VANNOY:
Five Businesses sued for non-compliance, learn from their HR Mistakes. Hi, I’m Mike Vannoy with Asure, and this is a good topic today. I hate, maybe good’s not the right word. We’re going to unpack five very specific use cases here. We’re not looking to embarrass anybody. These are real stories. We literally just pulled from the headlines. If you open a paper or open Google every single day, there’s a case where small business gets in trouble for some HR issue rather than finger wagging at everybody and telling you what the law says and what to do, what not to do. We just want to unpack five real life examples that have happened. We’re not going to name names at companies, we’re not looking to embarrass anybody, destroy anybody’s employment brand, but these are real use cases that I think it’s important for everybody to understand. So I’ve got the perfect guest to unpack this with me today. Regular guest on the show, Brian Schenker. Brian’s an attorney at the Long Island, New York office of Jackson Lewis. Brian’s practice focuses on representing employers in a wide range of workplace matters, as well as preventative advice and counseling. Brian has extensive experience defending class and collective action lawsuits under federal and state wage and hour laws. He has successfully defended wage and hour audits conducted by the US and New York State Departments of Labor, and Brian regularly handles cases before courts and administrative agencies involving claims of discrimination, sexual harassment and retaliation. Welcome back to the show, Brian.
SHENKER:
Thanks. Looking forward to this one.
VANNOY:
So let’s just jump right into it, and I’m going to do my best not to name names here. I’ll paraphrase maybe some of the details of the case, some of the headline if you will. And what I’d ask for you to do is unpack what happened, why it happened, what should the employer have done, what is it costing them, et cetera. Just our best advice that we can to help folks avoid these same mistakes, right? So use case number one. There’s a $290,000 lawsuit by the Department of Labor against a restaurant operator for illegal tip pool violations. It was an FLSA feral Labor Standards Act violation that had to do with tips and they got sued not by employee, but the Department of Labor for $290,000. What can you tell us about this case, this restaurateur, what they did, how they got in trouble, the impact, and then what they should have done to avoid it?
SHENKER:
Sure, Mike. So in this case, I think the first US set of issues we see are relating to tipped employees. So the issues range from failure to give proper tip notice to improper individuals participating in the tip pool, and those have significant minimum wage and other consequences. So I think that’s the first set of issues I see. I think in this case there was also an issue of, I believe uniform deductions. So that’s another issue that employers should be aware of when making any,
VANNOY:
Can you explain what that even means? I’m sure some restaurateurs who provide uniforms and they have a deduction for it know exactly what you’re talking about, but there’s probably a lot of people who don’t know what that means. Should they be paying attention to it or not?
SHENKER:
Yeah, absolutely. And I think this is one of the more straightforward ones, pretty easy for an employer to understand this. So under the FLSA, an employer can have employees bear the cost of uniforms but not without limit. So here the issue was that the employer deducted the cost of uniforms and those deductions brought the employees under the federal minimum wage, which is 7 25 an hour. And so that then becomes a minimum wage issue. You cannot deduct for uniforms below that federal minimum wage. Obviously there could be state law rules depending on your jurisdiction, but under the FLSA, that’s what we’re looking at in terms of deductions still maintaining at least the minimum wage for those employees.
VANNOY:
So the headline here was around an illegal tip pool. Was it, and I’m just making some assumptions, was it the way the tip pool then impacted the minimum wage threshold accommodation of pooling tips and a uniform deduction and how that took people under the 7 25 and therefore some type of a trigger?
SHENKER:
So yeah, so along those lines. So I think stepping back, taking one step back, talking about the tip credit. So here, this employer paid their tipped employees, right? It’s a hospitality employer. They paid their tipped employees a tip credit, which for those not familiar under the FLSA, an employer may count tips received by employees who regularly and customarily receive tips against the full minimum wage. So under the federal law, under the F L L S A, the maximum tip credit is $5 and 12 cents per hour. So this means the employer in this case was paying likely a $2 and 13 cents cash minimum wage to its employees, right? That’s far below the 7 25. But that’s permitted because these were tipped employees. And so there are really two issues that impact that, right? So one is the company failed to provide notice of the tip credit, and that’s the first prerequisite. When you have tipped employees and are electing the tip credit, obviously it’s a good benefit to employers, you’re paying a rate less than the normal minimum wage and it works out for the tipped employees because they’re getting their wages supplemented by those tips, which should equal at least that five 12 per hour
Under the FLSA tip notice tip credit notice can be verbal or it can be written I think as a best practice to employers out there written notice is the way to go because as we say, Mike, over and over again in these, if you didn’t document it, it didn’t happen, right? So it’s always good when you have a notice requirement under FLSA or any statute to put it in writing even if it’s not required. And so that notice is important because it tells the employee you’re not being paid the full minimum wage. There’s a tip credit, you’re going to have tips that satisfy that work to satisfy the minimum wage, and it basically lets them know the framework of how they’re being paid. So failure to provide that notice means that now the employer can’t pay that $2 13 cents an hour. They have to pay the full minimum wage. So you talk about damages, that’s $5 and 12 cents per hour for each of those tipped employees who didn’t receive the tip credit notice that is substantial and probably worked towards getting to that almost $300,000 figure.
