10 Ways to Minimize Liability When Providing Employee References

Although it was far simpler twenty years ago to provide references for most departing and former employees, it now requires careful planning. Employers must take deliberate steps to protect themselves against possible lawsuits brought by disgruntled former employees who may claim that they’ve been harmed by defamatory or negative job references.

All companies should now consider requesting (as a hiring condition) that each new employee sign a release form granting permission for the company to provide future job references without threat of liability. As noted below, that paperwork can then be supplemented by new, signed and dated authorization forms for each future reference requested.

Before sharing ten ways your company can reduce its potential liability when providing job references, this article will first briefly review common legal arguments advanced by former employees when they sometimes sue claiming a reference harmed their future job prospects.

Types of arguments past employees advance when alleging harm due to a job reference

Keep in mind that defamation does not have to produce actual harm – it’s enough that the negative reference was published or communicated to a third party and might reflect poorly on a past employee’s good name or overall reputation. Courts will normally review all the surrounding circumstances to determine whether a reference was truly damaging.

  • Intentional infliction of emotional distress. An angry former employee may claim that the person who issued the reference used unjustified and inflammatory language. While this isn’t asserted often, it’s a reminder to create a clear and distinct policy for how all references should be handled – free of unsubstantiated opinions or undocumented gossip. For example, it’s always wise to avoid alleging that a former employee demonstrated clear signs of struggling with some form of substance abuse on the job;
  • Invasion of privacy. Your company must avoid publicizing private information about an employee. For example, if you investigated why an employee was late to work on several occasions, you should never publicly disclose that the person was repeatedly jailed overnight due to arrests for drunk driving;
  • Interference with contract. A business should never knowingly provide false or misleading information about a former employee that could reasonably bias a prospective employer against hiring the person. Be as honest as possible and rely on neutral, documented information in the employee’s personnel file whenever possible;
  • Title VII discrimination. You must never provide a negative reference because a past employee was a member of a protected class. So, do not claim you fired someone because of their disability or alleged problems due to their gender. Title VII of the Civil Rights Act of 1964 forbids this type of discriminatory behavior.

Ten practices that can help you provide safe and proper references

  1. Always obtain employee consent. You should require a written request from all past employees asking you to provide a reference to a specifically named individual. This is very important since references should only be provided to proper parties;
  2. Designate only one or two company officials to handle all employee references. Centralizing this operation can help your company avoid releasing poorly drafted forms or letters of reference. It’s usually best to forbid all supervisors and other employees from providing their own references. You may want to create your own simple form for providing all references;
  3. Maintain accurate personnel files for all employees. Furthermore, be sure to conduct regular employee evaluations – and have employees sign the bottom of all written evaluations. This information should provide the basis for future letters of reference. It must be free of any biased or highly negative comments whenever possible;
  4. Avoid providing references over the phone. This is important since phone requests can be placed by nearly anyone. You must always be sure you’re only providing information to legitimate parties. Secure, written communications are always best. And never provide a reference until after you’ve received a new, written authorization form signed and dated by the former employee. (It should state that your company will not be held liable for providing the requested reference.) You can email or fax this form to the past employee when you receive a new request;
  5. Only provide information to proper parties. Be aware that private investigators and others may contact you and just pretend to be potential employers. Your company could be sued if you release a reference to someone who is not a prospective employer;
  6. Try to stick to the scope of the requested information. Don’t volunteer opinions or offer unsubstantiated data. Depending on your firm’s established policy for providing references – just stick to basic facts. (However, be sure to review the last paragraph of this article about providing references for past employees who exhibited violent workplace behavior – made serious threats – or sexually harassed other employees);
  7. Keep detailed records regarding all reference requests. If you fail to keep all written data involved with these requests and copies of the information your company provided, you may have a very difficult time mounting an effective defense if you’re sued for defamation – or on the other grounds named above – by a former employee;
  8. Be careful and provide about the same amount of information about all employees. While it may be tempting to provide lengthy praise for some former employees, it’s best to only comment on factors that may apply to all employees. If you’re going to provide negative information, be sure to first check with your Houston employment law attorney to be certain you’re not being too harsh – or revealing too much;
  9. Try to avoid requiring or compelling self-publication. If you fired someone because they were recently convicted of a serious crime or are no longer qualified to maintain a certain level of a security clearance, be careful what reason you give for firing that person. Otherwise, you may be forcing that person to later “self-publish” negative facts about themselves. Ask your lawyer if there are other valid legal grounds you can state as the basis for the firing of an employee when controversial issues were also involved. This can cause complex problems — yet honesty is always crucial; and
  10. Only share objective information. Never tell a prospective employer about any workplace gossip tied to the past employee’s personal problems. You should only be sharing data that can be easily verified by reviewing the employee’s personnel file.

While all these tips should help you reduce your chances of being sued based on a claim of defamation (or the other grounds stated at the beginning of this article), you must remain aware that providing too little information about a past employee can potentially render you liable in a lawsuit brought by the new employer. More facts about that problem are provided below.

Can you be sued for negligent referral, fraud or misrepresentation due to your reference?

