Employer Law Blog has been helping business people navigate employment law. Recognizing that every business with employees faces challenges that can impact their growth and profitability, Sandberg Phoenix attorneys are committed to sharing their knowledge of, experience with and passion for employment law.
The Government Severance Pay Act (P.A. 100-895) has implications of severely limiting the ability of public employers to negotiate severance packages and reduce litigation risks. The new law, which was signed on August 14, 2018, by the Governor and which is effective January 1, 2019, requires that any covered unit of government that enters into or renews a contract or employment agreement must include the provisions in the contract which restrict severance pay to no more than 20 weeks of compensation and restrict the availability of severance payment at all if the employee is terminated for “misconduct.” The Act defines “misconduct” to include:
conduct that is a deliberate violation or disregard of reasonable standards of behavior of an employee
intentional and substantial disregard of the employer’s interests or the employee’s duties
chronic absenteeism or tardiness in deliberate violation of known policy after a reprimand
willful and deliberate violation of a state standard or regulation
violation of the employer’s rules
other conduct, including criminal assault or battery on an employee, customer, invitee or abuse or neglect of someone under the employee’s professional care
While the Act explicitly states that it does not create an entitlement to severance pay, it is very likely that once these provisions are placed in a contract, separating employees will demand severance pay – even in the absence of a cognizable claim against the employer. Further, the Act drastically eliminates an employer’s ability to negotiate a separation and release where the departing employee has substantial claims and allegations that would result in costly litigation.
The Act is silent as to its effect on existing contracts and collective bargaining agreements, but all public employers should be mindful of these new requirements in drafting contracts, moving forward.
In the Tax Cuts & Jobs Act, congress in its infinite wisdom, determined to publically shame or, alternatively, financially burden companies that settle claims of sex harassment. Under the new law, taxpayers will not be allowed to take a business deduction:
For any settlement or payment related to sexual harassment or sexual abuse claims if the settlement or payment is subject to a nondisclosure/confidentiality agreement;
For any attorney fees related to such a settlement or payment subject to a nondisclosure/confidentiality agreement.
The full disclosure requirements will inevitably impact future settlements involving claims of sexual harassment especially for publicly traded companies. Given the now public nature of the settlements the tax law may, ultimately, serve as a deterrent to settling claims on the lone basis of litigation avoidance–even with a non-admissions clause. In this regard, a company may be compelled on a public relations front to exonerate itself through a vigorous defense. This is especially true given the fact that if a settlement does occur a plaintiff’s attorney will now be harmed with a compelling marketing tool of a media blitz publicizing the settlement amount, which may result in more harassment litigation against the company.
Alternatively, not all settlements rise to a level of financial significance that justify waiving the non-disclosure provisions. So, it is imperative for all companies to take the necessary and appropriate measures to place themselves in the best defense posture as possible as a means of substantially lowering potential settlement amounts. Doing so will allow a company to maintain the confidentiality of the settlement while lessening the financial burden associated with the loss of the business deduction.
Employer Take Away: The public policy behind the new tax provisions is to incentivize companies to comply with their equal employment opportunity obligations. Thus, the best course of action is prevent the harassment in the first place. As previously blogged, “Preventing the “Weinstein” in your Organization: Common Pitfalls in Complying With State and Federal Harassment Laws” there are several key steps a company should take to prevent harassment claims and, consequently, mitigate threats of sex harassment litigation. Such measures include, but are not limited to, maintaining a strong sex harassment policy, routine training, and comprehensive implementation and enforcement of the policy. In the event of a sexual harassment claim is filed, we recommend that prior to settling a claim of harassment that a company contact its employment counsel and accountant to conduct a comprehensive analysis of the impact the Tax Cuts & Jobs Act has on its organization.
We are frequently reminded that the “old” attending networking events and social dinners model of business development will soon be viewed as archaic and simply too costly. Replacing the traditional networking event and social dinner is the ever increasing and efficient use of social media. To this end, companies commonly use social media, such as Facebook or LinkedIn, to market, advertise and communicate with customers. A company’s employees also frequently will add these same customers to their own personal social media accounts as Facebook “friends” or LinkedIn “connections.” Social media is proving to be an effective tool when the company and employee are working collaboratively to achieve the same goal, usually to increase company sales. But, things often go amidst upon a “business-divorce” and the employee leaves to work for a direct competitor. When this happens it is common for the company’s customers or employees to continue to receive status alerts from the company’s former employee, either in the form of automatic updates, usually regarding their new employment, or more often direct communications.
Are the automatic updates and announcements a violation of a non-solicitation covenant? Are the direct communications a violation? While the expressed terms of a particular agreement should control the scope and interpretation of the post-employment restriction, the courts have begun to wrestle with technology and the use of social media. While the cases are often very fact-specific, courts have held that a key consideration in determining whether a social media post is an improper “solicitation” is the content and substance of the post, and whether the social media activity is passive or active.
