Wednesday, April 22, 2009

Why Do Employers Need to Document Their Reasons for Terminations when Employment is At-Will?

One question that managers often have is why they need to worry about documentation when terminating employees since everyone is an employee-at-will.  The answer requires a short summary of employment law 101.  Although employment in every state in the country other than Montana is employment-at-will, the answer lies in what most employees do once they have been terminated.  First of all, what is employment-at-will? Employment-at-will means that you can hire or fire an employee for any reason or no reason at all.  However, there is a little exception at the end of that sentence that states that this is so “as long as the reason is not unlawful”.  Herein lies the problem.  Many employees who have been terminated will claim that their termination was unlawful because it was discriminatory based upon their protected class.  As everyone knows, under Title VII of the Civil Rights Acts of 1964 and 1991 there are only 5 protected classes, to wit, sex, color, race, national origin and religion.  If President Obama has his way there may soon be a sixth which will be sexual orientation.  But currently there are five protected classes under Title VII as well as age under the Age Discrimination in Employment Act, disability under the Americans with Disabilities Act, military status under USERRA and genetic information under the Genetic Information Nondiscrimination Act (“GINA”).  In addition, each state usually has a larger number of protected classes than under federal law such as citizenship, marital status, sexual orientation, etc.  So what most terminated employees do is claim that the reason they were terminated was discriminatory based upon one or more of these protected classes such as race, age, disability, etc. 

How then can an employer protect its self against such claims?  The answer is documentation.  Document, Document, Document!  So the employer must be prepared to show, prior to the termination of the employee, that the real reason for the termination was that this was a terrible employee with poor performance or that his attendance was abysmal.  The best way for an employer to demonstrate this is with disciplinary warning letters stating that the employee is a poor performer or has terrible attendance.  Courts have an expectation of fairness, meaning that if an employers is really terminating the employer for poor performance or attendance, the employer who terminates an employee should provide the employee with the reason that they are doing poorly and what they can do to improve.  All of this should be in the disciplinary warning.  The employer should then provide the employee with an opportunity to improve as well as with a warning that a failure to improve his/her performance will lead to further discipline, up to and including termination.  If they fail to improve, provide another warning and another until it is clear that you have given the employee every opportunity to improve and they refuse to change.  Then, when you terminate the employee, it will be clear to a court and/or jury who hears the discrimination case that yes, in fact, the employee’s performance and not discrimination was the actual motive for the termination. 

So this is the reason that although employees are employees-at-will, employers still have to document the reasons that the employees are being terminated.  It is necessary so that employers protect themselves from any future claims that the termination was, in fact, discriminatory.

Submitted by: Melissa Fleischer, Esq.
President
HR Learning Center LLC
http://www.hrlearningcenter.com
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Monday, April 20, 2009

Indian Reservation Business Subject to Federal Wage Law

A Ninth Circuit court of appeal has concluded that the overtime provisions of the Fair Labor Standards Act (“FLSA”) applies to a business located on an Indian reservation and owned by Indian tribal members. The court also ruled that the United States Department of Labor has the authority to enter the Indian reservation to inspect the books of that business for enforcement purposes.

The case, titled Solis v. Matheson, pitted the Department of Labor against a retail store known as Baby Zack’s Smoke Shop, located on trust land within the Puyallup Indian Reservation in the State of Washington. 

The court acknowledged that Indian tribes generally operate under the legal shelter of “sovereign immunity.” The court wrote: “Indian tribes have a special status as sovereigns with limited powers. Indian tribes are dependent on, and subordinate to the federal government, yet retain powers of self government.”

Sovereign immunity is a bit of a misnomer, because tribes are not invulnerable to litigation. As the court wrote, “those powers may be limited, modified, or eliminated by Congress.”

Finding the FLSA to be a “statute of general applicability” designed to “achieve certain minimum labor standards with respect to industries engaged in commerce,” the court determined that Baby Zack’s Smoke Shop was regulated by the statute.

The court noted that some of the goods sold by Baby Zack’s have been shipped in from locations outside the State of Washington. Though located on tribal land and operated by a member of the tribe, “Baby Zack’s is a purely commercial enterprise engaged in interstate commerce selling out-of-state goods to non-Indians and employing non-Indians.”