Those types of lawsuits are becoming more common. If you had knowledge that a past employee behaved violently in your workplace, made serious verbal or physical threats against others – or sexually harassed one or more workers, you might need to disclose some of that information. This is a topic you must discuss in much greater detail with your Houston employment law attorney since Texas law may or may not provide you with adequate protection from liability.

If you’re uncertain how to provide a reference for a past or departing employee, please feel free to contact one of our Murray Lobb attorneys. We can provide you with sound legal advice regarding such topics. Our firm can also help you create employee release and authorization forms. Should you be sued by a former employee, we’ll be available to defend you through every stage of any proceeding.

What Should Be Included in Your Employee Handbook?

Both large and small companies can benefit from providing their workers with employee handbooks. These texts help employers answer key questions and clearly document that the same standards and rules govern their interactions with everyone. After all, no one wants to work for an employer who grants special privileges or benefits to some workers and not to others.

Employee handbooks also let employers set forth all their behavioral standards and procedural rules in a manner that can help them limit future liabilities — should anyone ever try to sue them for wrongful termination or acting in a discriminatory manner.

Before reviewing some crucial sections that many businesses like to include in their employee manuals, here’s a quick look at some of the topics that most workers want to see addressed.

Employees often search for information about key standards and office procedures

  • Be sure to outline your behavioral standards, attendance rules, office attire and the level of respect required for all relationships. Most employees are eager to learn how you view tardiness and what you consider acceptable clothing. Likewise, new workers want to learn about your conduct standards — and if your office has a “zero tolerance” policy toward all forms of sexual harassment and discrimination;
  • Always provide clear information about pay grades, qualifications for receiving medical insurance, pay periods and all forms of employee benefits. Workers usually start to relax more once they’re told how often they’ll be paid and the exact size of their payroll deductions. Likewise, it’s important to tell employees when (and if) they may be considered qualified for healthcare insurance;
  • Always state how often employee evaluations are conducted and the best ways workers can try to position themselves for future raises and promotions;
  • Be sure to note any individual or family leave policy provisions that your company honors. Always have your Houston employment law attorney read over this information for you, to be sure it fully complies with all current federal, state and local laws; and
  • Describe your most crucial emergency and safety procedures. Always tell your workers how they should evacuate from the office during extreme weather events, fires and even possible shooting incidents. Each new worker should be shown the proper way to exit the building on their first day on the job – and be shown where fire extinguishers and first aid kits are kept.

While these are just a small sampling of the general topics most employees want to see covered, they should help remind you of many other important subjects that you should cover in your employee handbooks.

The following list is compromised of some of the most commonly used sections in employee handbooks.

Key headings or sections most employers include in their employee handbooks

  • A “Preface” section. You may want to provide a general history of the company here, along with information about the founding members of the business. You can also note who currently heads up various office branches. The company’s key values and goals for the future are also often stated here. If you like, you can also add a brief congratulations to each new employee for being hired;
  • Material explaining all basic pay arrangements, promotions and current employee benefits. You can describe any 401k or stock options in this section, as well as the various types of retirement benefits. Overtime pay policies should also be covered;
  • A section that describes “at-will” employment versus jobs offered under contract;
  • Standards for employee behavior. Be sure to address the need for regular attendance; rules governing personal cell phone use during the work day – and any restrictions on using work computers for private purposes. (Ask your attorney if you need to obtain written permission from all employees to monitor their computer usage);
  • Formal leave policies. In this section, you’ll need to list all paid office holidays, how employees should handle vacation and sick leave, personal days off, family medical leave and time off to honor current military service commitments;
  • Employee termination policies. Be sure to note that these can vary, depending on; if an employee is considered an “at-will” worker who can be dismissed rather informally or if the person was hired under a formal contract.
  • Confidentiality policies. Be sure to clearly state what information and trade secrets the company considers confidential and trade secret. Ideally, all employees would signed a confidentiality and non-disclosure agreement.

Should you wish to review a large number of sections that different employers have included in their employee handbooks, consider reading 53 Key Sections of an Employee Handbook (and Other Helpful Tips).”

The Texas Workforce Commission also has a number of policies and a form of Employee Handbook available for free at https://twc.texas.gov/news/efte/table_of_contents-az.html. However, choosing the right sections for any employee handbook often requires a keen understanding of employment law and many complex human resources issues.

Please feel free to contact one of our Murray Lobb attorneys for help in drafting your new or updated employee handbook. We can provide you with the proper legal terminology required to meet your company’s unique needs.

Key Drafting Points for a Texas Employment Contract

Although Texas employers hire many workers on an “at-will” basis to make it easier to dismiss them (for reasons that doesn’t violate governing statutes), they also still provide employment contracts to others. After all, a well-drafted employment contract helps employers clearly establish what’s expected of their employees and makes it easier to protect proprietary information when workers leave.

If your company prefers to negotiate employment contracts with highly skilled employees, try to first meet with a Houston employment law attorney so that all of your most important needs and interests can be protected during the hiring process. And always be sure to communicate carefully with prospective employees since it’s easy to accidentally convey contract terms you may not have intended.