VANNOY:
And I would assume for this employer, we won’t name their name 290 grand. That’s not nothing. That’s potentially an existential threat, right?
SHENKER:
I agree. For a company of any size, that’s not going to be pocket change. And I think participation in the tip pool was something that they got this employer for too. So tipped employees, we have multiple ways we can go about this. Employers can just let the tipped employees take whatever is given to them in terms of tips or they can establish a tip pool in which you have a pool of employees and it’s limited to just those who are typically your customer facing employees who are customarily receiving tips in their position. And so to take a good example, if we take a restaurant, your front of the house people could be part of a tip pool your back of the house people like chefs and dishwashers, they can’t participate in a tip pool. So once you have improper participants in a tip pool, not only does that create issues as to those tips that are paid to them need to then be paid by the employer to the rightful owners of that money, the tipped employees.
But that can also result in the employer no longer having the benefit of the tip credit and owing the full minimum wage. And the same result would follow if managers, for instance, or supervisors were included in the tip pool, which is a common thing I see where maybe one day a company is short staffed and they have a manager fill in and help do service, and they say, okay, well that manager can participate in the tip pool for that day, not the case managers. If they provide direct service to customers, they can be directly tipped by that customer, but they can’t share tips with other employees. So that was another one that this company got dinged on.
VANNOY:
So I always try to give the employer the benefit of the doubt that they’re not trying to screw employees over, they’re just trying to scrape by a living just like every other entrepreneur and business owner. I think one of the things that probably indirectly helps employers these days is just the law of supply and demand. The labor market is so tight that I think less and less you’re going to see these types of, hey, a deduction and a uniform deduction took ’em under the minimum wage or trying to apply a tip credit that takes you under the minimum wage because employers are simply having to pay more to even attract talent in the first place. That’s probably one external mitigating factor here, but I think it’s fair to say we could give these guys the benefit of the doubt that they thought they were probably following the law. The two biggest mistakes here was notice that didn’t have an employee handbook or some type of written documentation that explicitly explained the policy, and they probably just genuinely misunderstood that you can’t have a uniform credit. They knew that you could have a uniform credit, a uniform deduction, but it can’t take you under the minimum wage. So
I can’t call ’em innocent mistakes. Ignorance of the law is no excuse, but these guys weren’t trying to do anything wrong. Probably they probably weren’t trying to screw their employees over, but by the way, this is 290 grand, 30 employees. This isn’t a hundred person company. This is a restaurateur, 30 employees, 290 grand. So this is super, super serious. You got to take it serious. And I think it’s just those two simple things. Get it in an employee handbook, communicate it, train upon it, and then you got to have a better understanding of the law when it comes to what you can and can’t do on deductions. Do you have any insight on what the trigger event was here?
SHENKER:
I’m not sure. I mean, typically when it comes to the D O L, you’re either going to have one employee or multiple employees come forward with a complaint and that triggers it and then the D O L might come in and just investigate those complainants or they might look at it more broadly and say, well, that complainant was a server and now we’re going to look at all servers or we’re going to look at all 30 employees
At this restaurant. So I think that’s likely what occurred. Sometimes the D O L just focuses on certain industries and will randomly select businesses to audit based on where they’re seeing a trend of violations. But in either way, as you said, even if this wasn’t intentional by the employer, especially when we’re talking about the FLSA and wage and hour law intent is irrelevant. And that’s the tough part for employers that just trying to get by and doing things without understanding what the law says, you’re not going to have a defense that says, well, I acted in good faith. Right? No, you don’t act in good faith unless you’ve reached out to professionals like in HR or an attorney to find out what’s the appropriate way to pay those people.
VANNOY:
Yeah. Hey, I’m looking at this article and I’m seeing there’s one other component here where servers were required to perform unpaid pre-shift work before the restaurant open. So my son, young man starting out and finding his way in this world, working for a company, I won’t say their name, I’m not trying to get anybody in trouble, but it was a job where they would go on location from home to home, he would drive to the employer’s home and my son would get paid while on the job site at the homes, but wouldn’t get paid driving sometimes an hour at a time from job site to job site to job site. I think there’s a lot of employers just simply don’t understand. You can’t do that when they show up to be engaged, ready for work, they’re on the job. And so just because you’re a restaurant doesn’t open until eight o’clock. If you have servers that are prepping tables, making coffee, putting silverware and napkins, whatever it is they’re doing, they’re on the clock.
