member for each day of noncompliance. The Employee Retirement Income Security Act (ERISA) provides for additional penalties and gives affected persons—as well as the Department of Labor—the right to file a lawsuit. Be sure you are sending timely notifications to your plan administrator when a qualifying event occurs, including terminations or a reduction in hours, such as a leave of absence or a layoff. For more information about COBRA compliance, see Derek Ross’ recent article, Should We Continue Health Insurance When an Employee is on Leave?

Employers with questions about COBRA compliance, or any other HR concern, can contact our HR professionals by calling us at 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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Best Practices When Terminating an Employee

by Renee Mielnicki, Esquire

We are frequently called upon to help our clients with the process of terminating an employee. Believe it or not, how you handle this process may determine if you will hear from your former employee again through some type of lawsuit. Severing ties with an employee is never easy, but unfortunately, it happens a lot in the working world. It’s a very emotional process for both the employer and the employee. Terminations have a lot of legal implications so they require proper handling.

Let’s pretend we have made a decision to terminate an employee because of their poor performance. We have had this employee on a written performance improvement plan for months. This employee clearly knows why he is failing at his job and what he has needed to do to improve, but he just hasn’t done it. Once you have decided to terminate this employee, what does the rest of the process look like?

Well, to me, it almost always looks about the same. Step one is to review your documentation and decision to terminate this employee with your attorney or a qualified HR professional. Before you let anyone go, you should first make sure your decision to do so is legally sound. Once you have the approval of a professional, the next step should be to review a prepopulated checklist regarding items such as gathering company equipment, revoking privileges to company databases, company emails and reviewing what is owed in their last paycheck. Once we have gone over that list, we need to think about how we will accomplish each task on the list. For instance, I often alert the IT professional shortly before I am about to terminate an employee. As soon as the news is delivered, I inform the IT professional that it has been done, who then locks the employee out of all company systems right away. All of these steps should be planned well in advance.

We next need to pick the date, the place and the people involved in delivering the bad news. There should be no real delay between the behavior that has led to your decision to terminate the employee and the delivering of the news. Why? Because lawyers can poke holes in the reasons for your delays, and you don’t want that.

Once you have your date, you want to be strategic with “the where” and “the who” which are involved in the termination meeting. Think about how your workplace is set up and who may be around at the time this takes place. You do not want to draw any attention to a termination discussion for several reasons. One, it creates drama and gossip, which are not productive. Two, it can embarrass the departing employee and make them even angrier and therefore more likely to run to a lawyer. Another good tip is that all termination discussions and reasons therefore should be kept confidential, both before and after a termination occurs. Sharing this information, or even spreading rumors and gossip about these matters, do nothing to help the company’s mission. In fact, it does quite the opposite…it slows down production and can effect morale. Sharing this information is also like the old “telephone game.” By the time the message gets from the person who started it to the last person who heard it, it is not even close to the truth. The only people who should know about these matters are those involved, including the employee’s supervisor. Remaining employees should simply be told “he is no longer with the company.”

Who delivers the message to the employee you are letting go is also very important. First, there should always be two employees from the company present when the message is given. One reason is for safety (remember this is very emotional) and the other is to act as a witness to what is said (or not said) during this meeting. You do not want to choose anyone with whom your departing employee has bad blood because that will just increase your chances of drama and even violence. Pick people he or she will see as neutral and make sure they are management since these processes are for management only.

Once we are at the meeting with the employee, the next question is, “what do we say?” The answer to that question once again is….not much. At the meeting, you should have your termination letter in hand and this is the time you are going to give it to him or her. (For more information about termination letters, see my previous blog). One rule of thumb is that a termination should never be a surprise to an employee. In my example, this employee should already know his performance is below our expectations and he is in danger of losing his job. Therefore, it should come as no shock to him when he is called into a meeting with his supervisor and the HR Manager, but is not told the subject of the meeting until he gets there. He should already have an idea what this unidentified meeting is about when asked to attend.