Before reviewing some of the important terms that should be included in most Texas employment contracts, it’s wise to note how some employment contract terms can become binding when set forth outside of contracts.

Ways employers may convey certain employment terms to job applicants or new hires 

Always carefully review the following ways that your company may be granting certain rights you didn’t intend to include in your formal employment contacts.

  • Through verbal agreements. Only allow a limited number of interviewers and other hiring staff to discuss key employment terms that may or may not be set forth in writing;
  • Statements made in offer letters. Always reread these before sending them out to make sure they do not contradict what’s in your written employment contract;
  • Provisions set forth in your employee handbook. (You should periodically ask your attorneys to review this material – to be sure it’s still current regarding new laws and recent court decisions);
  • All emails and faxes sent to prospective employees or new hires;
  • Statements made on workplace job notice boards.

While this list isn’t intended to be comprehensive, it should remind you that all written materials and formal conversations with applicants and new hires must be conducted carefully.

Here’s a look at some the terms you must properly address in your contracts.

Written employment contracts should always address these key terms and conditions

  • All core duties and responsibilities of the employee. It’s often wise to also note when the employee’s performance will be evaluated. For example, after the first 30 to 60 days – and then at other stated intervals;
  • Pay rate. This should be carefully discussed while making the initial offer and then documented in the employment contract;
  • All employee benefits, such as healthcare and stock options, should be listed and at least briefly explained;
  • Work locations and hours. If rotating shifts are required or if you strictly forbid working from home – you should set forth all these relevant restrictions;
  • Clear information indicating how employee disciplinary actions will normally be handled;
  • Reimbursement of approved expenses. If you do not cover any major expenses, you must state this very clearly;
  • How employee terminations are handled under different circumstances. This is a good place to possibly offer some type of severance pay if provided with two weeks’ notice (or some other time period you may prefer). You can then state that no general severance packages will be offered to those who fail to provide advance notice of their departure;
  • Dispute resolution terms. If you and the employee later have a dispute regarding the employment terms set forth in the contract, state whether you require the use of a specific form of dispute resolution — before any litigation can be pursued;
  • A reasonable covenant not to compete when employees are leaving. You should also include some type of clear statement that the departing employee must not disclose any trade secrets to others upon leaving.
  • A confidentially agreement. All employees who have any access to any company trade secrets, proprietary information or information the company deems to be of a sensitive or confidential nature must sign a confidentiality agreement.

If any of these terms are especially important to your company, give serious thought to asking all employees to not only sign their employment contracts – but to also initial certain paragraphs – clearly indicating that they were asked if they had special concerns or questions about those topics.

Please get in touch with one of our Murray Lobb attorneys once you’re ready to draft any employment contracts for new employees. We are also available to help you modify any of these contracts when various employment conditions change.

Brief Overview of Texas and Federal Whistleblower Laws

All employers must respectfully interact with employees who report alleged wrongdoings in the workplace. Often referred to as “whistleblowers,” these individuals are trying to correct illegal practices or behaviors they believe are harmful to many. Although some whistleblowers may have improper motives, you always ignore them at your own peril – especially since there are Texas and federal laws designed to protect them under certain circumstances.

The following information about whistleblower laws and related activities can help you better understand why an employer must obtain timely legal advice from a Houston business law attorney once any employee threatens to file this type of complaint.

The Texas Whistleblower Act

This statute is found in Sections 554.001 (and following) of the Texas Government Code. It only provides protection against employer retaliation for public employees – not private ones. The law expressly forbids public employers from suspending, terminating or otherwise imposing adverse personnel actions employees who report alleged legal violations by the employer or co-workers.

However, the complaining party – who must report the alleged wrongdoings to the appropriate law enforcement authority – must undergo (exhaust) all employer grievance or appeals processes before being allowed to sue the employer. Under the Texas statute, all whistleblower lawsuits must be filed within 90 days of the reported wrongdoing.

Damages may include obtaining a legal injunction against the employer – as well as receipt of all back pay owed if the employee was terminated (or demoted) in a retaliatory move. Successful whistleblowers (who meet all statutory requirements), are also entitled to receive full reinstatement, all fringe benefits owed, full seniority rights, actual damages, reasonable attorney fees, court costs and a set maximum of possible other compensatory damages.

Furthermore, a supervisor found to have violated the complaining employee’s rights under this Texas statute (Section 554.008) can be forced to pay up to a $15,000 civil fine.

While the burden of proof is on the whistleblower, the possible penalties can be formidable.

Federal laws often relied upon by various whistleblowers

  • The Sarbanes-Oxley Act (passed shortly after all the illegal Enron activities). It mainly addresses the penalties available in the wake of fraudulent accounting practices.
  • The Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • OSHA violations. Many construction workers and other employees file “whistleblower” complaints based on these Occupational Safety and Health Administration statutes and regulations.
  • Various Department of Energy laws and statutes.
  • Environmental Protection Agency (EPA) laws and regulations.
  • Federal airline regulations.
  • The False Claims Act (as recently updated).
  • The Fraud Enforcement and Recovery Act of 2009.
  • Hazardous waste regulations.
  • The Patient Protection and Affordable Care Act — and other government statutes related to the provision and receipt of proper medical care.