SHENKER:
Absolutely. And so I think that’s exactly what happened here. These employees were more or less not permitted to clock in until the start of their scheduled shift, but they were performing work before that. What every employer should have is a written policy regarding timekeeping, and it should state among other things, what constitutes work time, meal breaks, remote work, all those things. But then specifically as to this type of claim, which we would call off the clockwork, it’s going to prohibit off the clockwork that’s not recorded and threaten disciplinary measures, for example, if that policy is violated. And again, the important part is really that managers and supervisors are aware of these policies and practices and know-how, what the expectations are, that for instance, if an employee violates the policy and clocks in before their start of the shift against the company policy, then they can be disciplined up to termination for that. But the company still needs to pay them for that work they perform, right? So even unauthorized overtime, unauthorized work that must paid, but disciplinary action can follow if the actions violated company policy.
VANNOY:
Right. Let’s move on to use case number two here. So it’s another restaurant, but this one has to do, it was an EEOC case. It was race-based harassment by shift managers. So it was a restaurant. They got fined $150,000 by the EEOC. Unpack this one for us if you could please.
SHENKER:
Yeah. So yeah, I think this case involved a couple, some managers or some employees who were using racial slurs. I think it was shift managers who were using those. And again, I think it was regular use. It wasn’t one time issue, it was continual and constant inappropriate racial comments. And so what is this, right? This brings up hostile work environment, a classic case of a hostile work environment where the workplace is permeated with discriminatory ridicule or insult to the extent that it alters the terms and conditions of employment for those individuals. So the key here for a hostile work environment claim is that it’s verbal or physical conduct that’s unwelcomed and the conduct, and here it was racial slurs. Those have to do with the individual’s protected class here, the protected class of race.
But now again, just before we get into what companies can do, it’s important to understand that under federal law, this conduct needs to be severe and pervasive. And so here it was, right? It was on a regular basis. It was over a period of time because again, isolated incidents don’t necessarily result in a claim here. And again, I think we’ve mentioned this before, Mike, that the federal anti-discrimination laws aren’t, they don’t mandate civility in the workplace. They don’t mandate that people be nice to each other are kind, but that you can’t do certain things based on protected categories. And that’s exactly what happened here.
VANNOY:
I think something that I want to emphasize for employers here, and just to be clear, these were black employees that experiencing the racial slurs, we’ll assume that nobody was such an idiot that they’re using the most vulgar of words not to be said in this show. It may have been supervisors who thought they were being funny, right? But to your point, it was funny, not funny, but it was based on race. So protected class enforced by EEOC, it they were tall or short or whatever that they were being picked on or hazed. It was specific words that were race-based words. Number two, if you’re a business owner, you’re a small business owner, you’re onsite, maybe you’re completely innocent here and you would never ever use words like that. That doesn’t mean that you as an owner are not responsible for the behavior of your staff. This happened to be two shift supervisors who are doing this, but you as the owner in this case, how much was it $150,000 in an auto court settlement? $150,000. You own a small restaurant and you got to write a check for 150,000. I mean, either you got great insurance or you happen to have a super successful business or you’re out of business. Those are kind of your options there, right? Yeah.
SHENKER:
So
VANNOY:
What’s your guidance to the entrepreneur, to the business owner on how to mitigate this from ever happening in the first place knowing that, hey, I would never do this, but I’m also responsible for the behavior of all my employees, and it doesn’t have to be a supervisor, it could have been a coworker.
SHENKER:
Exactly. And so the way you went through that, it just zeroed my mind in on training, right? There are other things, but training, right? Because look, maybe these supervisors thought that, look stereotypes, jokes that involve stereotypes. One person might think that’s funny. Another might find it offensive. And again, we’re not talking about one insensitive stereotype or comment on one day. This is stuff that happens over and over again. And so it’s important that companies train, like you said, not just the supervisors, but all employees. They’re subordinates because hostile work environment can be created by anyone in the workplace, but especially supervisors who are involved in disciplinary decisions and hiring and firing decisions. They should certainly be trained on equal employment opportunity, policies, procedures, and how to spot and identify harassment issues. So maybe you have a supervisor who’s not involved in it, but they’re on the floor, their boots on the ground, they see what’s going on, they overhear things they can see when someone might not be too happy about comments that others are making.
