Do you know your ABCs? An Alphabetical Primer on Employment Law

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1 A Legal Newsletter for Employers & Human Resource Professionals By: L. Diane Tindall, Mary M. Williams and J. Kellam Warren Attorneys-at-Law Our Business Is Law. WYRICK ROBBINS YATES & PONTON LLP Issue XXXVI Spring 2008 Do you know your ABCs? An Alphabetical Primer on Employment Law A B C At Will Employment: In most states, including North Carolina, employment is deemed to be at will unless there is an agreement that the employment is for a definite period of time. Employment at will may be terminated by either party at any time for any or no reason (but not for an illegal reason such as discrimination in violation of state or federal employment law). Bonuses: Non-discretionary bonuses, such as for employee retention, or to reward employee attendance, performance or productivity, must be included in a non-exempt employee s regular rate of pay for overtime calculations; purely discretionary bonuses, where the fact and amount of payment is completely discretionary and where there is no promise or contract for such bonus, need not be included in the regular rate of pay for overtime calculation. COBRA: Under COBRA, after a qualifying event, such as a termination of employment, and a loss of group insurance coverage, an employee may elect to continue his or her group health benefits at his or her own expense. This continuation coverage is typically for up to 18 months, although it may be extended in certain limited circumstances. (Employers with fewer than 20 employees may be covered by similar state continuation coverage laws.) NOT LEGAL ADVICE: This publication is not to be considered specific legal advice and should not be relied upon in lieu of advice from an attorney. Each client s situation is unique, and if you have need for legal advice, you should seek advice from an attorney. CIRCULAR 230 NOTICE: Any information regarding any U.S. federal tax matters contained in this communication is not intended or written to be used, and cannot be used, as advice for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

2 Issue XXXVI Spring 2008 Page 2 D E F G H Drug Testing: The Americans with Disabilities Act (ADA) does not consider drug tests to be medical examinations, and therefore does not prohibit, require or encourage drug testing. However, most states have enacted laws that govern how and when drug testing may be conducted. There are also federal alcohol and drug regulations for certain industries, such as those adopted by the Department of Transportation, the Nuclear Regulatory Commission and the Department of Defense. Recipients of federal grants and most government contractors with contracts that exceed $100,000 must also comply with the Federal Drug Free Workplace Act. EEO-1 Form: On or before September 30 of every year, every employer that is covered by Title VII and has 100 or more employees and all government contractors with 50 or more employees are required to file with the Equal Employment Opportunity Commission (EEOC) executed copies of the form known as Employer Information Report EEO-1. The EEO-1 Report provides a count of the employer s employees by job category and then by ethnicity, race and gender. The EEO-1 may be filed electronically. Covered employers must also retain at all times a copy of the most recent Report at the company s headquarters and at each reporting unit. FMLA (Family and Medical Leave Act): The FMLA requires employers with 50 or more employees to provide eligible employees with up to twelve weeks of unpaid leave per year for family or medical reasons. The FMLA also provides for unpaid leave to eligible employees for reasons related to the medical treatment or serious injury or illness of a family member who is in the Armed Forces or for any qualifying exigency arising out of the fact that a family member is on or has notice of an impending call to active duty in the Armed Forces. Government Contractors: Under Executive Order 11246, any employer with contracts or subcontracts with the federal government in excess of $10,000 must take affirmative action to ensure the employment and advancement of individuals without regard to race color, religion, sex or national origin. Employers with 50 or more employees and contracts or subcontracts with the federal government in excess of $50,000 must develop and maintain a written affirmative action plan designed to increase the employment and promotion opportunities of minorities and females. There are similar requirements for disabled workers under the Rehabilitation Act of 1973 and for disabled and other veterans under the Vietnam Era Veterans Readjustment Act of Harassment: Sexual harassment is not the only form of discriminatory harassment prohibited by federal law; harassment based upon race, color, religion, national origin, age or disability is also illegal.

3 Issue XXXVI Spring 2008 Page 3 I J K L I-9/ Immigration: Employers must require all newly-hired employees to produce original documents establishing their identity and eligibility to work in the U.S. and to complete an I-9 form on each employee within three days of hire. Acceptable documents are listed on the back of the I-9 form. Jury Duty: Every state has enacted legislation that protects employees called to jury duty. The law in North Carolina prohibits employers from discharging or demoting an employee because he or she was called for or actually served on jury duty. There is no requirement under North Carolina or federal law that the employee be paid by the employer while serving on jury duty. Some states require that some or all time spent by an employee on jury duty be paid by the employer. Key Employees: Under the FMLA, a key employee is an FMLA-eligible salaried employee who is among the highest paid ten percent of all of the employer s employees. Key employees are entitled to FMLA leave, but may be denied reinstatement if necessary to prevent substantial and grievous economic injury to the operations of the employer. Lawful Products: North Carolina law prohibits discrimination against an applicant or employee because he or she lawfully uses a lawful product away from work. (Such a statute is commonly referred to as a smokers rights statute, as the most common lawful product cited under the statute is tobacco.) M Medical Examinations: Under the ADA, an employer cannot require an applicant to take a medical exam before making a job offer. An employer can, however, make a job offer conditioned upon satisfactory results from a medical exam, so long as the requirement is consistently applied to all applicants in the same job category. After hire, an employer can require an employee to undergo a medical exam only if job related and necessary for the business. N O New Hire Reporting: All employers must provide the state with information on newlyhired employees, as required by the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). PRWORA was enacted to assist in tracking parents with child support obligations. OWBPA (Older Worker Benefit Protection Act): An amendment to the Age Discrimination in Employment Act, OWBPA requires that a waiver or release of claims under the ADEA by an employee who is 40 years of age or older: be written in understandable language; specifically refer to claims under the ADEA; extend only to past and not to future claims; be in exchange for some valuable consideration to the employee; be

