Richards, Layton & Finger, P.A. USA - Delaware

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1 LABOR AND EMPLOYMENT DESK BOOK Richards, Layton & Finger, P.A. USA - Delaware CONTACT INFORMATION Jennifer C. Jauffret Richards, Layton & Finger, P.A jauffret@rlf.com 1. Do you have a plant closing law in your jurisdiction and if so, what does it require? (For U.S. jurisdictions, please answer: Is there a Baby WARN Act in your state and if so, what does it require?) No. Delaware does not have any statutory provision requiring an employer to provide notice for a plant closing or mass layoff. Delaware follows the federal Worker Adjustment and Retraining Notification Act of 1988 (WARN), 29 U.S.C et seq. 2. Are there special rules on releases/waivers in your jurisdiction? With respect to settlement of claims, there are generally no special rules in Delaware as to releases. However, ut is a violation for an employer to request or require that an employee waive his rights in connection with hazardous chemicals as a condition of employment (16 Del. C. 2415) or waive his rights to unemployment or workers compensation benefits. There are also two rules regarding releases in the context of background checks as set forth below. Release in connection with Child Protection Registry. An employer who operates a health care facility or child care facility may not hire any person seeking employment without requesting and receiving a Child Protection Registry check for that person. The employer must obtain a release signed by the person authorizing the employer to obtain the information provided in the check. 11 Del. C

2 Nursing Home Employment Background Check Release. All applications for employment or for referral to work in a nursing home must require the applicant to provide information necessary to obtain a report of the person's entire State and Federal criminal history record. Every application for employment must contain a signed statement that the applicant grants full release for the employer to request and obtain such records. 16 Del. C What are the equal employment opportunity/ non-discrimination categories in your jurisdiction (For U.S. jurisdictions, please answer: Are there protected categories beyond Title VII in your state?) The categories in Delaware are race, marital status, genetic information, color, age, religion, sex and national origin. 19 Del. C These restrictions apply to State employers and private sector employers with four or more employees in Delaware. Id. Pursuant to the Handicapped Persons Employment Protections Act (HPEPA), it is an unlawful employment practice in Delaware to discriminate against a handicapped person. 19 Del. C. 720 et seq. The HPEPA applies to public and private employers with fifteen or more employees and requires employers to provide reasonable accommodations for qualified handicapped persons. Id. 4. What are the minimum wage and overtime rules (and exemptions) in your jurisdiction? Minimum wage is $7.15 in the State of Delaware. 19 Del. C Delaware excludes the following job classifications from responsibility to pay the minimum wage: agricultural and domestic service employees; bona fide executive, administrative or professional employees; commission-paid salespeople; federal employees; volunteers in educational, charitable, religious or nonprofit organizations; employees of the fish and seafood industries including first processing employees; minors under the age of eighteen employed as a junior counselor or counselor in training employed by a nonprofit organization in a summer camp program; and inmates employed by the State. Id. at 902. Delaware has not adopted overtime requirements applicable to private sector employers. Generally, overtime is regulated pursuant to the federal Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. Delaware does have some statutes regulating or relating to aspects of overtime pay applicable in specific instances. See 7 Del. C. 6005(c) (providing that violators of environmental laws shall pay the overtime costs of State employees who participate in cleanups); 10 Del. C (establishing statute of limitations for actions involving overtime compensation); 11 Del. C (providing for payment of overtime to investigators working on organized crime investigations); 17 Del. C. 132 (indicating that in certain limited circumstances in connection with highway/road projects the State must pay its workers overtime); 19 Del. C. 1102(b)(1) (indicating that an employer may delay the payment of overtime pay until the next pay period if the regular payday is within the pay period and the pay period does not exceed sixteen days). 5. Is there employment-at-will, or some other rule, in your jurisdiction? What are the exceptions?