While this list isn’t intended to be comprehensive, it provides a general overview of the types of statutes and regulations often referenced in many whistleblower complaints.

The following information reviews the most common types of illegal retaliation some employers take upon learning that a whistleblower complaint has been filed.

Forbidden, retaliatory actions taken by some employers

  • Job termination. Far too many employers look for “clever” ways to fire complaining employees once they learn a whistleblower complaint may be filed.
  • Demotion. An aggrieved employee may be called in and told that there have been long-standing complaints about his/her performance – requiring demotion to a lower position with considerably lower pay.
  • Thinly disguised harassment on the job.
  • Retaliatory discipline. This may include the placement of highly negative performance reviews in an employee’s file – making it much harder for the workers to receive any future promotions or favorable recommendations upon leaving the job.
  • Blacklisting. Some employers will “discreetly” contact their peers throughout the same industry, purposefully designating the specific, complaining employee in hopes of preventing that person from every landing another job in that same field.

Two high-profile whistleblower events help explain how such actions often unfold

One of the best ways to gain a stronger understanding of whistleblower activities is to read all you can about how former Enron employee Sherron Watkins reported her concerns about her employer. You may also want to learn more about all the late FBI agent W. Mark Felt (“Deep Throat”) did to expose President Richard Nixon’s illegal activities tied to the Watergate scandal.

As one Texas Monthly article puts it, the Enron scandal involved highly questionable financial practices that included the creation of financial entities to help Enron conceal the company’s growing debt from Wall Street, regulators and the general public. The book Power Failure provides an in-depth look at how all of Enron’s troubles began and how its illegal activities ruined the lives of so many.

Conclusion

Always make sure your company (or government office) provides all supervisory personnel with comprehensive training on the proper ways to respond once a whistleblower complaint has been filed (or is referenced by an employee). And remember that retaliatory acts must be avoided since they’re illegal and often very costly.

If you believe an employee is preparing to file a “whistleblower” complaint against you, please contact one of our Murray Lobb attorneys right away. We can explain your legal rights to you and help you take the proper steps to respond appropriately. Timely intervention can prevent critical misunderstandings and unnecessary litigation.

Why It’s Often Wise to Moniter Employee Computer Usage

While all employees benefit from believing that their companies trust them, they must still accept the modern workplace reality that certain privacy interests must be carefully weighed against protecting valid business interests. Furthermore, employers have a need and a duty to make sure that all employees are putting in their fair share of time while completing assignments. No one should be allowed to waste valuable work time surfing the Internet or responding to personal emails while others are shouldering their proper tasks.

Do many employers regularly monitor computer and Internet usage?

At present, about 80% of large companies carefully monitor how their employees use workplace computers. They also routinely review all company website and social media postings and randomly review email exchanges and software downloads. Internet usage is also closely monitored. These practices can often help businesses avoid future lawsuits and financial losses.

Once your company decides to begin monitoring practices, you really should talk with your Houston business law attorney about all the legal concerns that can develop.

Before addressing other key issues involved with monitoring your employees, it will be helpful to note how many companies provide notice to their workers that their computer usage and Internet activities will soon be regularly reviewed.

When and how do employers bring up computer and Internet monitoring to employees?

  • At the time of hiring. You can make this a condition of accepting employment;
  • When all periodic performance evaluations are conducted. At the end of these sessions, you can produce a carefully worded document, asking for the employee’s written consent for monitoring their computer usage and business communications. It may be helpful to note how this can help protect some of their own interests — and limit the harassment that some employees might otherwise engage in if no such monitoring existed;
  • Include several paragraphs on the topic in your employee handbook. Always be sure that you later ask each new employee if they have any questions about this policy;
  • Place a warning above the company’s computer network sign-in page. This warning might reference the employee handbook – or the written consent form you should have already obtained from each employee;
  • Include a very clear and obvious “Notice” paragraph at the bottom of each outgoing email. This is an attempt to provide notice to third parties (such as non-business contacts who may include workers’ friends and family members who write to them at work – that any or all such emails are subject to monitoring and review).

Your signed consent forms should remind employees (along with the company employee handbook) that certain types of improper communications and usage of the Internet can result in disciplinary actions – and even firing.

As the following information indicates, your careful review of how employees are using their computers can prevent many serious workplace conflicts.

Harmful activities pursued by some using company computers, email and the Internet

  • Harassing behaviors. Making illegal and damaging statements in emails may constitute sexual, racial – or other forms of harassment;
  • Likewise, some types of email (or typed letters) may contain defamatory comments or illegal threats against others. No employee has the right to make serious threats against other employees or outside email recipients. These negative communications may simply imply that a specific person may lose his or her job if certain improper demands aren’t met;
  • Critical company information (like trade secrets and intellectual property) may be stolen and then shared with others;
  • Employees may download and then share copyrighted material or software, allowing others to make additional copies. This can also include the illegal download of porn materials — that are then sent off to others – or stored on your business databases;
  • Workers may accidentally share harmful email and general computer viruses while using their computers in unauthorized ways;
  • Employees may spend lengthy time periods surfing the net — unrelated to legitimate work assignments. Many companies wind up paying significant amounts of money each year for time that employees spent playing online games or enjoying other unauthorized Internet activities;
  • Some workers may maliciously sabotage company files and data for no apparent purpose;
  • Other employees may use their work computers and printers to complete tasks for their separate, private business needs.