And so even if there is not a complaint, managers should understand what to look for and to proactively address these situations that’s going to protect the employer. Now, we’ve talked so much I think in the past also about having available internal complaint procedures, which is another thing that companies should do, right? Having an internal complaint process, typically that’s going to be set forth in the handbook that you mentioned earlier, that all companies should have and distribute to their employees. And it should give employees several pathways to complain internally so that the company is the one dealing with these issues and can nip them in the bud before, for instance, the employee goes to the EEOC, right? If this company had done that, if they had a complaint procedures and had handled something early on, it might’ve never gotten to the point where an employee felt the need to make a claim because the company would’ve resolved it. But I think in addition to those, I mean obviously we talked about having e e O policies, you need written policies that should define what harassment and discrimination are and say that it’s not permitted. And there should be written acknowledgements that employees receive this. Because again, if we don’t have a signed acknowledgement, how are we going to approve that the employee received the actual policy or the handbook?
VANNOY:
And I just really want to emphasize here before we move on to the next one, it is your responsibility as the employer to create this environment where these things can’t happen. So I can again, try to give benefit of the doubt to an employer. I can envision a work environment where two employees, they might really just give each other a whole bunch of, they might give each other the business on a regular basis. And between the two of them, perhaps it’s funny, and maybe there is even a racial component in the jokes that they tell each other, but it could make other people in the room uncomfortable. That’s all it takes. And so you as an employer, we’re not suggesting that you have some sterile, antiseptic, no fun culture, but you do have to stand for the law regardless of what you feel. You got to stand for the law. And you can’t tolerate even jokes that it would appear. People are laughing at if they’re based on race, gender, ethnicity, origin, sexual preference, they’re protected. Class is period. And so to me, the best way to protect against this is just don’t allow that as part of your culture. You can say, okay, guys, that’s not appropriate. We’re not going to go there. Let’s have a fun environment. But that’s off limits. That content is off limits here. It’s as simple as that, right? Yeah.
SHENKER:
You hit the nail on the head there. Absolutely. Absolutely. You don’t know when someone’s going to be offended by something. And so these inappropriate topics, even if you think people are okay with them, they’re not work related topics that it shouldn’t be happening at in the workplace.
VANNOY:
And we’re not suggesting here that everyone has to be a wilting flower and try to protect, I don’t want to be slightly politically corrector. We’re not looking to create a safe space for everybody here you can be, like you said, the law doesn’t require you to be civil or kind, respectful, or even pleasant, but the law does prevent you from race, gender, or you can’t have language that discriminates in any of those classes as laid out by the law. Right?
SHENKER:
Exactly.
VANNOY:
Okay, let’s go to case number three. It is another EEOC case. It’s a discrimination case, but this one is a little bit different. It’s not. This is based on a disability. So there was a $40,000 penalty for a hotel. This is one hotel, we won’t say the name. It was a franchisee of a name that you would recognize $40,000 penalty. It was a disability discrimination lawsuit. Can you unpack that one for us, Brent?
SHENKER:
Right. So yes. So disability discrimination is one of those areas under Title vii, the federal anti-discrimination statute. That is a little different than the other bases like sex and race because disability discrimination provisions have an additional requirement that an employer provide reasonable accommodations. So not only can you not discriminate against someone on the basis of a disability, but you need to take proactive steps to accommodate that. So I think in this case, really what was one of the big issues was leave as a reasonable accommodation. And so typically we think of a reasonable accommodation as something that is going to enable the employee to perform their essential functions, the main components of their job with that accommodation. But courts have found that a leave of absence, and under federal law, that’s typically going to be a leave of absence of some definite duration. We’re not talking about unlimited duration of leave.
We’re talking about a specific period of time that’s requested in advance, and it’s likely that the employee would be able to return and perform the functions on return when they come back. That can be a reasonable accommodation. And so again, it’s not necessarily exactly like the F M L A where it’s job protected and they have to be returned to their same exact exact job, but there is that same idea that they’re going to be brought back to the same or similar position and they won’t be prejudiced by the fact that they took protected leave. So
VANNOY:
Here
I want to get into the nuance in this one. And again, we’re not going to name names. I think anybody watching listening today thinks I’m not going to discriminate someone with in a wheelchair with a vision impairment, or I think we naturally gravitate towards these obvious things. I’m a good person. I would never do that. In this case, this is an employee. Something happened, had an emergency room visit, was out for a bit, but then was cleared by doctors to return to work, but the hotel simply stopped scheduling that person. And I think all of us know what that really means in the retail world or a restaurant, when they stop scheduling you frequently, that’s a soft firing. Right? Now, if they wanted to fire this employee, they could have probably good documentation of performance expectations or missed all that kind of stuff. They would’ve been on very firm ground to probably terminate the employee. But when the employee goes to the emergency room, has a little bit of leave, and then they mysteriously stop getting scheduled, I mean, if we were to give the employer the benefit of the doubt, maybe it was a terrible employee, maybe it was a great employee, we have no idea. But the fact that the employer used this medical leave as a trigger event to stop scheduling them, that was the violation with a d a. And I think that’s not an obvious scenario to so many employers, right? So do you think I’m summarizing that right?