Regulating this commercial enterprise, concluded the court, would not impinge upon matters of tribal self-government. The court added that the tribe had not enacted comparable labor laws, nor did it contend that such laws would preempt federal law.

Although law in the area of Indian sovereign immunity has been slow to evolve in relation to the rapid growth of tribal commercial enterprises, the Ninth Circuit’s decision can be characterized as part of a trend towards regulating labor relations of Indian tribes, particularly where the rights of a non-Indian workforce are at stake.

In 2007, as reported in our Legal Update here (page 2), in 2007 a court found that the National Labor Relations Act (NLRA) applied to an Indian tribe operating a casino. (San Manuel Indian Bingo and Casino v. National Labor Relations Board (D.C. Circuit, February 9, 2007).

The Ninth Circuit in Matheson also noted cases where courts had applied federal labor laws to Indian tribes, including cases where OSHA applied to a tribal farm employing non-Indians and ERISA applied to an Indian-owned saw mill. There are also a number of reported cases where courts have declined to apply federal labor laws to Indian tribal matters.

It is reasonable to expect labor law litigation against Indian tribes to increase, and, further, that the U.S. Supreme Court will sooner or later offer clarification due to conflicting lower court rulings.

Read the Ninth Circuit opinion (pdf)

Submitted by:
Christopher W. Olmsted, Esq.
Barker Olmsted & Barnier, APLC

Thursday, April 16, 2009

EEOC’s Proposed GINA Regulations Limit ADA Inquiries

The Genetic Information Nondiscrimination Act (“GINA”), which becomes effective on November 21, 2009 prohibits employers from acquiring genetic information about its employees, with certain exceptions. (Follow this link for a summary: Summary of GINA.)

The law will require employers to change their current practices regarding the acquisition of medical information. Practices that have been permissible under the ADA will no longer be permissible on account of GINA. The EEOC’s recently published proposed regulations make this challenge apparent.

GINA includes a broad definition of “genetic information.” It includes not only the results of genetic testing, but also information regarding the manifestation of disease in family members. Family medical histories are often found in medical records. It is lawful, under the ADA, to acquire medical information regarding employees, post-hire. Such information may also be acquired in the context of the reasonable accommodation process, or a fitness for duty process.

The EEOC’s proposed regulations state that genetic information inadvertently obtained as part of an ADA accommodation does not violate GINA. “An individual provides genetic information as part of documentation to support a request for reasonable accommodation under Federal, State, or local law, as long as the covered entity’s request for such documentation is lawful.”

Unless the information is truly provided inadvertently, the employer will violate GINA. According to commentary for proposed regulations, an employer “that asks for family medical history or other genetic information as part of an inquiry or medical examination related to an applicant’s or employee’s manifested disease, disorder, or pathological condition will not be considered to have acquired such information inadvertently.”

GINA and the proposed regulations will prohibit practices previously allowed under the ADA. The comments to the proposed regulations state: “Thus, even though the ADA allows an employer to require a medical examination of all employees to whom it has offered a particular job, for example, to determine whether they have heart disease that would affect their ability to perform a physically demanding job, GINA would prohibit inquiries about family medical history of heart disease as part of such an examination. Such a limitation will not affect an employer’s ability to use a post-offer medical examination for the limited purpose of determining an applicant’s current ability to perform a job.”

The commentary continues: “[Employers] should ensure that any medical inquiries they make or any medical examinations they require are modified so as to comply with the requirements of GINA. In particular, we note that at present, the ADA permits employers to obtain medical information, including genetic information, from post-offer job applicants. As we interpret GINA, this will change on the November 21, 2009 effective date of Title II of GINA: Employers no longer will be permitted to obtain any genetic information, including family medical history, from post-offer applicants. Employers will likewise be prohibited from obtaining this type of information through any type of medical examination required of employees for the purpose of determining continuing fitness for duty.”

The comment period for the EEOC’s proposed regulations ends on May 21, 2009. The proposed regulations can be found at this link: EEOC Proposed GINA Regulations

Submitted by:
Christopher W. Olmsted, Esq.
Barker Olmsted & Barnier, APLC