CHAPTER 1: Introduction to Employment Law

Transcription

1 CHAPTER 1: Introduction to Employment Law Whether large or small, if your company does business in Michigan, you need to be informed about the laws and regulations that govern employment practices in our state. This book is intended to be a layperson s guide to those laws, presented in an easy-toread fashion and geared to the small-to-mid-size business owner or human resources professional. Your Company is Covered Even if You Only Have One Employee! Even the smallest employer, with but a single employee, is required to comply with a number of state and federal laws covering the employment relationship. All of the following laws apply to a company with only one employee: the Michigan Elliott-Larsen Civil Rights Act (prohibiting various forms of employment discrimination) the Michigan Social Security Number Privacy Act (regulating and restricting how employers use and display employee Social Security Numbers) the Michigan Persons With Disabilities Civil Rights Act (prohibiting job discrimination against, and requiring reasonable accommodations for, persons with disabilities unrelated to their jobs) the Michigan Wages and Fringe Benefits Act (setting forth various requirements, procedures, and deadlines in the payment of wages and fringe benefits) the Michigan Occupational Safety and Health Act (requiring workplace safety, similar to the federal Occupational Safety and Health Act) the Michigan Employment Security Act (requiring an account with the Michigan Unemployment Agency for unemployment compensation purposes) the Michigan Workers Disability Compensation Act (requiring workers compensation insurance as long as one person is employed at least 35 hours per week for 13 or more weeks) the Michigan Polygraph Protection Act (prohibiting employment decisions premised on requiring individuals to submit to polygraph tests)

2 the Michigan Youth Employment Standards Act (setting work restrictions for the employment of minors, provided at least one minor is employed) the Michigan Whistle-Blowers Protection Act (prohibiting job discrimination against employees who report violations of law to public authorities) the federal Uniformed Services Employment and Reemployment Rights Act (prohibiting job discrimination based on military service and extending reemployment rights to veterans returning from military service) the federal Fair Credit Reporting Act (requiring various disclosures and procedures if an employer uses a third party to conduct reference checks for employment purposes) Michigan s Minimum Wage Law applies to companies with two or more employees even if the federal Fair Labor Standards Act does not apply. Michigan s law regarding minimum wage sets forth many of the same protections as the federal law, which applies only to certain industries unless the employer has annual revenues of $500,000 or higher. Michigan s Bullard Plawecki Employee Right to Know Act, which regulates the maintenance of employee personnel records, applies to Michigan employers with four or more employees. More familiar federal laws come into play as a company s employee threshold increases: At 15 employees, the Americans With Disabilities Act (prohibiting job discrimination and requiring reasonable workplace accommodations for qualified individuals with disabilities) and Title VII of the federal Civil Rights Act of 1964 (prohibiting job discrimination based on race, gender, religion and national origin) apply. With 20 employees, employers are required to provide COBRA continuation coverage (for employees who experience qualifying events ), and the age discrimination prohibitions in the federal Age Discrimination in Employment Act apply as well. At the 50-employee threshold, companies are required to provide Family and Medical Leave Act job-protected leave for eligible employees. With 100 or more employees, an employer has a variety of notice obligations prior to a mass lay-off or plant closing under the federal Worker Adjustment and Retraining Notification Act.

3 The above, of course, is not meant to be an exhaustive list of the laws that apply to the workplace. Furthermore, each named law above (as well as many unnamed laws) typically has its own more detailed set of regulations rules promulgated by the federal or state agency charged with enforcing the law that fill in any gaps left unaddressed by the law. Most of the above-mentioned laws have more detailed threshold requirements, and in most cases the legal protections or requirements go far beyond the parenthetical description offered. The above employee thresholds are not described in complete detail here see the chapters that followed for a more detailed discussion but merely to illustrate a company s compliance burden based on the number of individuals employed. As this publication goes to press in early December 2006, employers can anticipate still more change on the legal compliance horizon. In addition to the annual updates previewed below, new and probably significant regulations are expected sometime in the next year regarding the federal Family and Medical Leave Act, and a Democratcontrolled Congress taking office in January 2007 may bring new employment issues to the forefront. What s New for 2007 Rarely does a year go by without at least some new legal compliance burdens or modifications to existing laws, and calendar year 2006 was no exception. Further, in a continuing effort to increase the coverage offered by this publication, expanded coverage is provided regarding MIOSHA practices (including new coverage of lock-out/tag-out procedures) and a number of employment-related forms and reports not previously available with this publication. Noteworthy additions or revisions in this year s publication include: discussion of new court opinions from the United States Supreme Court regarding discrimination and retaliation (in Chapter 4) and compensable time issues (in Chapter 8), as well as discussion of a rare interpretative ruling from the Michigan Department of Civil Rights related to contraceptive equity in health benefits (in Chapter 4). updates to Chapter 8 to reflect Michigan s new $6.95 minimum wage, $4.25 training wage, and 85-percent sub-minimum wage. a revised chapter on Affirmative Action, workplace diversity, and Equal Employment Opportunity, including guidance on developing an affirmative action plan for federal contractors and subcontractors, that now accounts for the adoption in Michigan of a constitutional amendment barring affirmative action preferences in state public contracting, education, and employment (Chapter 6).