Do employers have broad rights to monitor all employee activities at work?

Federal, state and even global laws can limit these rights. Also, most employers do not have the right to invade employee privacy by placing intrusive cameras or audio devices in restrooms or lunchrooms. However, they do have some specific rights to monitor how employees use equipment provided to them. And under certain circumstances, companies can even monitor how employees use their own personal computers while logged on to company networks and databases.

In general, any efforts you make to monitor employee communications must agree with the provisions of the federal Electronic Communications Privacy Act (ECPA). Fortunately, it does allow certain types of monitoring that fall within an acceptable “business purpose exception.” In other words, your monitoring efforts must have a direct tie to protecting a “legitimate business purpose.”

As already noted above, it’s crucial to discuss all these matters with your attorney to be sure your approach to computer monitoring will not subject your company to any employee or third-party privacy lawsuits.

What global, federal and Texas laws address all these various legal topics?

Keep in mind that companies regularly interacting with international clients or companies must be prepared to observe all the following types of governing laws.

  • The European Union General Data Protection Regulation (GDPR) – and the laws passed by many of its members’ individual states;
  • The Electronic Communications Privacy Act (ECPA)
  • The Stored Communications Act
  • Various federal wiretapping laws
  • Texas statutes and case law that your lawyer can review with you

Some general guidance is also available on the Texas Workforce Commission website.

Conclusion

Companies of every size must give all these issues considerable thought before buying any types of computer monitoring software. You’ll also need to decide which DLP (data loss prevention) solutions or strategies are most likely to meet your company’s unique needs. For example, do you want to prioritize software that helps with network traffic monitoring, keystroke logging, natural language processing – or other methods? You’ll also need to consider what types of data encryption practices may be useful to you.

Fortunately, there are many outside consultants who can help you carefully evaluate all the current computer monitoring software that’s available – so you can find the best products that fall within an affordable price range for your company.

Please feel free to contact one of our Murray Lobb attorneys so we can address your current questions about monitoring your employees’ business communications and usage of the Internet. We can also help you draft the types of privacy consent forms and other paperwork that can help you more proactively safeguard your company’s business interests.

IRS Clarifies “Employee” Versus “Independent Contractor” Test

The IRS recently issued clarifying guidelines to help employers determine which workers should be treated as independent contractors or employees. The government naturally wants accurate decisions to be made since they determine when it’s paid certain taxes on each worker’s wages.

The main deductions that should be subtracted from all employees’ paychecks include those for Social Security, Medicare, unemployment and income taxes. When a business has work done by an independent contractor, that person must pay all those taxes in the form of self-employment tax.

What remains the general standard for deciding if a worker is an independent contractor?

If an employer reserves the right to only direct control over the result of the work – and cannot tell a worker exactly what to do and how to handle the assignment – then that worker will usually be legally viewed as an independent contractor.

However, deciding what constitutes specific directions for completing a given task can still fall into a gray area.

Fortunately, there are three basic analytic categories that can help employers accurately determine when workers are properly classified as “employees” or “independent contractors.”

What are the three main categories of analysis for deciding a worker’s correct status?

The IRS indicates that employers should carefully examine the following three aspects of how they relate to workers to determine their proper work status.

  1. Behavior control. An employer may have behavior control over a worker even when it does not exercise it. For example, when such control is involved, it may include telling a worker which specific tools to use and where those supplies should be purchased. Under those circumstances, the worker should be considered an employee. Conversely, the less control over a worker’s behavior, the greater the chance that the person is working as an independent contractor.

If there are strict guidelines for determining the quality of the work provided, there’s a strong chance that the worker is an employee. When the worker is provided a bit more leeway in terms of quality control – there’s a stronger chance that the person is an independent contractor.

Of course, the two parties will usually need to agree to some basic quality standards, regardless of whether the worker is an employee or independent contractor. Finally, if periodic training or ongoing training is required of a worker – that increases the chances that the worker should be treated as an employee.

  1. Financial control. Does the worker have to personally cover the majority (or all) of the expenses tied to completing the work? These might include the purchase and maintenance of proper computers, printers, fax machines, scanners and other required equipment. If the worker is covering all those expenses, he or she should probably be classified as an independent contractor.

Stated differently, when a worker has many unreimbursed expenses, that person is usually an independent contractor — not an employee. Independent contractors are also those who retain the right to continue obtaining additional work from other parties. As for the payment for services, independent contractors are usually paid a flat fee – although that arrangement can vary in some cases.