The two management employees in the room should know well in advance who will be speaking and who will be the witness. The speaker should be very brief, simply telling this employee, “As you know, your performance has been very poor over the past few months. For that reason, the company has decided to terminate your employment effective today.” At that time, the employee is then provided his termination letter and the meeting should end. Sometimes there will be questions, accusations or even crying when the news is given. But I always say, try to not respond, unless it’s to repeat what they already know like, “You have been on a performance improvement plan for quite some time and have not improved.” In my opinion, these meetings should take no more than 60-90 seconds or the employer has said way too much. The more we say as employers in these meetings, the more likely we are to be faced with a lawsuit. Examples of why are:

  1. We say something that isn’t true or contradicts what we have already said or documented; or
  2. We say something illegal. For instance, “You are getting older and can’t seem to keep the same pace as those younger than you.” Another example might be, “Being a mom and trying to work is too hard.” Or, “I’m really sorry about this,” which suggests the employer did something wrong, when it was all the employee’s fault.

So for that reason, what we say should be very brief. Just like the termination letter, the verbal message is simply to give our general reason and the date our decision is effective. After you have told the employee the why and the when, you simply get up and lead the employee either out of the building or to their desk to collect their belongings. Again, these type of details should be thought out and planned well in advance because each circumstance is unique.

Keep in mind these situations can be a bit more complex, such as with multiple layoffs. Those types of processes require a bit more planning, but can generally work the same as far as messaging and delivery. The same is true if you are using severance packages. Additional preparation and planning go into terminations involving such and can make it look a bit different than I describe above. If there is a one-size-fits-all-rule about terminations, it is the less you say the better it will be, for all parties involved.

If you are an employer with questions about terminations, please contact our HR professionals 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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How (and Why) to Write a Termination Letter

by Renee Mielnicki, Esquire

We counsel a lot of our employers on how to conduct a termination involving an employee. One source of confusion that occurs during this process is what to say in a letter to an employee that you have decided to let go from your business. In fact, in some cases, we are asked, “do I even need to write a letter telling them they are fired?” The answer to that question is, yes. The reason is it’s always best to put in writing how the employment relationship ended. Did the person quit? Did they resign? Were they laid off or did we terminate them for violating a company rule? Getting in writing how the employment relationship ended can be useful for several reasons, including unemployment compensation claims and for employment-related lawsuits, like discrimination.

So what should we put in this letter? The answer to that is, not much. Remember there is a good chance that this type of letter is going to be taken to an attorney, so we don’t want to put anything in there that provides ammunition for a lawsuit, including setting forth something that is untrue or that will be contradicted by someone or something else. Once it’s in writing, it can become an exhibit in a legal proceeding, so less is always better.

It should always be very clear to an employee why they are being fired. Your reason should be clear when you inform them verbally as well as in the letter you provide to them documenting what you said verbally. Allowing an employee to walk away wondering what they did to lose their job is almost always a trigger for a lawsuit. They often speculate it’s for an illegal reason and then it’s hard for the employer to show it was for a legitimate, business-related reason if they were not clear in their words and the letter.

Here is what I include in any termination letter that I provide to an employee:

  1. The effective date of the termination. This should be the same day you give them the news and the date of the letter.
  2. A formal reason why. This should be because they have violated a policy, an expected standard of conduct or have repeated poor performance. For instance, if an employee fails a drug test and the employer wants to terminate the employee for this reason, the reason outlined in the letter would be, “you have violated our drug and alcohol testing policy by testing positive for drugs” and then list the specific date.
  3. Tell them the date of their last paycheck, which should either be the next pay period after their termination date or sooner if your state law so requires.
  4. If they are on the company’s group health plan, tell them a separate letter regarding their rights under COBRA will follow.

And that’s it. It’s that easy? Your termination letter should not say any more than this. I have seen too many people write termination letters with lots of details to the point its two pages long. Drafting a termination letter that includes more than what I describe above is pretty risky because now you are stuck with it if a dispute occurs which means what you said in there better be right. I always counsel my clients that the details of the termination should be in the personnel file, rather that the letter. For instance, the reasons we asked for a drug test are set forth in a memo from the supervisor in the employee’s file along with the positive drug test report. Or, the performance improvement plan given to the employee months ago telling him how he must improve as well as the documentation showing he didn’t meet the goals for improvement go into his file. These details belong only to the employer unless and until a lawsuit happens. In that case, they then have to be provided to the other side during litigation. Remember, you don’t want to fuel a lawsuit unnecessarily by giving too many details in the letter. It’s better to be simple and clear because less is really more with these letters.