3 Delaware law provides a heavy presumption that an employment relationship is at-will. The exceptions include whether the termination would violate another statute or law such as in the context of discrimination, retaliation or whistle blowing, and pursuant to the implied covenant of good faith and fair dealing. Merrill v. Crothall-Am., Inc., 606 A.2d 96, 101 (Del. 1992). The implied covenant of good faith and fair dealing is limited to the following: (1) the termination violated public policy; (2) employer misrepresentation of an important fact wherein the employee relied either to accept a new position or remain in a present one; (3) employer use of its superior bargaining power to deprive an employee of identifiable compensation related to the employee s past service; or, (4) the employer falsified or manipulated a record to create false grounds for termination. E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, (Del. 1996). 6. What are the legal obligations upon terminating an employee in your jurisdiction? There is no notice requirement in Delaware, nor are there any rules regarding manner of termination. The Delaware Wage Payment & Collection Act sets forth the requirements for final pay upon termination. Notably, an employee's pay upon termination is due on or before the next regularly scheduled payroll date. 19 Del C Also, if an employer, without any reasonable grounds for dispute or absent one of the limited exceptions, fails to pay an employee wages, the employer shall, in addition, be liable to the employee for liquidated damages in the amount of 10 percent of the unpaid wages for each day, except Sunday and legal holidays, upon which such failure continues after the day upon which payment is required or in an amount equal to the unpaid wages, whichever is smaller and attorneys fees. Id. Delaware law provides that an employer must post and maintain printed statements of unemployment regulations in places readily accessible to employees and further provides that employers must supply an individual information regarding unemployment regulations at the time the individual becomes unemployed. 19 Del. C In order to avoid the payment of unemployment benefits to the terminated employee, Delaware law requires that an employer have just cause for terminating an employee. See 19 Del. C. 3315(2); McKoy v. Delaware Dept. of Labor, Div. of Unemployment Ins., 1997 WL , at *2 (Del. Super.) accord Thompson v. Duke s Boat Sales, 1996 WL , at *3 (Del. Super.). 7. Are there any family and/or medical leave laws in your jurisdiction, and if so, what do they require? (For U.S. jurisdictions, please answer: Are there family and/or medical leave laws in your state beyond FMLA and if so, what do they require?) Delaware does not have a family medical leave statute providing for private sector employees. Delaware follows the federal Family Medical Leave Act (FMLA), 29 U.S.C However, Delaware does have rules governing leave for public officers and employee as follows.

4 Delaware law provides that public employees may take up to six weeks of leave for the adoption of a minor child. 29 Del. C Additionally, Delaware law provides that a full-time or part-time employee of the State may use accumulated sick leave for child care purposes upon the birth of a child of the employee or the employee's spouse, or upon the adoption by the employee of a pre-kindergarten-age child. 29 Del. C Please list any miscellaneous, interesting or oddball laws in your jurisdiction, and state under what circumstances they pertain. Monitoring of Telephone, and Internet Usage. No employer may monitor or intercept any telephone conversation, , Internet access or usage of or by a Delaware employee unless the employer either: Provides an electronic notice of the monitoring policy to the employee at least once during each day the employee accesses the employer-provided or Internet; or Has first given a one-time notice to the employee of the monitoring policy. 19 Del. C Employers violating this provision are subject to a penalty of $100 for each violation. Id. Meal Breaks. An employer must allow an employee an unpaid meal break of at least 30 consecutive minutes, if the employee works 7-1/2 or more consecutive hours. The meal break must be given some time after the first two hours of work and before the last two hours. However, this rule does not apply to any professional employee certified by the State Board of Education and employed by a local school board to work directly with children, or where there is a collective bargaining agreement or other written employer-employee agreement providing otherwise. Further, there are exemptions in cases where: a) Compliance would adversely affect public safety; b) Only one employee may perform the duties of a position; c) An employer has fewer than five employees on a shift at a single place of business (in which case the exemption applies only to that shift); or d) The continuous nature of an employer's operations, such as chemical production or research experiments, requires employees to respond to urgent or unusual conditions at all times and the employees are compensated for their meal break periods. Violators shall be subject to a civil penalty of not less than $1,000 nor more than $5,000 for each violation. 9. Does your jurisdiction have a law requiring employers to give employees access to, or a copy of, their personnel records? Pursuant to 19 Del. C. 732, upon request the employer must allow the employee to inspect his or her personnel files. If upon inspection of the employee s personnel file, an employee disagrees with anything contained in such records, the employer and employee may agree to a