  1. How the employer and worker each perceive the nature of their relationship. When the parties have not negotiated any employee benefits like vacation pay, sick pay, a pension plan and stock options – the worker is usually an independent contractor. While a written contract signed by the two parties can indicate how they view their interactions, it’s not always the only evidence the IRS and the courts will review when classifying the work relationship. All relevant documents and communications may need to be examined.

The main consequence for an employer who misclassifies a worker is that the employer may be required to pay all employment taxes currently owing for that worker – as opposed to requiring the worker to cover them.

What unique emphasis is placed on these three categories in the updated guidelines?

As for behavior control, employers really shouldn’t be telling the independent contractor the exact sequence of events for all tasks to be performed or exactly how they should be handled.

Regarding financial control, only independent contractors can experience a profit or loss while handling assigned tasks. Employees whose expenses are generally covered will usually not experience any profit or loss while completing assigned tasks on a given schedule.

As for how the parties view their work relationship, a fully executed contract can be controlling when other conclusive details aren’t available. However, as briefly noted above, the parties’ communications can usually provide clear indications of whether they’re interacting as employer-employee or employer and independent contractor.

The key bottom line for employers who don’t want to only work with employees – is to allow their independent contractors considerable flexibility while completing tasks – while respecting professional standards acceptable to both parties.

Please give our law firm a call if you need any help determining which workers are employees or independent contractors. We can also help you better understand the many different types of classifications that govern a wide range of employees you may want to hire – and the tax consequences for hiring those who fit in each group.

Our firm always remains available to help you draft many different types of contracts that can serve all your business needs.

How Should You Respond to Potentially False I-9 Documentation?

At present, the federal government expects companies to carefully examine all I-9 documents presented by job applicants and to ask questions about required paperwork that looks like it may have been altered. Once you receive proper documents that look valid, you must keep your copy of the completed I-9 form on file, ready to share it with ICE (Immigration and Customs Enforcement) upon request. In some cases, you may be given only three days’ notice to produce these documents for all your employees.

To help employers fulfill their duties, ICE provides general guidelines that describe how all I-9 document reviews should be handled. These guidelines are further referenced below, along with topics you should address with your human resource staff to help them avoid accidentally discriminating against applicants and employees while simply trying to obtain fully updated, accurate documents.

What federal law established the need to obtain I-9 documents from job applicants?

Congress passed the Immigration Reform and Control Act (IRCA) back in 1986. It requires employers to obtain job applicant documents that validate each person’s right to work in this country. This task is handled by fully completing a Form I-9 document for each job applicant. To help establish their legal status, applicants can produce such items as:  a driver’s license, a Permanent Resident Card, a US passport, a birth certificate and a Social Security card.

Can some I-9 documents be acceptable even when they initially look questionable?

The simple answer to that question is “Yes.” However, you should always keep notes in your file concerning any odd documents that you first believed might be false – and keep a copy of them. As ICE notes on its website, there are times when a worker may show you documents indicating different last names – and that may be acceptable if the job applicant can provide you with a reasonable explanation for the varied listings.

While employers must be respectful and open-minded while handling required I-9 tasks, they should be acting in agreement with previously established, written employee guidelines clearly noting that all new hires and established employees can be fired for providing any false job applicant documents. When you haven’t already created such written guidelines and acceptable standards of employee conduct, you may later find yourself accused of discriminating against an applicant or employee based upon his or her immigrant (or special ethnic) status.

This type of scenario often unfolds when an employee informs you after being hired that one or more documents given to you before being hired was fraudulent or invalid. This tends to occur when the employee is trying to provide you with newly updated, valid documents.

This specific type of issue was presented to the Department of Justice (DOJ) back in 2015. Unfortunately, instead of issuing an advisory opinion, the DOJ simply noted that employers should already be prepared to handle these types of issues — based on established employee conduct guidelines. Otherwise, they risk being sued for one of at least four employment-related forms of discrimination.

Is it true that some employers have been heavily fined for I-9 violations?

Yes. One of the largest fines recently imposed by the Office of the Chief Administrative Hearing Officer (OCAHO) involving I-9 irregularities was against Hartmann Studios. That company was required (in July of 2015) to pay $600,000 in civil penalties. (That amount had been reduced from the original penalty sought of $812,665.) When Hartmann was undergoing a new inspection back in 2011, the company employed over 700 workers.

While that large sum of money is quite high, it’s important to recognize that Hartmann Studios was unable to provide any I-9s for some of its employees who had been terminated and needed an extension of time to produce documents for others.

What steps can our office (or company) take now, to make sure were fully complying with all current I-9 document guidelines?

If you haven’t already done so, give serious thought to signing up for the US government’s
E-Verify program that can help you properly process all your I-9 documents. By visiting this government website, you can learn more about how this program works. Your usage of this service may help establish your good-faith attempt to properly handle all I-9 duties.

You may also want to ask your lawyer if you should require all newly hired (and established) employees to sign a form that clearly indicates their awareness that they may be immediately fired for their dishonesty if you ever learn that they’ve provided you with any fraudulent I-9 documents. If you do this, you’ll need to strictly apply this standard.

Please contact our Murray Lobb law office so we can answer any other questions you may have about properly handling all I-9 documents. We can also provide you with advice on drawing up a general employee handbook — that also fully alerts all employees to the possible consequences of supplying your company with fraudulent I-9 documents.