SHENKER:
Yeah, I think you are. And so, right specific to that point, employers should have written rules regarding leave, including leave for a disability accommodation. It should address the length of leave, the protocol for extending the leave since that often occurs. And here relevant to this case, the protocol for what happens at the end of the leave. So here it appears the employee went about it the right way. So after the end of leave, when someone’s expected back, generally employers should request some type of medical certification that clears the employee to return to work either without accommodation or with a reasonable accommodation. And so once you have that as the employer, this person is then cleared to work and whether it’s going to be that same position or a similar one, or maybe they’ve been out for a while and the department’s been restructured, but now it’s the obligation of the employer to discuss with the employee, how are we going to return you to work?
And look, I think getting to the issue of discipline, I think there are a couple scenarios. So sometimes we just have employees who aren’t great employees and they’re going to be subject to discipline, and they end up taking leave in the midst of that time period when they’re not performing well, right? Other times we have less legitimate situations where we believe an employee is taking a leave of absence or requesting disability leave because they expect they might be fired, and this is their way to make sure they’re safe. Now, how often that occurs? Not exactly. Sure. I certainly have clients who feel that that occurs from time to time. But look, to be clear, employers can still discipline individuals who are out on leave, disability leave or have returned from it, right? The key question there is, would you take this same action against an employee had they not taken leave?
So if an employee screwed up a huge report or violated company policy before they took their leave, but there wasn’t an opportunity to investigate it and issue the discipline, an employer can absolutely issue that discipline while the employee’s on leave or when they return. Now, the key is, as you discussed earlier, documentation, because without documentation, it’s very much going to look retaliatory, which is unlawful. But with the proper documentation as to what the issues were, what the policies that were violated were, the timing of it, those are what would allow an employer to take that action. So here we don’t quite know. I mean, this employer might’ve had legitimate reasons to terminate this employee, but maybe they didn’t document them correctly, and so therefore they had nothing to go on. And it looks quite bad when you refuse to let someone return from their leave.
VANNOY:
And to be clear, we’re not choosing sides here. Maybe this is a fantastic employer employee and a terrible employer. We have no idea. But the point is, as an employer, the way you protect yourself is documentation, handbook, training, documentation of that training and all your conversations. You can’t overdo it in the documentation and expectation setting.
SHENKER:
Absolutely.
VANNOY:
Yeah. Okay, let’s move to our next one. So this is an interesting one. I think we’re going to see lots more of this in the future. It’s around job ads, job postings, the number of laws popping up on the state county municipality level is just exploding. The number of laws passing around what you can and can’t say, or are required to say, pay transparency laws, salary ban,
SHENKER:
Salary
VANNOY:
Issues, salary bans. There’s the whole kinds of stuff here that are making something as simple as a job posting more complex. So this was a penalty of $3,855 for a job ad three $3,800 penalty and two years of federal monitoring for a business with a discriminatory job. Ad Brian, help everybody understand what was in the ad and what mistake did the employer make here.
SHENKER:
So this one is really interesting, and I think a great example for employers on a job advertisement issue that they might not really be thinking. And the related issues. So this didn’t apply, right? Weren’t saying clean criminal history or things like that. What happened here was that the job advertisement limited the applications applicants with certain immigration statuses. So the ad stated that you needed to have a specific visa status that’s available to certain foreign nationals studying at colleges or universities in the us, the optional practical training program. And so what the result here was is that the Department of Justice found this company was discriminating on the basis of citizenship or national origin because they weren’t accepting applications from, for instance, a US citizen or an authorized worker who’s a citizen of another country but didn’t have this visa status. So I think taking a step back, the law, the federal law here that we’re dealing with is the Immigration Reform and Control Act, right?
ICA, as we call it. But what that act requires is that number one, this is a law that addresses I nines, right? So the fact that whenever you onboard an employee, you’re going to have them by the first day of employment, fill out an I nine form and show you documentation that they are who they say they are, their identity and their work authorization. And so there are a whole bunch of requirements there. The Department of Justice oversees that as well. But the same law also prohibits employers from discriminating against applicants on the basis of citizenship status, which is not covered by Title VII or National Origin. And so actually, the funny thing here is that National Origin is addressed by Title vii, but Title VII only applies to employers with 15 or more employees. So here we have this act that applies to employers with four to 15 employers with respect to national origin.