If you are an employer with questions about terminations, please contact our HR professionals 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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ICE Audits are on the Rise – Are You Ready?

by Laura Pokrzywa

The Trump administration has made immigration reform a top priority, and that includes a careful look at who employers are hiring. If you do not know what a Form I-9 is, or if you are unsure how to complete one properly (or not sure if your organization has someone who knows), take heed. Federal law requires every employer to verify that each of their employees has authorization to work in the United States. That means your organization should have a completed Form I-9 for every employee.

The penalties for employers who fail to comply range from $375 to $16,000 per violation. Neglecting your responsibility to collect and properly store completed form I-9s can be an expensive mistake, especially given the increasing likelihood of an audit by U.S. Immigration and Customs Enforcement (ICE).

One of the most recent ICE raids exemplifies this administration’s renewed efforts to ensure that U.S. businesses only hire workers with the legal right to work in the United States. On Wednesday, January 10, ICE agents raided 98 7-Eleven stores in 17 states and arrested 21 undocumented employees. The investigations started years earlier at franchise locations in New York and Virginia where managers had used stolen identities to employ at least 100 people who did not have proper authorization to work in the United States. 7-Eleven has since terminated the franchise agreements of franchisees convicted of violating these laws. ICE officials warn employers of all sizes to expect more compliance inspections.

The best thing you can do is simply be ready. The best way to get ready is to conduct your own audit before ICE calls:

  1. Do you have a properly completed I-9 for every employee?
  2. Do you have a separate secured file to store those I-9s and the supporting documentation you gathered?
  3. Have you designated and trained someone in the company to be the contact should you receive a Notice of Inspection?

Completing I-9s: To access the latest form I-9 from the U.S. Citizenship and Immigration Services (USCIS) website, click here. You will also find helpful instructions and information, including a detailed downloadable guidebook for properly completing I-9s.

Correcting I-9s: Part of your internal audit should be to check the I-9s you have on file to ensure they have been completed in accordance with the instructions given at the end of the form. If you find errors, these may be corrected, but the corrections must be noted carefully. For example, a misspelling can be corrected by drawing a line through the incorrectly spelled word and writing the correct spelling above it using a different color ink. Be careful that you never render the original mistake illegible (no erasing or using white out). Date and initial all such changes using the current date. If more extensive corrections are needed, fill out a new form (using the current date) and attach the old form to it with a brief note of explanation. Keep that in the I-9 file so that an ICE agent would be able to “follow the trail” of corrections.

Storing I-9s: Employers must retain and store Form I-9 either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials from the Department of Homeland Security, Department of Labor, or Department of Justice. Since you will have just three business days to produce the forms for inspection, it is best to keep all I-9s and the supporting documentation in a secured, separate file that is easily accessible should you receive a Notice of Inspection from ICE.

What about E-Verify: E-Verify is an internet-based system that has been used voluntarily by thousands of employers since it was introduced in 1996. This system, administered by USCIS, verifies the Social Security numbers provided by newly hired employees by checking them against Social Security Administration and Department of Homeland Security records. This allows participating employers to ensure, in a matter of minutes, that their new hire has the necessary authorization to legally work in the U.S.

A 2009 presidential Executive order required federal contractors to use E-Verify for employees working under covered federal contracts. According to a statement on the USCIS website, this action “reinforces Federal government policy that the Federal government does business only with organizations that have a legal workforce.” In addition to this federal requirement, at least 21 states have laws that require the use of E-Verify by certain public and/or private employers. Seven of those states require the use for most employers. If you are one of those employers either voluntarily using E-Verify, or required to use the system, be sure you have the required poster hanging in a conspicuous place where job applicants will see it. That poster is available for free download through the E-Verify system.

In keeping with campaign promises, last October President Trump submitted to Congress a list of 70 action points designed to reform and enforce immigration laws in the U.S. Included on that list is the requirement that all employers use the E-Verify system for all new hires. Though this change is not likely to pass through Congress any time soon, it is an issue we are watching.

If you are an employer with questions about Form I-9 compliance, please contact our HR professionals 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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Why Every Employer Should Have an Employee Handbook

by Laura Pokrzywa

As most employers know all too well, the number and cost of employment-related law suits continue to rise each year. In 2016, more than 10 percent of small to mid-size businesses faced an employment charge of discrimination of some kind, most of which involved more than one claim (i.e., discrimination based on race, sex, disability, and/or retaliation). The average time to settle one of those claims was 318 days! Worse yet, nearly one fourth of those charges resulted in defense and settlement costs averaging $160,000 per claim.1

If you are an employer, you live with the risk of facing expensive, time-consuming lawsuits for any number of reasons. You can reduce that risk with preventative measures such as training managers in risk-related areas including hiring and disciplinary procedures; training for employees regarding harassment; and finally – and this one is huge – an up-to-date employee handbook.