4 discussion of new final regulations that were released and became effective after the publication of the 2006 edition of this book regarding the Uniformed Services Employment and Reemployment Rights Act (in Chapter 14). discussion of FTC requirements regarding the shredding or other disposal of paper-form or electronic-form information obtained about applicants or employees from third-party consumer reporting agencies (in Chapter 15). a significant expansion of the MIOSHA chapter (Chapter 19) to include discussion of lock-out/tag-out issues for the first time. several new or updated forms, including the CA-6 and CA-7 work permits for employing minors; new unemployment insurance tax and wage reporting forms; an updated EEO-1 reporting form and corresponding instruction booklet; 2007 state tax withholding tables (federal tables were not yet available as the volume goes to publication; see for 2007 federal tax withholding tables and forms), as well as required federal postings for equal employment opportunity, minimum wage, polygraph protection, and workplace safety and health (all in the forms section and/or on the included CD-ROM). Some Basic General Liability Avoidance Advice The purpose of this book, of course, is to help Michigan employers understand their legal obligations in the context of the employment relationship with the goal of reducing the occurrence of unlawful employment practices, which generally lead to liability and wasteful financial outlays. Proactive Michigan employers may consider some basic advice and proactive steps to reduce the potential for such liability, including outplacement services, releases, alternative dispute resolution, insurance for employment claims, and preventive audits. Outplacement Whether for economic or performance reasons, the decision to lay off or terminate a longterm employee is the most painful of all personnel decisions. Many companies consider hiring an outplacement firm, and paying the firm s fees (which in the case of executive employees can be substantial) to humanely facilitate the employee s transition to another job. The advantages are obvious: in addition to being fair to someone who has invested a great deal in your company, an employee who promptly finds another job will be less interested in pursuing a lawsuit. If you decide to consider outplacement, carefully interview the firms available. One very important factor to consider is what the firm s track record is on placing the kind of

5 employee you are terminating. Some companies advertise very good track records, such as a placement rate of 80% within six months following the termination at issue. Releases Whenever an employee is separated and given any consideration to which the employee is not otherwise entitled, including severance pay, paid continuation of benefits, outplacement assistance, a retirement incentive, or some other benefit, the employer should insist on obtaining a comprehensive release and waiver agreement from the employee in exchange for the benefits offered. With such an agreement, the employee contractually obligates herself to not to sue the company for all legal claims that might have arisen from the employment relationship. Releases are technical legal documents, and the law of releases (as with all employment laws) changes rapidly. Among other things, a federal law known as the Older Workers Benefit Protection Act (OWBPA) includes many technical requirements for releases in order to waive age claims (including that it be in writing and that the releaser be advised to consult counsel). Therefore, consulting legal counsel to draft or at least review your release is a relatively cheap way to reduce your employment liability. The costly alternative to not doing so could be a lawsuit you thought you could avoid, along with the possibility of not even getting back the benefits or compensation you paid the employee for the release in the first place! Alternative Dispute Resolution Given the relative explosion of wrongful discharge litigation over the last two decades, many employers have considered arbitration systems, including binding arbitration, even for non-union employees, as better alternatives to courtroom lawsuits before judges and juries that can frequently extend out for years after an employee s termination and cost tens of thousands of dollars in attorneys fees to defend. The advantages of arbitration are self-evident: it is quicker and cheaper than court. Experienced labor counsel can assist you in setting up a comprehensive system for arbitrating employment claims, which will in many cases reduce your general exposure to employment liability as well. The Michigan Supreme Court struck down an employer s right to mandate arbitration of non-union employee civil rights claims where the provision requiring the arbitration is merely a non-contractual employee handbook provision. The Sixth Circuit Court of Appeals, the federal appeals court with jurisdiction for Michigan, clarified that an employee cannot be required to arbitrate employment disputes unless the employee has voluntarily signed an arbitration agreement to do so. Employers who actually contract in a separate writing with their employees for the arbitration of such claims must also be aware of other procedural and substantive requirements for the contract to be enforceable. Employers are therefore encouraged to seek the advice of labor counsel in setting up

6 arbitration procedures for employee disputes, and Chapter 4 of this book addresses some of the key considerations that must be made regarding ADR policies and procedures. Insurance Covering Employment Claims Whenever your company is faced with the threat or fact of an employment lawsuit, you should review your current insurance policies to see whether the claim is covered. If your present insurance policies do not cover insurance for employment claims, consult with your insurance agent. Many companies offer comprehensive insurance regarding claims for employment liability with a range of deductibles and premiums that may be attractive for your company in light of the alternative (expensive, uncovered litigation and attorneys fees). Preventive Audits A comprehensive audit of your employment policies including your employment application, employee handbook, individual employment contract, benefit policies, and any other written employment policies by experienced labor and employment counsel also can be a relatively cheap way to reduce your employment liability exposure. Reviewing your current policies in light of the observations contained in this handbook can be a first step in that preventive direction. A sample audit is discussed at the end of Chapter 3, while one possible template to follow for a comprehensive audit is included in the Sample Forms section and CD-ROM included with this volume.