So it kind of covers that gap and brings in even smaller employers. But right here, I mean, look, what happened here, including is something in your ad like that your position is only available to people with certain statuses that’s going to be discrimination on the basis of citizen status, national origin, that type of thing would be very problematic. And look, I’ve handled these claims before, and the Department of Justice will go after less obvious things, not necessarily advertisements. They even look at e-verify records. So e verifies an optional voluntary program that employers can supplement their I nine process with to help detect fraud. And the I nine, the data that employers put into the E-verify system goes to the department justice, and sometimes they bring claims or bring in certain investigations based on what they’re seeing from E-Verify. If they see that everyone’s showing a column, a document from the I nine form, instead of a column B and a column C, that might tip them off.
It’s a substantial deviation from normal percentages. So they will investigate even less obvious things. And look, what I would suggest is this is a small fine, this 3000 and change, fine. What often can happen is if there’s a problem with how the company is doing something, it’s going to likely impact more than just one individual, right? It’s going to impact a whole bunch. And then these penalties per person, while they might be small per person, they multiply, there can also be back wages available injunctive relief requiring the company to hire or rehire an employee. And so of course, the civil penalties as well.
VANNOY:
Brian, let’s get into the specifics of this one. I think this could fall into the category of intellectually interesting, unless you just realize how simple this was. And forgive me if you said it. I want to read the title of this ad. So this is an IT company. They’re looking for a developer, and again, I’m giving them the benefit of the doubt here, that they weren’t trying to break the law, that in fact, they may have been trying to do something noble, right? The title of the AD software developer exclusively for O P T. So the ad stated that the applicants must be under O P T visa status. Forgive me if you said it. What does O P T stand for? What does that mean?
SHENKER:
Right? That’s the optional practical training program. It’s a program for college students for foreign nationals who are in
VANNOY:
US college. So here’s an employer, let’s give ’em the benefit of the doubt. They probably thought they were being noble. Hey, let’s create a job. I would love to be able to tap into this talent pool. People in this program give people from other places a chance. I suspect there’s talented people coming from there and without even thinking that they’re discriminating against everybody else. So I think the message here is be noble, great, but when you post a job, you can only restrict based on the requirements, skills, and requirements to perform the job. So there’s a skills component. Hey, do you actually have the skills? Do you have the certifications? Do you have a driver’s license? Because this requires making deliveries. Are you physically in this area that you can perform that job? Can you lift boxes over such and such weight? It has to tie to the actual performance of the job. And so if you’re putting any restriction, because the inverse of this would be just as egregious. So, hey, I don’t want to train any rookies here. I only want some experienced people. You couldn’t put an ad that excluded people with O P T status. You can, however, say, looking for seasoned professionals with at least three to four years experience, but you can’t discriminate based on a class or a specific group. It’s got to be an what is required to perform the job.
SHENKER:
Yeah, Mike, great point. And I think that guidance there, making job advertisements have it only containing job related, business related information and requirements that’ll save companies from not just this type of citizenship or national origin type claim, but many of the other types of claims that can come from potentially discriminatory ads, where again, this ad is going out in the public. It should be the general guidelines of what you’re looking for for this position. Of course, this company, they could have considered applicants with O P T visas, but they didn’t need to make that a requirement for the position. So I think that’s the difference considering diverse applicants, like you said, very knowable, right? That’s what companies should be doing for a number of valid reasons, but you don’t want to limit it and say, Hey, we’re looking for non-US citizens to fill this position. You can’t go to that extent,
VANNOY:
Right? Right. Alright, last case I want to explore here. This is, again, it’s EEOC. This is sex-based discrimination. I think what captures the headlines is equal pay women in the C-suite, women in highly visible jobs. And that’s a whole nother topic. We’re not going there. This is a case where this is a manufacturer. They were fined by the EEOC $252,768 because it was discovered based originally from a complaint. I assume that they had unfair hiring practices for hiring machine operators in the shop floor. So
SHENKER:
Yes,
VANNOY:
Into we’re falling into big time stereotype V here. I’m not interested in a political angle on this discussion, but what I am interested in, what does the law say and what are the best practices that small employer all employers must follow when hiring applicants? By the way, the outcome of that is going to equal much more equal outcomes as well. But let’s say you,
SHENKER:
Yeah, so I mean, look right here, we’re obviously talking about sex discrimination and following what we were just talking about on the last case, right? We’re talking about decisions that are not job related and consistent with business necessity. So let’s just start with that general premise before we get into the hiring aspect, that whenever an employer is distinguishing between employees or treating them differently, those should be based on job related or business related distinctions, not distinctions related to protected classes, right? That’s discriminatory. So the thought that here, a woman could not operate a certain machine that’s entirely improper. So this is classic disparate treatment, treating people of a protected category who are similarly situated to people outside of it, men in a different or discriminatory way.