Though no federal or state law requires an employer to have an employee handbook, it is actually one of your best legal defenses in the event of an employee, or former employee, filing a claim against you. Here’s why:

  • Your employee handbook can help create a defense related to claims of harassment, discrimination, wage and hour issues, the Family and Medical Leave Act (FMLA) and/or the Americans with Disabilities (ADA). A handbook confirms your policies on these matters and your commitment to follow all applicable laws. Of course, you will need to follow these policies consistently in order for them to benefit you as part of a defense.
  • A good employee handbook can also prove invaluable during a hearing for an unemployment compensation claim where the employee is terminated for violating a workplace rule. Without a handbook (and a signed acknowledgement of receipt from the former employee), you have very little hope of proving that the employee knew of the policy or procedure they were accused of violating.

In addition to the legal help, a well-written employee handbook offers these great benefits:

  1. It is a powerful welcome to a new employee. It tells your new hire that you are ready for them. By equipping them with this good information, you show them that you care about your employees and that you want them to succeed in their new role.
  2. It is an excellent means of consistent communication with all employees because it allows employers to: (a) express the corporate culture (by tone and content); (b) set mutual expectations between employees and management; (c) let employees know important details about their employment, like what they should do if they are too sick to work, how they manage their vacation time, how often they will be paid, who is eligible for holiday pay, what happens in the event of severe weather, what to do if they need an accommodation of some kind, etc. A well-written handbook should mean fewer questions to your supervisors and your human resources team.
  3. It empowers front line supervisors and middle managers. Just as it answers questions for your hourly employee, it’s a great reference for you supervisors! In fact, the employee handbook should be included as an essential part of supervisor training. If your supervisors aren’t familiar and comfortable with the employee handbook, they will not be consistent in applying your policies which will create a breeding ground for legal claims.
  4. It offers protection for the company by establishing certain rights for the employer, such as the right to conduct a workplace investigation and inspect property at any time, the right to search electronic records, including any emails or internet searches conducted on company equipment, the right to conduct drug and alcohol testing under specified circumstances, the right to modify or interpret company policies, etc.
  5. Lastly, it serves as one central location for notifying employees of reporting procedures should they experience or witness harassment or discrimination, for notifying employees of FMLA rights (if appropriate), and for clearly stating whether or not you will pay out unused vacation at the end of employment.

Some employers argue that their organization has more discretion when policies are not written down, since there is nothing to which management can be held accountable.  By failing to clearly communicate your policies, you expose the company to a host of serious issues such as discriminatory treatment claims, disorganization, confusion among employees and morale issues.

With effective written policies presented to all employees in the employee handbook, your organization is much more likely to manage all employees consistently.  By consistently applying your policies, you are greatly reducing your risk of facing a charge of discrimination.

Unfortunately, even for companies that understand the value, this is one project that frequently gets relegated to “back burner” status, leaving it to be addressed “when things slow down a bit.”  But lawsuits never take vacations, so this is a project you will want to get done.

If your organization is operating without an employee handbook, or with an outdated handbook, now is the best time to make that right.  Just a quick word of warning:  the answer will not be found in a “fill-in-the-blanks” template handbook, nor in a handbook you borrowed from another business or found on the internet. Handbooks need to be customized to your company, your state and local laws, your industry, your company’s unique challenges and your company culture. Your handbook should also be reviewed by an attorney that specializes in employment law. Laws and your policies change so handbooks should be updated at least every other year.

If you need help with the creation of a new handbook or updating an existing handbook, give us a call.  Our human resources team has drafted hundreds of employee handbooks for employers of all sizes, in just about every state and industry.  Every one of those handbooks has been reviewed by our licensed attorney.

Employers can contact our HR team by calling 724-864-8745. We will be happy to help you in 2018!

1From the 2017 Hiscox Guide to Employee Lawsuits and its representative study of 1,214 closed claims reported by small- to medium- sized employers (fewer than 500 employees).

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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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.

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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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