5 removal or correction of such information. 19 Del. C If no agreement is made, then the employee may submit a written statement explaining the employee s position. Id. Thus, there is no legal obligation to provide employees with a copy of their personnel records, only access to such records. 10. Does your jurisdiction outlaw or restrict drug tests, alcohol tests, genetic tests or any other kind of testing? Drug Testing. For private employers, Delaware generally allows pre and post employment drug testing if implemented in a nondiscriminatory manner. Advance written notice of the drug testing policy is also advised. Testing is mandated for nursing home applicants and current employees where the Department of Health and Social Services has a reasonable suspicion that an employee has been convicted of a disqualifying crime since becoming employed. 16 Del. C et seq. For public employers, Delaware common law requires the consideration of three factors when judging the constitutionality of employee drug tests: (1) the nature of the privacy interest; (2) the intrusion on the employee s privacy; and (3) the nature and immediacy of the governmental concern at issue, and the efficacy of the means employed for meeting that concern. Wilcher v. City of Wilmington, 139 F.3d 366, 374 (D. Del. 1998). Thus, a requirement that a fire-fighter urinate while under observation was not sufficiently offensive to constitute invasion of privacy. Wilcher v. City of Wilmington, 60 F. Supp. 2d 298, (3rd Cir. 1999). Department of Correction employees, in security sensitive positions, are subject to random drug testing and incident-triggered testing. 29 Del. C All applicants for these positions initially must submit to testing for illegal drugs. Id. School bus drivers are also subject to drug testing. 21 Del. C Polygraph Testing. Polygraph, lie detector or similar tests are prohibited as a condition or continuation of employment. 19 Del. C Employers can be subject to a fine or imprisonment for violations of this provision. Id. at 704(c). There are no Delaware statutes or case law regarding medical, psychological, personality or alcohol testing by employers, but pursuant to the Delaware anti-discrimination statute genetic testing would be prohibited. 11. Does your jurisdiction have any special rules on the payment of sales commissions? No. Delaware does not have any statutory provisions regulating the payment of sales commissions. Generally, employment contracts providing for sales commissions are governed by the terms of the contract and Delaware courts apply general contract principles to interpret such contracts when disputes arise. See Realty Spectrum Group, Inc. v. Nanticoke

6 Homes, Inc., 1991 Del. Super. LEXIS 306, at 3-4 (Del. Super. July 29, 1991); Williamson v. Tecot Electric Supply Co., 1978 Del. Ch. LEXIS 677, at *3 (Del. Ch. Sept. 14, 1978). With that said, provisions regarding the timing and circumstances of when commissions are earned, accrued and/or forfeited should be very clearly spelled out in the written agreement or policy. 12. What are the basic rules on enforcing non-competes and related agreements in your jurisdiction? Covenants not to compete are enforceable under Delaware law if the employer can prove mutual assent to the terms of the agreement, adequate consideration, reasonableness in time and scope, and intent to protect the employer s legitimate economic interests. Faw, Casson & Co. v. Cranston, 375 A.2d 463 (Del. Ch. 1977). Continued employment for at-will employees will provide adequate consideration in support of a non-compete agreement after the onset of an employment relationship. Research & Trading Corp. v. Powell 468 A.2d 1301 (Del. Ch. 1983). If a provision in a non-compete agreement is overbroad, the court may take the reasonable alteration approach by modifying them, thus making them more narrow and enforceable. Knowles-Zeswitz Music, Inc. v. Cara, 260 A.2d 171 (Del. Ch. 1969).