Not to say that this was not a company-wide policy, it may have been, but one of the things that makes me think about is how managers can be in a problem, even if there’s no official policy that women can’t perform that machine operating job. If you have managers and supervisors who are telling the women who are saying, I want to apply for this position or expressing interest that no, that’s not for you or other wise, basically pushing them away from that, that’s very problematic. So we go back to training. They need to understand the managers, supervisors that they play a key role in preventing discrimination and making sure that the criteria for discipline promotion, hiring fire are the same for everyone. But here, look, with specifically with respect to the hiring under the federal laws, it’s just as it’s unlawful to discriminate against employees once they’re an employee of your company, it’s likewise unlawful to discriminate against applicants. So under Title vii, it prohibits discrimination based on race, color, religion, sex. That includes pregnancy and national origin, the age under the A D A, you have the Equal Pay Act. And so here, I think it touches on the conduct here, touches on a couple of those.
I think that clearly you have a sex issue there under Title vii. This makes me think that there could also be equal pay issues where men and women should be paid equally for equal work. There are many state laws coming out in the past, and they continue on that issue that have even more bite than the federal law. So again, that just goes back to setting wages, setting any conditions of employment should be based on job related matters, not any protected categories, right?
VANNOY:
Yeah, it’s the same theme. It’s job posting, your interview practice, your onboarding, everything from pre-hire to post-employment, every process you have, it’s got to be based on the job itself. What are the skills duties to perform the job? This one’s harder to try to give benefit of the doubt to folks. I think about maybe I grew up in a blue collar environment, my dad’s, he’s a good man. I could see my dad thinking, oh, that this is a dangerous job operating that machine. I would never want a woman to do that, trying to be chival risks, but not intentionally discriminatory, but it would clearly be discriminatory. Right? So you have to make your criteria for the hiring to be about the job and nothing else, right?
SHENKER:
Exactly. And I think an example that might drive that home to many employers, because many people out there listening to this might be saying, of course I would never bar women from a certain position and only apply that to men. But think of this example, you have a woman who operates that machinery and then she becomes pregnant and notifies the company. And now like you said, the owner, this male owner who thinks he’s doing the chivalrous thing says, alright, I’m taking you off your position and putting you in a less strenuous position. There’s no basis for that. And that would be found to be discriminatory because this person hasn’t requested an accommodation. I mean, if there was an issue with performance and the individuals moving along with their pregnancy and you’re having performance issues because they can’t do the job, that would be much different than just presuming they can’t do it because of the fact they’re pregnant or because of the fact that it’s a woman. So yeah, even though this sounds like an old school mentality, I see these types of things come up more often than you might think, where again, it’s usually not going to be an official company policy about it. It’s going to be something that just informally happens where
We have no women in this position and we deny all their applications for promotion. And again, giving a company the benefit of the doubt, maybe there were reasons to favor those male applicants that had nothing to do with them being male, but you’re not going to get that benefit of the doubt in a court if you don’t have documentation suggesting why the various women who applied were denied and the men who applied were accepted. And I think here, you probably don’t get any favorable presumption if you’re the employer, if the documentation then shows that the males you promoted had inferior qualifications than the women. That’s extremely,
VANNOY:
I’ll try to manufacture an example. So maybe an employer, you got to drill press or a mill, and you got to lift this 150 pound piece of metal up onto under the jig to run this machine. So maybe anybody could run the machine, but hey, this is heavy lifting, so therefore it’s a man’s job. You can’t discriminate based on sex. You can discriminate saying, Hey, this requires the ability to lift 150 pounds repeatedly throughout the day, which by the way, is going to exclude a whole bunch of men too. And there’ll be some women that absolutely can also do that, right? But you make it about the job. And I think this is one of those, our mutual friend Mary Simmons, she and I did a show really just on this topic about blind biases. We just don’t blind to our biases. So definitionally, we don’t know what they are.
And I think we all think, and for the most part, I think we are good people. We’re not outwardly discriminating against people of different sex or color or origin or disability, but it’s these really subtle ones. We discriminate based on height, good looks. That’s the single biggest discriminatory factor people have. That’s subconscious. There’s a lot of things that we discriminate based on without realizing it. And so I think the solution to a whole bunch of these use cases we talked today, it’s an employee handbook that explicitly states your policies. It’s continued training on those policies. It’s job descriptions with performance expectations, good documentation of performance reviews, how you’re meeting those expectations, compliant job openings and ads, all these things just go hand in glove together in part of a framework to create a productive and compliant work environment.