4 Issue XXXVI Spring 2008 Page 4 P Q R S T provided to the employee for a 21 day consideration period; and be revocable for a period of 7 days after signing. If the waiver is given in connection with a group termination, the employee must be given a 45 day consideration period and provided a list of the ages and positions of those employees in the decisional group selected and not selected for termination. Payment of Wages on Termination: State law, and not federal law, dictates when and how employees must be paid their wages on termination. In many states, including North Carolina, all terminated employees must be paid their final paychecks on the next regular payday of the employer following the date of the termination. Under North Carolina law, the employer cannot require that the employee come to the workplace to pick up his or her final paycheck. If the employee requests that the paycheck be mailed, the employer must mail the paycheck to the employee at the employer s expense. Qualified Individual with a Disability: Under the ADA, a qualified individual with a disability is someone who can perform the essential functions of his or her job with or without a reasonable accommodation. The ADA prohibits discrimination against a qualified individual with a disability and requires the employer to provide any reasonable accommodation, unless the employer can demonstrate undue hardship. Retaliation: Title VII (which prohibits discrimination in employment based on race, color, religion, sex or national origin), the ADA (which prohibits discrimination against a qualified individual with a disability) and the ADEA (which prohibits discrimination based on age) all also prohibit retaliation against an employee or applicant for filing a charge, testifying, assisting or participating in any investigation or proceeding involving discrimination under any of these statutes. Solicitation and Distribution Rules: Under the National Labor Relations Act (NLRA), an employer s policy that prohibits employees verbal solicitation of causes or organizations during working time is presumptively lawful. However, you cannot prohibit verbal solicitation during non-working time, such as lunch breaks. A policy prohibiting the distribution of literature on working time and in working areas is presumptively lawful. A non-discriminatory policy prohibiting access to non-employees for the purpose of solicitation and distribution is also presumptively lawful. Title VII: Title VII of the Civil Rights Act of 1964 originally did not protect women as a protected class. Congressman Howard W. Smith of Virginia added sex as a protected class status into the proposed legislation in an effort to kill the bill. His tactic failed, and discrimination based on sex was made illegal in the U.S.

5 Issue XXXVI Spring 2008 Page 5 U V USERRA (Uniformed Services Employment and Reemployment Rights Act): USERRA requires all employers to restore an employee returning from uniformed service to his or her previous employment position with all seniority, pay, status and benefits that would have accrued but for the military leave. In addition, an employer may not discharge the employee without cause for a period of one year if the service was 180 days or more, or for 180 days if the service was for a period of 31 to 180 days. Vacation Pay: If and when employees receive vacation pay is governed by state law. In North Carolina, no vacation pay is required by law, but if provided, the employer must notify employees at the time of hire of how and when vacation is earned, whether it may be carried over, when it must be taken, when and if the employee will receive pay in lieu of time off and under what conditions and in what amounts vacation will be paid out upon termination. Ambiguous policies are construed in favor of the employee. If a vacation policy does not specify an accrual schedule, an employee s vacation may not be reduced or eliminated by a change in policy. W WARN Act (Worker Adjustment and Retraining Notification Act): Employers with 100 or more employees must provide employees and government officials with 60 days prior written notice of any plant closing or mass layoff. A plant closing is a permanent shut down of an employment site that results in a job loss during any 30 day period for 50 or more employees (excluding part time). A mass layoff is defined as a reduction in force that results in employment loss at a single site of employment during any 30 day period for at least 33% of employees (including part time) and at least 50 employees (excluding part time). X Y X-Rated Language (O.K., we re stretching here): Sexual harassment can arise from a broad range of verbal and physical behavior, which may include insults, jokes, offensive language, slurs or comments based on sex or targeted at an individual because of his or her sex, and/or displays of suggestive, offensive or sexually-oriented pictures or materials. (So watch your P s and Q s.) Youth Employment: In North Carolina, no youth under 18 years old may be employed in any occupation deemed hazardous by the U.S. Department of Labor. In addition, youths under age 18 who are in school (through grade 12) cannot work between the hours of 11:00 p.m. and 5:00 a.m. preceding a school day unless they are over 16 and have the permission of the youth s parent or school principal. No youth under 18 may be employed in North Carolina without first obtaining a youth certificate (although there are a few exemptions).

6 Issue XXXVI Spring 2008 Page 6 Z Zero Tolerance Policies: The U.S. Supreme Court has held that an employer is strictly liable (meaning it has no defenses) if an employee is sexually harassed by a supervisor and suffers an adverse employment action. Otherwise, the employer may assert that it had reasonable policies and procedures in place to prevent and correct the harassment and the harassed employee unreasonably failed to take advantage of the policies and procedures that were in place. Therefore, to avoid liability, employers should impose zero tolerance policies for sexual harassment. Now you know your ABCs, call us with any questions please! For more information on the topics addressed in this newsletter, contact Diane Tindall at Mary Williams at or Kellam Warren at Current and Past Issues of The Resource are available in PDF format through our Firm s website, at the News and Articles Link. All rights reserved. This Newsletter may not be reproduced in whole or in part without the written permission of Wyrick Robbins Yates & Ponton LLP. Wyrick Robbins Yates & Ponton LLP 4101 Lake Boone Trail, Suite 300 Raleigh, NC (919)

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