Gray Areas Keep Emerging in the Field of Sexual Harassment

Sexual harassment cases have remained quite numerous during recent years. Lawsuits involving Fox News, the late Roger Ailes and the transportation giant Uber have kept our judicial system very busy. In fact, in early July of 2017, the Los Angeles Times reported that Fox News had just fired the head of its L. A. sports programming division due to new allegations of workplace sexual harassment.

Perhaps it’s not surprising that while so many claims were being filed during the past five years, courts were being asked to evaluate some newer types of allegations. Several of them involve employees who were fired because their bosses said they were too attractive to have around or interact with on a regular basis. Equally odd are recent workplace problems caused by male employees trying to distance themselves from female co-workers who they claim harbor romantic feelings for them.

Before examining these new issues closer, it’s important to review what constitutes modern sexual harassment.

The EEOC’s Definition of Sexual Harassment

On its website, the EEOC states that it’s simply wrong to harass a person (such as a job applicant or employee) based on that person’s sex. Harassment can include someone making unwanted sexual advances or requests for sexual favors from another worker. While both men and women can suffer sexual harassment, statistics reveal that women file 83% of these claims. Some surveyed workers have said that they believe that this is probably true since men are often  overrepresented in positions of power in the American workplace.

Harassment doesn’t always involve any touching. In fact, offensive remarks about the opposite sex can be enough to constitute sexual harassment. What courts are often looking for is whether various workers’ words and actions have created a hostile working environment. When simple teasing and offhand comments become quite regular, they can legally be viewed as sexual harassment. Even consensual office romances can cause legal problems because when they end, one of the two participants may often wind up fired or demoted.

Relatively new sexual harassment claims involving bosses who fire employees for being too attractive provide new dilemmas for our courts. Likewise, employees distancing themselves from others because they think their co-workers harbor hidden romantic feelings for them are also uniquely troubling. These types of “gray area” claims are discussed further below.

Should It Be Lawful to Fire Someone Who Is Too Attractive – Or a Female?

Oddly enough, one or two courts have allowed bosses to simply dismiss women because they’re so attractive that the men fear they can’t control themselves if they remain in the workplace. One such case was filed by Melissa Nelson against her dentist employer in Iowa. This 33-year-old office assistant had worked for this dentist for many years. However, she was let go after he claimed that his wife had learned that her husband was sharing improper text messages with the young woman.

Of course, this type of employer claim clearly implies that the woman will make poor choices and should therefore be dismissed as some type of precaution. Perhaps the employer just wanted to dismiss her but couldn’t come up with a better excuse. Nevertheless, the Iowa Supreme Court later reaffirmed its decision, denying this fired young woman any type of compensation. The court even tried to dodge its questionable “logic” by saying that the firing was based on feelings – and not the young woman’s gender.

Unfortunately, that Iowa case is not unique. A similar case was filed due to the 2013 firing of a Manhattan yoga instructor who worked in a chiropractor’s office. She was told she was “too cute” — and that her ongoing presence in the office would make her boss’ wife jealous. A judge dismissed her case back in 2016. However, that case isn’t over. In August 2017, an appeals court ruled that the Manhattan yoga instructor can proceed with her case and sue the chiropractor.

What About Men (or Women) Who Want to Avoid Working with the Opposite Sex?

Can an employee refuse to spend legitimate work time with a woman because he believes she has a crush on him? Can this be viewed as some type of sexual harassment? This issue came up recently in an Austin, Texas workplace. William Manno, who had been refusing to work alongside a specific female — is now having to reevaluate and change his behavior.

Thomas Kochan, a Massachusetts Institute of Technology professor and co-director of the M.I.T. Sloan Institute for Work and Employment Research says that when workers inappropriately refuse to interact with others due solely to their sex or presumed romantic feelings – employers may need to intervene. In fact, it can prove very useful and instructive for employees who want to isolate themselves from members of the opposite sex to begin participating in group work activities so they can develop healthier work habits.

Regardless of how one views some of these newer issues, it’s important for all workers to stand up for their rights when any serious harassment behaviors develop.

What All Workers Must Do When They Believe They’re Being Sexually Harassed

  • Keep detailed notes about the offensive incidents. Be sure to write down the specific facts, the dates and times involved — and whether there were any witnesses. Keep this log at home and not in your place of employment;
  • Carefully review any employee handbook you’ve been given. Try to follow your company’s recommended way of handling suspected sexual harassment. If reporting the incident to your immediate supervisor won’t work – you may want to confide in a senior employee you believe you can trust. However, you should first review all the steps named here – before taking any action;
  • Immediately contact your local Houston employment law attorney. Once you’ve scheduled an appointment, gather together all relevant employee handbooks, training materials and other pertinent documents regarding your sexual harassment claim. Your lawyer will tell you exactly which steps to take in the proper order to fully preserve your claim in a timely manner;
  • Be prepared to contact the EEOC (Equal Employment Opportunity Commission). You normally have 45 days from the date of the event to obtain help and advice from an EEOC counselor. Your lawyer can inform you how such claims are normally processed and tell you about other legal remedies you may need to pursue;
  • Seriously think about what you may lose if you don’t file an EEOC claim and consider other litigation. As most women know, some of the worst instances of sexual harassment are never reported. After all, no one wants to become the subject of office gossip if the employer fails to honor your privacy. Likewise, concerns about retaliation are common. Fortunately, there are legal remedies for retaliation. However, if you don’t file a claim, it may become much harder for you to protect your career in the future against the negative repercussions of the current sexual harassment.