Employer Action Steps: Employers looking to enforce non-solicitation agreements or other restrictive covenants in the social media age should take the following steps:
STOP using outdated non-solicitation clauses that do not reference social media. Revise and update non-solicitation agreements to specifically address social media activity.
Monitor former employee’s social medial sites to the extent possible. Then, immediately print and preserve any posting by a former employee suspected of violating their agreement.
Maintain administrative rights to your own social media site. Issues often arise where a disgruntled departing employee is the only person who knows the passwords and usernames, and essentially locks the company out of its own social media accounts.
All employees should be required to sign agreements to provide access, username, and passwords to account information and other software, computer and devices upon the termination of their employment.
As seemingly daily revelations surface of sex harassment allegations in the entertainment/media industry it is imperative for organizations to learn from the mistakes of others when it comes to sexual harassment in the workplace. The plethora of harassment complaints in is not a recent dilemma. In fact, there have been federal and state laws prohibiting “harassment” in the workplace for over 30 years. In this regard, on June 19, 1986, the U.S. Supreme Court ruled unanimously that sexual harassment violated federal laws against discrimination and that companies could be held liable for sexual harassment committed by supervisors — even if the company was unaware of the harassment. Yet, despite the long-term establishment of harassment law, problems persist with establishing compliance/investigation protocols, which inevitably result in very high jury verdicts or insane settlements. I present you Mr. Bill O’Riley. So, what are the common mistakes employers make in preventing and responding to allegations of harassment? With nearly 100 years of combined experience, the Sandberg Phoenix Employment Team as found the following:
Failing to Have a Harassment Policy for all forms of harassment and for all protected groups, not
Failure to set zero tolerance policy during new employee orientation.
Failure to make violation of harassment policy an immediate termination offense in misconduct policy.
Failure to use every opportunity available to reassert your zero tolerance harassment and retaliation policy.
Failing to provide a multichannel complaint procedure.
Failure to extend harassment policy to the computer, e-mail, phone, social media, and off-duty policies.
Failing to provide routine (at least once a year) and through harassment/retaliation training.
Failing to immediately investigate all complaints regardless of severity.
Failing to designate an independent investigator.
Failing to conduct a complete and objective investigation-drawing an early conclusion and investigating to support the conclusion.
Failure to properly document the investigation.
Failure to maintain, as confidentially as possible, the investigation.
Retaliating against accusers and witnesses in any manner.
Failing to take interim measures during investigation. Failure to take immediate action to remedy the situation during the investigation.
Failing to take the correct prompt remedial measures regardless of the status of the wrongdoer.
Failing to thank and follow up with the accuser and all witnesses.
Not holding customers, vendor’s employees, owners and supervisors to the zero tolerance policy.
Failing to fully recognize all the risks such as off-duty and off-site conduct.
On Monday, October 27, 2017, President Trump nominated Scott Mugno, currently the vice-president for safety at FedEx Ground, to be the new head of the Occupational Safety and Health Administration (OSHA). Mugno is well known in Washington among members of business-oriented organizations. So, what does this mean for employers? Well, Jordan Barab, Deputy Assistant Secretary of OSHA during the Obama administration, thinks Mugno will primarily change the agency’s focus from enforcement to helping employers comply with the rules and law. Mugno is “most likely a typical Republican pick who will want to shift the balance from a strong enforcement program to a larger compliance assistance program, but won’t try to dismantle the agency,” Barab said on his blog. If Barab is correct, then this will be a very welcome change for employers. The Sandberg Phoenix Employment & Labor Team will continue to monitor OSHA changes, such as :
Revisions to antiquated and outdated OSHA standards.
Continued existence of the Severe Violator Enforcement Program.
OSHA’s practice of “regulation by shaming” where the agency used extremely negative and at times, factually inaccurate, press releases against employers to sham them into compliance or settlement
In a case of first impression, the Missouri Court of Appeals held that sexual stereotyping can support an inference that discrimination on the basis of “sex” occurred in the workplace. Lampley and Frost v. MCHR, Case No. WD80288 (Mo.App. W.D. 2017). The Appellate Court maintained that sexual orientation is not a “protected-class” under the Missouri Human Rights Act (MHRA), but held that sex-based stereotyping is a prohibited employment practice in Missouri and, therefore, can support an inference of unlawful sex discrimination.
Employer take away: Although the Lampley decision did not overturn Missouri decisions holding discrimination because of sexual orientation is not prohibited under the MHRA, it greatly expands the rights of employees who do not conform to gender-normative behavior to sue their employers for sex discrimination.