SHENKER:
Yeah, exactly. And I think following right up on that documentation issue, I think one of the other things that the employer in this case got dinged for on penalties was violation of, I believe it was the EOCs personnel record retention requirements. And so I do want to touch on that because not only are we dealing with the EEOC, but there are a lot of different statutes that have different retention requirements for companies. And it’s very important because that documentation you create, right? Disciplinary or just personnel files, payroll time records, whatever it might be. Of course you keep those for some amount of time, but when is it time to get rid of them? How long do you need to keep them? So that really ties into what the statutes say, or statutes of limitations issues. So under thEEOC, all employers must keep personnel records for at least one year from that date of termination. Under the A D E A payroll records must be kept for at least three years. Under the FLSA wage and hour law, the statute of limitations can be up to three years. So employers should be keeping all their wage and hour records for at least three years. And
Again, we don’t always get into the state law side of things because we’re dealing with diverse employers throughout the country, but you should know what the requirements are for maintaining records under your state laws. Because for instance, in New York, we have the New York Labor Law, which is the state counterpart of the FLSA, and that has a statute of limitations of six years. So employers in New York should be maintaining their time and pay records for at least six years, if not longer. So I think that’s real important because again, I’ve had issues with clients, whether it’s wage and hour issues or I nine and immigration issues, where they got the first part, they created records at the time that were contemporaneous, that were what they were supposed to have, but then they tossed them. They thought that once the employee resigned or was terminated, that they no longer needed these records. Then a wage an hour lawsuit is filed, or there’s an audit, an agency audit, and now you don’t have the records. And you’re saying, well, we had them. But you can imagine that an employer is not going to do too well telling an agency or a court that, Hey, we had the records, sorry, we don’t have them now as if you never had them. So real important to create the records, just as important to know how long you need to keep them.
VANNOY:
I think maybe lemme say this in closing, Brian, we’re going to have to repeat this format. I think this is super helpful. Sometimes I said at the top of the hour, sometimes it’s easy to get finger wagging to business owners about HR laws because complex, there’s lots of ’em. There’s more every day. For every law they pass, they retract zero. So this just gets harder and harder every day for business owners. But sometimes we just got to unpack the real life scenarios that are happening every day. These are five examples we just picked out of the headlines from the last, I want to say week or two. So these happen all the time.
We would never, ever, ever guide companies on ways to break the law. But I think it’s fair to say that most of these folks got in trouble. Most of these employers got in trouble. It, I’m making a guess. It probably originated with an employee complaint, an employee complaint that led to an EEOC violation or fine to a Department of Labor audit. It’s unlikely that these things originated from some random D O L audit that just showed up. The auditor showed up at the door one day and said, Hey, we want to look at the books. It probably started with a disgruntled employee, and you have to be compliant. There’s no excuse. You have to. And the best way to mitigate against mistakes is if you’re being a good person. These mistakes happen usually innocently, you didn’t do it on purpose is to create a great employment culture. When your employees know that you’re not trying to screw ’em on purpose, they’re more likely to come to you with their grievance than they are to somebody in your terrible profession
Speaker 1:
Of being
VANNOY:
A lawyer and try to sue their pants off or go directly to A D O L E O C. That usually is an employee not happy, finds an attorney. And then Pandora’s box opens up. The better relationship you have with your employees, the more open, transparent, trustworthy, you can work through your issues together and usually preempt these problems. But that doesn’t prevent any of anybody’s from being responsible for following the law in the first place. Brent, I’ll give you the last word. What would you say in closing?
SHENKER:
Yeah, no, absolutely. And I think you’re spot on there, right? The goal is to be a hundred percent compliant and unfortunately, there are some things that an employer will miss or supervisors will do that are against policy. But again, I think outside of having that compliance, having a good culture, having an open door policy, having employees understand that if they bring a complaint to the company, it will be taken seriously and resolved. That sets a great culture and that sets up an employer to be able to resolve these types of issues before it becomes a $200,000 issue, or before one individual issue becomes a class action complaint. Because often from the cases I handle, there’s usually some opportunity before it rises to the level of litigation that the company could have addressed it. And it’s so important to understand how to address things, what the issues are, and to just make your employees feel that they’re respected. It goes a long way.
VANNOY:
Yeah. I will add one last thing. Even if you are 100% compliant, if your employees don’t like you, they can still complain and you could have cost of litigation and cost to defend in any of these issues, even if they’re erroneous. So again, compliance is the baseline. Culture is what you’re really aiming at. Brian, always enjoy talking to you. Learn something every time we do. So thanks for joining me today and thanks for everybody else for joining. Until next week, we’ll talk to you later.
Speaker 1:
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