Everyone Should Benefit When an Employee Is Properly Fired

While most people don’t enjoy being fired from a job, everyone can benefit if the process is handled properly. To understand how this result is possible, it’s important to remember that your employees must be able to work together as a team. When one member is completely out of sync with the others or simply cannot do the assigned work in a timely manner, everyone suffers. So, once you’ve efficiently moved through the firing stages, most staff members will finally get the chance to perform at their highest level again.

The following information provides a brief overview of important goals to keep in mind when firing an employee. It also provides tips for protecting your company from wrongful termination lawsuits and describes the best way to meet with people while firing them.

How to Display Good Character and Protect the Business from Lawsuits

  • Be sure to clearly explain all employee management and firing guidelines in an employee handbook. Always hand one of these out to all new-hires on their first day at work and have them sign a simple form noting that they’ve received the booklet and will carefully review it right away. It’s even better to gather together “new hires” within a week or two of their starting at your company and covering basic information in the handbook;
  • Carefully investigate all the facts involved with possibly firing a specific employee. Also, make sure all supervisors are regularly interacting with each employee and telling them when their performance needs improvement – in writing (be sure to have the employee sign and date this form before placing it in a permanent file);
  • Review all applicable state and federal laws regarding termination. If necessary, speak with your attorney if you have any major questions – or believe the employee is likely to sue. Always remember that some employees are very sensitive to issues involving race, gender, ethnicity, religion, nationality, veteran status, disability, age and sexual orientation;
  • Gather together all pertinent, written evidence concerning the employee’s work record. Be prepared to keep this file in a very safe place in case a lawsuit is later filed. While doing this, rethink all the hiring practices that may need to be revised so you can avoid hiring a similar person in the future;
  • Treat the employee with dignity and respect. Don’t gossip about your firing plans. Meet with the employee in a private office setting with at least one other staff member present to serve as a witness. Respect the fact that the process of being fired may be hard on the individual. Unless the employee is guilty of terrible misconduct, remain open to paying a later unemployment insurance claim. Consider offering a severance package in exchange for the employee signing a waiver not to sue for wrongful termination. Be polite yet firm when simply stating the reasons for your decision. Finally, let the individual speak briefly about how they feel about the event. And be sure to pay all monies owed for accrued sick leave and vacation time;
  • Know that you may face sociological repercussions among other workers after the firing. If what you have done in firing a specific person is considered unfair, you may have a problem regaining the respect of many co-workers and superiors. It’s always wise to meet briefly with all concerned employees and simply state that the individual is no longer with the company and that you would prefer to not discuss it further for privacy reasons;
  • Be sure to retrieve all company property prior to providing a last check to the fired employee. You’ll also want to ask for the company laptop and any keys to office property. Be sure to immediately notify your computer and building security forces so they can block the employee’s future access to the company database and email system.  You’ll also need to collect all company I.D. cards and uniforms.

Finally, try to part on pleasant terms with outgoing employees, perhaps noting that you believe that they’ll find a better fit in other positions soon. Everyone really can benefit from a properly handled firing since it can eventually improve workplace morale. In fact, even the fired employee may soon find an equal or better position somewhere else.

Be sure to call our firm if you need any specific advice about preparing an employee handbook, interacting with troublesome staff members — or any other employment law issue.

Get Ready for the New Overtime Rule

May 18, 2016 – The U.S. Department of Labor has released its final rule on overtime under the Fair Labor Standards Act. The Administration estimates that the new rule will extend overtime protections to 4.2 million Americans who are not currently eligible under federal law. Once effective, the rule will raise the salary level from its previous amount of $455 per week (the equivalent of $23,660 a year) to $913 per week (the equivalent of $47,476 per year) in 2016. The rule will also raise the compensation level for highly compensated employees from its previous amount of $100,000 to $134,004 annually. The final rule also establishes a mechanism for automatically updating the salary level every three years, with the first update to take place in 2020. These changes take effect on December 1, 2016. The Final Rule can be viewed here: https://www.dol.gov/whd/overtime/final2016/

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The final rule does not make any changes to the duties test for executive, administrative and professional employees, which affects the determination of who is exempt from overtime. Administrative employees who do not meet the special provision for administrative employees will be eligible for overtime if they earn below the salary level set in the final rule and they work more than 40 hours in a week.

In response to the new overtime rule, employers have the option of:

A. Paying time-and-a-half for overtime work;

B. Raising the workers’ salaries above the new threshold;

C. Limiting worker’s hours to 40 per week; or

D. Some combination of the above.